Nilde Field Redevelopment Update

Source Press Release
Company ADX Energy Ltd 
Tags Reserve Update, Production/Development, Exploration, Upstream Activities
Date March 29, 2017

ADX Energy Ltd (ASX:ADX) is pleased to provide the attached Nilde Field Redevelopment Update presentation containing an indicative economic assessment for the project that incorporates the extensive resources reevaluation work undertaken by ADX during the last 12 months and the concept definition studies undertaken by ADX in collaboration with Calm Oceans Pte Ltd (COPL) for the utilisation of a self-installing mono column platform (MCP).

ADX announced revised resource estimates based on static geological and dynamic reservoir modeling honouring all available geological and historical production data from the field on the 14th of February 2017.  On the 22nd of December 2016, it was announced that ADX and COPL entered into a Memorandum of Understanding 'MOU' to jointly progress development planning for the Redevelopment of Nilde on the basis of leased platform, production and storage facilities. ADX believes this is an optimal technical and commercial solution. The attached presentation summarises this work, incorporates drilling cost studies undertaken by ADX and facilities lease costs derived from contractor proposals to provide an economic analysis for the project and the basis for a formal financing and farmout process which ADX is now in a position to commence.

Key points from the technical and economic analysis are as follows:

  • The Project has the potential to be highly profitable and robust due to high reservoir productivity, light sweet crude, shallow drill depths, shallow water depth and low royalties.
  • The combination of low offshore drilling costs possible from the MCP platform combined with attractive lease rates for the platform, production and storage facilities result in excellent predicted economics as summarised below at an oil price of US$ 40 per barrel;
    • Net post tax cash flow averaging approx. US$150 million per annum for first 3 years for the predicted base case resource (2C resources estimate of 33 million barrels);
    • Low capital costs per barrel of US$4.80 - 3.40 per barrel (across the predicted resource range of 22 million barrels 1C  to 50 million barrels 3C);
    • High post tax NPV10 per barrel of US$13 - 25 per barrel (across the predicted resource range of 22 million barrels 1C to 50 million barrels 3C);
    • Material Post tax NPV10 of approx. US$200 - 650 million (across the predicted resource range of 22 million barrels 1C to 50 million barrels 3C);
    • Project pay back across all three resource cases of less than one year, and
    • Break even oil price for the 1C resource case less than US$30 per barrel.

The analysis to date indicates the transformational nature of the Nilde asset for ADX. Extensive historical data combined with recent developments in platform, drilling and production technologies has created a highly desirable redevelopment opportunity from a substantial remaining oil resource.

While it has taken longer than expected to secure all the available data & information for a credible value proposition for Nilde, the results of the resource determination, project feasibility and economics to date are compelling. The asset is already generating significant interest amongst potential farminees. ADX is now ready to commence a formal financing and farmout process utilising the attached results incorporated into a detailed information memorandum.

As mentioned in previous releases ADX has commenced discussions with Italian Authorities to enable appraisal operations as soon as practically possible. Our goal is to progress appraisal well planning and Nilde Redevelopment project planning in parallel to enable the submission of development plan as soon as possible after the drilling of a successful appraisal well.

ADX believes an appraisal well is an important pre-investment to ensure an optimal subsurface development plan and secure project finance for the project. It is intended that an appraisal well will be suspended as a future producer.

ADX development strategy is based on collaboration and alignment with capable contractors as demonstrated with the COPL MOU enabling ADX to progress a material project at low cost while ensuring the appropriate skills and experience are deployed to deliver a successful project.

Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd