ADX kicks off flow tests at Austrian oil and gas discovery well

Following the completion of regulatory and environmental approvals, ADX Energy has kicked off flow testing operations at its Welchau-1 discovery in Upper Austria.

With a workover rig and testing equipment already on site, the tests, which are set to go through to the end of March next year are aimed at assessing the hydrocarbon potential of a discovery the company made earlier in the year.

Starting next week, ADX plans to test two key reservoirs starting with the deeper Steinalm formation before moving to the shallower Reifling zone.

By using a series of flow periods and shut-ins, the company will watch how the well performs and check for any potential reservoir damage caused by drilling and cementing the 7-inch casing.

Initially, flow rate, surface pressure and downhole pressure data will be collected, together with samples from both levels. However the well may also be retested under stimulated conditions as needed to take note of any improved performance.

Although the Steinalm formation tests could take from 6 to 10 weeks, if a good flow is achieved, ADX may stretch the timeline further to gather more long-term data.

Notably the workover rig being used for the testing program has already been used by ADX to drill its Anshof-2A oil appraisal well at the company’s Vienna Basin fields. Its familiarity, therefore, with the equipment and personnel means it can tweak the program as needed without spiking costs.

The successful testing of Welchau will have significant implications for ADX, our partner MCF and the Republic of Austria which is located in the heart of energy starved Europe. The expected light oil (43.6° API) at Welchau could be very valuable in commercial quantities given shallow drill depth and onshore setting which is proximal to infrastructure.

The company holds a 75 per cent economic interest in the Welchau-1 discovery and part of a broader ADX-AT-II license area having farmed out a 25 per cent stake to Austrian giant MCF Energy in exchange for 50 per cent of the Welchau-1 well expenses up to a cap of €5.1 million.

Now that MCF has met its funding requirements it has locked in the 25 per cent stake, however it is still on the hook for any additional well costs including exploration and appraisal expenses.

When the Welchau-1 discovery well was first drilled earlier in March it lit up with hydrocarbon shows across a 450-metre interval intersecting three main reservoirs.

Subsequent tests before casing the hole for future testing left the company feeling confident it had made a sizeable gas discovery with some condensates with a prospective resources estimate of between 12 and 217 million barrels of oil equivalent (MMBOE) and a mean forecast of 85 MMBOE.

Significantly however, in September, ADX revealed the hydrocarbons at Welchau are now likely to be predominantly high-grade, light oil with associated gas, rather than the liquids-rich gas it initially expected.

If confirmed as an oil project, it will have major ramifications for the partners as the well could then be developed incrementally and much more cost effectively than a gas project, minimising capital expenditure and improving the economics and payback time frames.

Two years ago, ADX was a junior oil and gas explorer with some interesting but undeveloped grounds in Austria. Wind the clocks forward to today and the same company is not only set to shortly produce 720 barrels of oil a day but is also drilling the exciting and high impact wild cat Lichtenberg-1 gas well and assessing a sizable new discovery in Welchau-1.

The coming year is likely to be a very busy one for ADX as it transforms itself into a sustainable producer with abundant growth options.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au