So, we get closer to the reality check in Austria for ADX.
They are going ahead with the Upper Austria exploration prospects farm-in process ... they used to say in the oil business that the worst thing you could do to a good project was to drill it ...
That said, what did we learn from this latest missive:
- it is a crap shoot - historical exploration success is 48% (and as they say in the investment world ... past performance is not indicative of future performance). Do we buy into the past performance of Austrian companies in the region? Or ADX cumulative record over the past 20 years (closer to 0%)
- ADX, which does not have the money to do this alone, keeps 100% of the abandonment liability (according to Austrian law, yes, they say it in the presentation as a positive for prospective partners))
- the traditional drilling contractor RED may not be used (available?). Used to be owned by RAG, but now owned by Polish drilling contractor UAS - who will obviously mobilise rigs to the highest return locations. Drilling cost estimates are however based on RED estimates ...
- Still touting Geothermal potential. Yes it exists, but totally different licensing process/authority in Austria, and geothermal electricity guaranteed price in Austria only 10% of what they are in Germany ... economic?
- Oh, this also means that the 50-60 well Flysch play at their current production site is on the back burner ... this was originally how they were promising 3,000boepd. Is it still real that it is possible to produce that much oil for a location that has been exploited since 1930s?? Apart from the prospect of trying to get that many drilling permits or rig availability ...
Well we have about 16 weeks to find out if they get any bites, and how much/little ADX will be left with.
In the meanwhile expect a breathless update on Hydrogen and CCS.
I await with baited breath. Oh, and Q1 results to see if they ever managed to get production back up to 300boepd (yes, remember that they didn't tell you of the 22% decline that started in October and they only told you about it in January ... after the fund raising).
Don't take all this personally, I make money by seeing what makes it through my skeptical views.
(20min delay)