I like the maths

ADX Energy (ASX:ADX)

Market cap: $17.69 million
Share price: $0.007

ADX is a European oil and gas explorer and producer, focused on Austria which is also branching out into the growing renewables game.

“We are currently producing around 340 barrels a day, which last year generated about $8 million in Aussie operating cashflow that we reinvested in the business,” executive chairman Ian Tchacos told attendees.

“We also have a very large exploration portfolio of around 213 million barrels of oil equivalent prospective resource.”

Tchacos said all its renewable projects, including a hydrogen project, solar park and geothermal play are part of its existing asset base.

For now, its oil portfolio is rapidly accelerating in productivity.

“How that’s all played out, we made a discovery in January last year and by October we had commercial production,” Tchacos said.

“We will drill two more wells in the next year and expect to increase production by somewhere between 600 to 1000 barrels a day so for us that will result in a 300% increase in production.”

ADX has some major competitive advantages. Its Austrian operations boast experienced staff, access to 3D data and infrastructure, while it is located at the epicentre of the European energy market which has seen its supplies severely disrupted by sanctions and the ensuing car and mouse game between the EU and Russia.

Tchacos said most punters will concentrate on ADX’s large onshore gas project, which contains about 800Bcf and sits about 19km from an international gas pipeline.

“We are sitting in the middle of Europe, which is energy starved, in a jurisdiction where we can get things done quickly, have boots on the ground and have a very substantial work program going forward,” he said.

On Tchacos’ maths, ADX was running at an enterprise value (EV) per barrel of ~$2.60, ~7 cents per exploration barrel and $27,000 per flowing barrel, cheap by any measure.

“Our production underwrites our share price but you have a lot of exposure to short term growth through gas exploration and in the longer term three renewable projects,” he said.