AXP Energy Limited confirmed field development and well completion operations have commenced with work underway on the completion of the first of two Illinois Basin oil wells. In addition, the drill pad has been prepared for the first of the new vertical infill wells to be drilled next month. As reported on 4 November 2021, AXP formed a new drilling division to pursue cost effective increases in oil and gas production through field development activities, including drilling infill wells in existing productive leases and also bringing online wells that were previously drilled but not completed.

AXP is deploying its own geologists, drillers and field hands for all work which can be executed more cost effectively than through the hiring of contractors. In building its own drilling capability, AXP has been able to reduce its reliance on contractors so that its planned programs can be executed more cost effectively. In formulating the field development program for CY2022, AXP's geologists have now identified a portfolio of nine previously drilled, cased and uncompleted wells (DUCs) that were never brought into production due to the GFC market downturn in 2007.

These wells were shut-in and have remained idle for the past 14 years. The first two (DPI-2604 and DPI-2605) are located in Eastern Muhlenberg County, Kentucky and sit within the Salem-Warsaw and Upper Fort Payne formations which are common targets for oil production in the region. This project has been prioritised ahead of drilling new wells due to their lower risk development potential and favourable project economics as the drilling costs have already been incurred.

Both wells were perforated this week and are currently flowing naturally. Despite the natural flow, AXP plans to fracture stimulate both vertical wells next week to enhance production. Flow rates will be reported upon completion and after flow back.

This initial field development activity aims to take advantage of the low cost, quick execution, high reward opportunities that exist within the Company's portfolio. A further seven DUCs which are prospective for both gas and oil have been identified and will be considered for perforating, fracking and completing once the results from the first two wells are evident. In addition, 10 of gas producing wells in the Appalachian Basin have been drilled through oil producing formations and the Company is now assessing the feasibility of perforating these zones to produce the oil as well as the gas.

Work is also well advanced on the first high impact vertical infill well which has been identified on the Dacy Lease, located within the Poole Consolidated oil field in Webster County, Kentucky and are part of the Kentucky Exploration leases which were acquired in full late last year. The drill pad has been constructed and drilling is likely to commence in March, weather permitting. The Dacy Lease was earmarked as a priority target after a thorough internal geological review.

The well is planned to be drilled vertically into the Mississippian age Ste. Genevieve formation, a thick Mississippian carbonate. Production comes from lenticular oolitic porosity zones, overlain and interbedded with shales and non-oolitic limestone.