stock analysis report from
February 22nd, 2012
interesting to note with The EWT Program ADX is preparing Stock Analysis estimates rates at 1,500 BOPD ..
lets hope the initial flow test is good
ADX Energy:
Expect speculative jump if Sidi Dhaher tests well
ADX is getting closer to
a flow test of its Sidi Dhaher oil discovery in
Tunisia. A flow of 200 barrels per day or
more would be a good result.
ADX’s 40% interest in the onshore Tunisian Chorbane Block could begin oil production later this year if testing at the Sidi Dhaher oilfield proves positive.
The undercapitalised company and its largely undercapitalised band of partners, including Xstate and Verus plus cashed up AIM listed Gulfsands, will most likely test the well in March.
Success would lead to a small-scale operation and further planning for additional development wells, which
might lift production towards 1,500 BOPD.
The Chorbane block holds additional prospects which would also feature in thecompany’s plans. The most important
feature of Chorbane is its ability to pay the company’s annual running costs.
ADX is in the fortunate position of holding a 60% interest in all its offshore Tunisian projects and has 40% onshore, while in Romania it holds 100%. This position provides ADX with plenty of room to negotiate farm-in support to progress its projects.
I n v al u i n g t h e c o m p a n y ,
StockAnalysis assumes significant farm-out of interests and adds new equity of $12 million at a low share
price, which may unfairly encumber it.
However the company remains attractive under this harsh treatment. If oil flows from Sidi Dhaher at a commercial rate, which seems likely from log analysis, the project would substantially underpin the company’s current share price at around 8 cps.
Risking the Lambouka and Dougga discoveries at a fraction of their potential upside value, suggests an underlying value for ADX of 30 cents per share.
Risked exploration in the Mediterranean and in Romania adds
about 29 cents to give a total, risked
target valuation for the company of 59 cents per share and an initial target price of 17 cps, representing about 30% of total risked value, which from experience is the
proportion of value that the market might be comfortable to pay
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