ADX Energy has hit paydirt again at its HOCH-1 shallow gas exploration well in Upper Austria, recording a co-mingled, water-free gas flow from four separate zones averaging 3.15 million cubic feet per day (MMcfpd) over a 12-hour period.

The flow rate is equivalent to a healthy 548 barrels of oil equivalent per day (boepd) and provides further evidence of a significant new gas discovery in a region starved of local energy supply.

The latest test at HOCH-1 involved perforating and flowing gas from zones three, four and five, which were then combined with the previously tested zone two.

An earlier test of just zone two produced a stable, water-free gas flow of 2.7 MMcfpd. Pressure analysis from that initial test indicated excellent reservoir productivity with a potential flow rate of 3.5 MMcfpd from a sand body extending at least 600 metres from the well.

The HOCH-1 well, drilled in May, encountered up to eight potential biogenic gas reservoirs within the Hall and Base Hall Channel formations. With the latest successful test, the well has now been shut in with downhole gauges to record pressure build-up. Results are expected in about two weeks and will be critical for determining the size of the commercial reserve.

The positive flow results from all HOCH-1 well zones tested to date is very encouraging in terms of the determination of a commercial reserve for the well. The results from Phase 1 also provide confidence that deeper, yet to be tested zones are likely to be gas filled and can potentially provide a significant reserves contribution given their lateral extent based on 3D seismic mapping and well correlation.

Perhaps more tantalising is what could still be lurking deeper.

Post-drill mapping using freshly reprocessed 3D seismic data has allowed ADX to link the deeper Hall Channel sands at HOCH-1 with historic wells sitting between 2.5km and 3km away, adding some serious potential scale to the emerging gas story. The work points to potentially sizeable extensions of several gas-bearing reservoirs, particularly in zones three and six.

Adding further intrigue, water-free gas from zones four and five has raised hopes that the deeper zones six to eight could also be packing gas. ADX now plans to put at least two of those deeper Hall Channel targets to the test in phase two, once it secures a workover rig to drill through an existing cement plug.

The HOCH-1 well sits within the ADX-AT-I exploration licence in Upper Austria, where ADX is the operator and holds a 50 per cent economic interest. It is the first of three shallow gas prospects the company has lined up, with two additional prospects, GOLD-1 and SCHOE-1, already fully permitted and set for drilling later this year.

A strong finish to the HOCH-1 testing campaign could go a long way towards taking some of the geological sting out of the next two wells. Better still, open-access gas pipeline infrastructure runs just 2km from the new prospects, offering ADX a ready-made route to market should the shallow plays stack up commercially.

Beyond its shallow gas chase, ADX holds a significant portfolio of other European energy assets. This includes its existing oil production from the Anshof field and Vienna Basin, its “world-class” Welchau deep gas prospect in Austria, and further gas exploration ground in the Sicily Channel, offshore Italy.

The company’s Vienna Basin operations are already generating cash, with optimisation work recently squeezing more oil from its Anshof field, about 200km to the southwest. Adding to the appeal, Anshof’s infrastructure can handle up to 3000 barrels a day, leaving plenty of spare capacity to funnel any future production into a market where oil is again flirting with producer-friendly US$90 (A$125) a barrel.

The positive test results are particularly relevant given the precarious state of Europe’s gas market. The Dutch TTF gas benchmark, a key European price indicator, has been trading at elevated levels around €69 per megawatt-hour, which ADX says is equivalent to a hefty US$138 per barrel oil price. The tight market conditions are being driven by an uncertain import environment and low storage buffers heading into winter, making any new domestic European supply strategically important.

With all zones tested so far at HOCH-1 flowing water-free gas, ADX has every reason to be optimistic about the well’s commercial future. In a market where every molecule of locally sourced gas counts, the company finds itself in the right place at the right time. As it prepares to probe the deeper, potentially more significant zones at HOCH-1, this Austrian gas story could just be getting started.

Is your ASX-listed company doing something interesting? Contact: matt.birney@wanews.com.au