ASX Release

25 October 2016

Nilde Oil Field Re Development Update 100 % increased Oil In Place Resource expected, based on new data and technical studies. PROJECT HIGHLIGHTS
  • Approximately 300 Million Barrels best technical original oil in place (OIIP) now estimated for the Nilde Field based on additional field data acquired by ADX and studies undertaken by highly qualified geotechnical and reservoir engineering consultancies.

  • Now a 60 Million Barrels 2C remaining resource can be inferred assuming the same recovery factor as that used by Competent Person Senergy. Compares very favourably with Senergy's independently assessed 2C Resource of 28 Million Barrels for the Nilde field announced on 17 February 2016.

  • The revised estimates honour all the available geological, drilling and production data adding significant credibility to the viability and potential value of the Nilde Oil Field Re Development Project.

  • Reservoir production simulation using the revised and more detailed geological model to develop field production forecasts is nearing conclusion.

  • Review of development options is ongoing with preferred facility providers of FPSO's (floating, production, storage and offloading facilities) and MOPU's (mobile offshore production units).

  • A drilling and well completion study has been undertaken to develop drilling programs and cost estimates for vertical, high angle or horizontal appraisal wells that can be used as producers.

  • ADX is now well placed in terms of resource estimation, preferred development options, facilities costs and well cost estimates to provide clarity in relation to economic potential of the project.

  • A formal farm out process will commence in November however there has been early engagement with a number of potential farminees and potential purchasers of an interest in the field.

  • Government Authority engagement has commenced to accelerate licensing based on Nilde appraisal drilling in 2017.

ADX goal now is to secure funding and approvals to drill appraisal wells that can be used as future development wells in 2017.

ADX Energy Ltd (ASX:ADX) advises that it has made significant progress in the detailed assessment of the resource potential, the preferred development options, the expected project costs and a potential path to commercialisation of the Nilde Oil Field (incorporating Nilde and adjacent Nilde Bis discovery) in the d363 CR.AX permit offshore Sicily, Italy. ADX believes that it is now well placed to commence farm-out discussions or partial sales to fund ongoing engineering work and the drilling of appraisal wells. Subject to funding and government approvals it is ADX goal to drill two appraisal wells in 2017 which could be utilised as future production wells.

Importantly the resource potential of the Nilde field and confidence in ADX geological model has been significantly enhanced by the recent geological, petrophysical and reservoir engineering studies which have been undertaken utilising all the available data for the field. ADX has acquired an extensive seismic, geological, drilling and production data base for Nilde since the last third party review in February 2016. Utilising this expanded data set, studies by ADX assisted by highly qualified and reputed consultancy firms (GE Plan and Hot Engineering Note1) with extensive experience in the assessment and production of fractured carbonate reservoirs has revealed an approximate doubling of the oil in place for the field relative to that estimated by Senergy (GB) Limited ("Senergy") in their independent assessment announced in February 2016. Senergy's earlier assessment was based on a more basic volumetric analysis with the data available at the time. Using a 30% recovery factor for the field - which is the same as that used by Senergy and also previously by ENI (then AGIP) the remaining 2C Contingent Recoverable Resource estimated by ADX would be approximately 60 Million Barrels of oil. This compares very favourably with the 28 Million Barrels of 2C Contingent Resource independently assessed by Senergy via the volumetric method in February 2016 when a less detailed database was available to ADX. The key data and studies which have contributed to this increase are discussed in greater detail below.

With the revised 3D geological model completed, the current emphasis of the Company's work is the forecasting of future field production using reservoir simulation. This work is expected to be completed in early November 2016. The modelling will provide a better understanding of the excellent past production performance for the field, the optimal well development plan to recover the remaining resources and a predicted remaining recoverable resource based on well production forecasts.

The substantial increase in resource potential of the Nilde field significantly enhances the potential viability and value of the Nilde Oil Field Redevelopment Project.

The combination of light oil (39⁰ API), highly productive reservoirs demonstrated by the Nilde 2 well which produced at approximately 10,000 barrels per day for over 5 years, modest water depths (90 meters at Nilde), modest drill depths (1500 meters) , excellent fiscal terms and relatively benign sea conditions enhance the potential commerciality of Nilde.

As announced in a "Project Update" on 21 April 16, based on indicative development cost estimates for suitable FPSO facilities and current drilling cost trends a capital cost per barrel of less than US$10 can be expected for Nilde based on the Senergy 2C resource. Potential project economics indicate that the project is profitable at oil prices down to US$ 20 per barrel for the 1C Senergy resources Case and US $15 per barrel for the 2C Senergy resources case. Revised economics will be provided for revised resources estimates upon completion of the current reservoir simulation studies which will provide a new range of recoverable resources based on the revised geological model with a significantly larger estimated oil in place.

Note 1

Principal Consultant Capability

GEPLAN CONSULTING S.R.L. (GEP) is a consulting firm based in Italy and was founded in 1998. Amongst other expertise GEPLAN has specialist skills in carbonate and fractured reservoir characterisation and has undertaken a large number of projects in Italy and the Circum-Mediterranean, the Middle East, Africa, USA and Latin America. In Italy it has worked on several major oil and gas fields such as Vega and Tempa Rossa for its clients Edison, Total and Shell.

HOT Engineering GmbH (HOT) is a leading reservoir consultancy company with headquarters in Austria, branch offices in Germany, Libya and the United Arab Emirates, and a global network of representative offices. With three decades of consulting experience, HOT is one of the established providers of advanced and integrated geological, geophysical, petrophysical as well as reservoir and production engineering technology. Over the past three decades, HOT has performed many integrated reservoir studies, ranging from new discoveries to mature giant fields, from clastic to fractured carbonate/granite environment, in consolidated and unconsolidated settings, from high perm to low perm and 'tight' reservoirs, from simple structures to heavily compartmented and fractured environment, from undersaturated reservoirs to gas condensate fields, from dry gas fields to underground gas storage.

HOT's main focus for consulting services has been Europe, the Middle East and North Africa with occasional studies also been made for customers in Australia, the Far East and Latin America.

Lead-5

Nailia-1

Lead-4

Nilde-1 bis

Norma-1

Nilde-2

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Lead-1

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Figure 1: d363 CR.AX Permit showing Nilde Field and proximal discoveries. Exploration prospects shown in yellow.

ADX Energy Ltd. published this content on 25 October 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 25 October 2016 00:57:04 UTC.

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