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ADX Energy (ASX:ADX) - Executive Chairman, Ian Tchacos - The Market Herald
  • ADX Energy (ADX) managed to successfully navigate some heavy headwinds through what was a tough quarter for oil and gas producers
  • The oil price crash saw a sector-wide slump in share prices and profits, but ADX seems to have emerged in decent shape despite the economic turmoil
  • Even with the oil crash and a global pandemic, ADX managed to finish the quarter with a little over $3 million in the bank
  • ADX was served well by its hedging arrangements, which helped stave off the worst of the price crash damage
  • 80 per cent of the company's production is hedged above current market prices to December 2020, so ADX is well placed despite market difficulties
  • Exploration and geotechnical work is also continuing at its Austrian and Romanian projects as the company seeks to expand known reserves
  • ADX Energy is trading 16.7 per cent higher at 0.7 cents

ADX Energy (ADX) managed to successfully navigate some heavy headwinds through what was a tough quarter for oil and gas producers.

The oil price crash saw a sector-wide slump in share prices and profits, but ADX seems to have emerged in decent shape despite the economic turmoil.

The bottom line

ADX was served well by its hedging arrangements, which helped stave off the worst of the price crash damage.

June quarter revenues fell 40 per cent compared to the previous three months, but that loss was reduced to just a 22 per cent fall due to hedging sales and revenues.

While a 22 per cent drop in revenues is obviously damaging, it's not too bad considering the oil price fell to just one-third of pre-pandemic levels in April and is still recovering.

80 per cent of the company's production is hedged above current market prices to December 2020, so ADX is well placed despite the ongoing market difficulties.

Even with the oil crash and a global pandemic, ADX managed to finish the quarter with a little over $3 million in the bank.

The company also increased overall production by nine per cent through the quarter despite the headwinds.

With the continued ramp up of production and exploration, coupled with beneficial hedging arrangements and a strong financial base, ADX looks to be rolling along nicely.

Outlook

ADX is projecting a further two per cent rise in production over the current quarter.

Exploration and geotechnical work is also continuing at its Austrian and Romanian projects as the company seeks to expand known reserves and resources.

The only real black mark for the company is that it's still trying to divest itself of its Kerkouane Exploration Permit offshore Tunisia, as announced in September last year.

Other than that ADX has come through a tough period relatively unscathed compared to its competitors, and is continuing to grow its opportunities despite trying market conditions.

ADX Energy is trading 16.7 per cent higher at 0.7 cents as at 2:15 pm AEST.


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