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- ADX Energy (ADX) announces that Kepis & Pope Financial Group (KPFG) assigned its interest in the Welchau farm-in agreement to MCF Energy
- Dual-listed gas explorer MCF Energy will fund 50 per cent of the cost needed to drill the Welchau-1 well in exchange for a 20 per cent interest in the area
- Additionally, MCF has until February 28, 2023, to decide if it wants to fund the other 50 per cent of drill costs, for a total economic interest of 40 per cent
- In total, MCF may spend up to €3.81 million (A$5.95 million) on drilling the well
- ADX has ended the day 14.3 per cent in the green to close at 0.8 cents
ADX Energy (ADX) has announced that Kepis & Pope Financial Group (KPFG) assigned its interest in the Welchau farm-in agreement to Canada-based gas explorer MCF Energy.
At the end of 2022, ADX and KPFG struck an agreement for KPFG to fund at least 50 per cent of drilling costs for the Welchau-1 well in Upper Austria. KPFG has since transferred its interest to MCF Energy.
MCF Energy recently listed on the TSX Venture Exchange, as well as the Frankfurt Stock Exchange, with aims to unlock natural gas opportunities for energy security in Europe.
“The board of ADX is pleased to have MCF Energy as its highly experienced and European gas focused partner to participate in the drilling of the large Welchau gas prospect in Upper Austria,” ADX Executive Chair Ian Tchacos said.
Under the agreement terms, MCF will fund 50 per cent of the cost needed to drill the Welchau-1 well in exchange for a 20 per cent economic interest in the Welchau farm-in area.
The agreement also came with the option for MCF to earn a further 20 per cent interest (for a total 40 per cent) in the farm-in area if it funds the other 50 per cent of drilling costs. The dual-listed stock originally had until January 21, 2023 to exercise the option but the parties have agreed to extend this to February 28 on the same terms.
Before choosing to fund the other half of drill costs, MCF Energy will need to prove it’s capable of meeting the additional financial obligations.
If it does decide to fund the entire well cost, budgeted at being up to €3.81 million (A$5.95 million), MCF Energy will hold a 40 per cent economic interest in the Welchau farm-in area and ADX Energy will retain a majority 60 per cent interest.
The Welchau prospect reportedly has the potential to contain an 807 billion cubic feet equivalent best technical prospect resource.
ADX believes the Welchau area is connected to a gas discovery at the historical Molln-1 well which tested pipeline-quality gas at a rate of up to 3.5 million cubic feet per day down-dip from where Welchau-1 will be drilled.
The company will keep the market updated on well planning and permitting.
ADX ended the day 14.3 per cent in the green to close at 0.8 cents.
