ADX finds farm-in partner for offshore block in Italy
Oil and gas company ADX Energy has found a farm-in partner for its acreage in Italy. The partner, SDP Services Limited, will fund a part of its work program in the 363 C.R-.AX Permit.
ADX Energy on Wednesday said it would farm out a 50 percent interest in the license to SDP. The offshore license contains the Nilde Oil Redevelopment Project and the “successfully tested” Norma and Naila oil discoveries offshore Italy.
SDP will fund the work program commitments of Audax Energy Srl (Audax) a wholly owned subsidiary of ADX up to a maximum of Euro 20.82 million to earn a pro-rata interest of 50% upon completion of funding. The farm-out is subject to the Italian Licensing Authorities ratifying the license.
Upon ratification of the License SDP will receive 5% net profits royalty interest attributable to any future production from the Nilde Field. ADX will remain operator of the license.
According to ADX, SDP is a privately owned specialized oil and gas services company providing drilling, seismic, testing, hydraulic fracturing, and logging services with offices in London.
“This farm-out transaction provides the financial support required by the Italian Licensing Authorities and places ADX in a strong position to seek ratification of the License,” ADX said on Wednesday.
Ian Tchacos, Executive Chairman of ADX, commented “The Board of ADX is pleased to have secured this potentially important Farmout transaction with SDP Services. We expect that the funding support provided by SDP will break impasse with the Italian Authorities and lead to the long overdue ratification of the license.”
He was referring to the Italian authorities’ recent evaluation which said ADX’s Audax subsidiary had insufficient financial capability to fulfill its Permit commitments, adding an additional requirement for the licensee to have upon license ratification the capacity to bear the cost of future
committed work program expenditures in the Permit, including the costs of drilling a well in year 4 of the Permit.
“Upon ratification, a substantial investment in the Nilde Re-Development project has the potential to unlock substantial value for ADX and SDP shareholders. Nilde at current oil prices is potentially a very valuable project as outlined in the attached project summary and we now can start to look forward to getting back on track,” Tchacos said.