ADX Energy : Dougga Gas Condensate Project Update

24 May 2017

ADX Energy Ltd (ASX Code: ADX) has made significant progress on the definition of its Dougga Gas Condensate Project offshore Tunisia. Key recent achievements are summarised as follows:

• 3D Geological Modelling incorporating fracture modelling indicates a 103% increase in Gas In Place "GIP" estimates. This increase is expected to result in a positive revision of recoverable resource estimates for the discovery.

• Agreement by ADX and its National Oil Company partner ETAP to vary the Kerkouane work program from the acquisition of 3D exploration seismic and the drilling of an exploration well to the drilling and productivity testing of updip Dougga (called Dougga Sud) enabling the drilling of the Dougga Sud to determine the productivity of the Abiod reservoir, the updip volumes identified on 3D seismic and the condensate content of the gas.

• Expressions of interest for a rig option to drill the Dougga Sud ("Dougga-South") well have yielded very positive responses in terms of rig capability and day rate for late 2017 to early 2018.

• Preparation of an application for the second renewal of the Kerkouane license which contains Dougga. The three year renewal will include a 36% relinquishment of the exploration block and the commitment to a future exploration well. The relinquishment area does not impact the Dougga gas discovery, the Kerkouane gas discovery or the remaining exploration prospectivity of the block.

• The presentation to the Tunisian Authorities of the Dougga Development Concept Study with technical outcomes by TechnipFMC. As predicted by ADX, a subsea tie back to an onshore gas plant is the most desirable technical and commercial option. Study derived capital costs and schedule estimates will be available in mid June.

ADX intends to bring together this work to define the appraisal and development potential of Dougga in July 2017 with a view to securing either a farmin partner or a financial partner to participate in Dougga Sud well.

ADX has concluded a detailed reservoir study of the offshore Dougga gas condensate field with the objective to conduct reservoir simulation studies and optimally place future production wells. An additional important outcome of this work is a new so called "gas in place" resource estimate which is expected to result in a significant 103% contingent resource increase relative to previously announced figures for the 2C case of 173 mmboe (Table 1, further below) if similar recovery factors were applied. The previous resource figures were based on a more basic volumetric assessment, undertaken both by ADX and third parties. Once reservoir simulation studies are completed ADX will announce the resulting new contingent recoverable resources.

The new Dougga 3D geological model has incorporated a fracture model which is the result of new insights gained by ADX in its recent Nilde oil field studies. Nilde is situated approximately 70 km to the northeast from Dougga on the same structural trend on the Italian side of the Sicily Channel (Figure 1 location map).

Nilde oil field

D 363 C.R. AX

KERKOUANE

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700 km² Geostreamer 3D

Figure 1: Location map of ADX offshore Sicily Channel acreage. Dougga gas condensate field is within the Tunisian Kerkouane license

The fracture prediction work has been undertaken by an Italian consultancy group which is highly experienced in the Sicily Channel area and with fractured carbonate reservoirs in general. The same consultancy group also undertook the Nilde fracture and structural

modeling work. Figures 2a and 2b show 3D visualizations of the fracture permeability and fracture connectivity at the top of the main Abiod gas condensate reservoir.

Dougga-South Dougga-1

2.5 km

Figure 2a: Top Abiod reservoir 3D structure showing (relative) vertical permeability. Green areas and blue colours define areas of relatively higher predicted fracture permeability.

Dougga-South Dougga-1

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Figure 2b: Top Abiod reservoir 3D structure showing (relative) fracture connectivity. Blue colors define areas of relatively higher predicted fracture permeability, such as around proposed Dougga-South well location.

In addition to the fracture modelling a 3D geocellular model was created (using Schlumberger - Petrel software), together with an updated petrophysical and structural model, incorporating 3D seismic derived reservoir attributes.

As a consequence of this work, a fully integrated 3D model has been created enabling future reservoir simulation and optimum well placement.

A more accurate estimate of in place resources for the proven Abiod reservoir has been achieved by integrating the 3D seismic structure and seismic attributes (seismically derived indication of reservoir quality) with petrophysical data. Figure 3 is a 3D image of the top Abiod reservoir structure with colors showing potential reservoir (matrix) sweet spots derived from geological modeling in conjunction with 3D seismic attributes.

An additional important outcome of the work undertaken was a more accurate estimation of gas and liquid resources. Table 1 shows the previously ASX announced contingent resource figures. The corresponding GIIP (gas initially in place) figure for the previously announced 2C case of 173 mmboe has increased by 103%. A significant part of the increase is due to the incorporation of fracture volumes and the 3D seismic derived Abiod net pay map (Figure 3).

The new 3D model predicts that the highest fracture densities and connectivity can be expected in the compartment targeted by the proposed well Dougga Sud (or South) well. A combination of good fracture density and connectivity could facilitate very high gas condensate flow rates.