ASX-listed oil and gas exploration and production company, ADX Energy, has signed a binding Memorandum of Understanding with one of Austria’s largest energy producers for access to its processing, storage and transportation facilities. ADX said the agreement with RAG Exploration & Production secures greater economic certainty for the company’s planned hydrocarbon production from its exploration areas in the established Molasse oil and gas basin in Upper Austria.
RAG accounts for approximately 7 per cent of Austria’s domestic oil production and it has a number of producing oil fields alongside ADX’s recently acquired exploration permits near Linz in Upper Austria.
RAG’s parent company, RAG Austria AG, owns an extensive network of oil and gas production, storage and distribution assets throughout Austria. It has produced 800 billion cubic feet of gas and 70 million barrels of oil from the Molasse basin over time.
The agreement would reduce capital expenditure and the time it takes to move from drilling to commercial production, ADX said, due to the tie into RAG Austria’s existing hydrocarbon gathering, processing and storage facilities. RAG Austria is a key player in Austria’s extensive oil and gas infrastructure network.
It acquired the prospective 450 square kilometre exploration position in the Molasse basin in November, which included 10 drill-ready exploration prospects.
This transaction substantially increases the economic potential from the recently announced ADX exploration and appraisal portfolio in Upper Austria. As a result of this transaction our ready to drill portfolio can be more efficiently and economically developed in a much shorter time frame assisting our strategic goal of rapidly building hydrocarbon production in Austria.
In a previous deal finalised in December 2019, ADX acquired the producing Zisterdorf and Gaiselberg oil and gas fields in the onshore Vienna Basin from RAG Austria. The deal made ADX only the third oil and gas production company in Austria.
ADX has established a close working relationship with RAG Austria, including the sharing of personnel, expertise and access to some of RAG Austria’s seismic data. ADX Chief Executive Officer, Paul Fink, is an Austrian national with a long background in global oil and gas exploration and production.
The Upper Austria agreement would benefit both companies, ADX said, ensuring hydrocarbons from the Molasse basin could be produced efficiently and cost-effectively by utilising available capacity and maximising the throughput of RAG’s facilities, thereby lowering the production costs for both parties.
ADX said RAG Austria was progressively moving out of exploration to focus on production, transportation and storage. This would likely create further opportunities for ADX to acquire quality assets from it in the future.
Originally focused on oil and gas exploration in the Mediterranean Sea with permits in offshore Italy and Tunisia, ADX is now switching its attention towards generating more immediate returns by growing its bag of quality onshore assets in Europe. These include assets already in production and exploration targets in established production zones that have near term potential to spit out cash.
Is your ASX-listed company doing something interesting? Contact: email@example.com