MCF Energy Ltd. updated the drilling progress of the Welchau-1 exploration well in Austria, and an update on anticipated operations in the Lech and Lech East concessions in Germany. Further to the announcement by MCF Energy on March 18, 2024 of the discovery of condensate rich gas shows at Austria's Welchau-1 well, an extensive logging program has been completed, revealing high correlation between hydrocarbon shows and open fracture networks essential for well productivity. The well continues to show strong indications of hydrocarbons in the mud system and has flowed hydrocarbons to surface despite over-balanced mud weight.

Production casing will be run. The Welchau-1 well was drilled a 8 1/2 inch hole to a total depth (TD) of 1,733.1 metres, where a full set of wireline logging tools and an MDT formation test tool was run. The well encountered hydrocarbon shows between the depths of 1,346 metres measured depth (MD) and 1,702 metres MD (a 356 metres gross interval) across three interpreted lithological sequences.

At 6.00 am Central European Time (CET) on the 24th of March 2024 the well bore was being conditioned prior to running production 7 inch casing. An extensive logging program was run in the 8 ½" section, which included an image log and cross-dipole sonic in addition to standard logs for well evaluation. Visual interpretation of these logs clearly proves the presence of different types of porosity (vuggy and open fractures).

Strong hydrocarbon shows have been encountered below the sealing Lunz and Partnach Formations. Several gas peaks as high as 8.22% have been recorded in the reservoir formations below the seal. In addition to the gas shows, liquid hydrocarbon shows were also observed.

Those include direct and cut fluorescence on cuttings and core fragments. In core fragments the fluorescence is associated with the presence of fractures. Liquid hydrocarbon and gas inflow was monitored in the well following logging operations further confirming existence of live hydrocarbons.

The well was planned to be pressure recorded and downhole sampled by running the Modular Formation Dynamic Tester (MDT) in a dual packer operations mode. The main objective of acquiring downhole samples of reservoir fluids have not yet been achieved. Five pressure recordings from the interval 1,479 metres to 1,597 metres MD revealed a complex carbonate reservoir setting in an over-pressurised hydraulic system at an equivalent formation density of 1.28 SG.

The corresponding permeability of the pressure tested levels show medium to very high permeability which is in agreement with fracture density and petrophysical log interpretation. The inability to sample reservoir fluids using the MDT from the zones of interest was primarily due to the extensive mud losses into the open fractures of the well and limited testing time. Furthermore operational difficulties hindered the sampling procedures due to tool sticking and the inability to recover representative samples from the zones of interest.

The recovery of the stuck MDT tool string required 72 hours of rig time and three attempts to bring the tool string safely back to surface. During fishing operations to recover the stuck MDT tool, hydrocarbon shows continued to build until the well had to recirculate several times to clear the gas from the well bore to a safe level. Also a strong oil odour was present near the mud tanks and drill floor.

Anticipated well operations in the coming week include the casing, cementing and suspension of the well to preserve the well bore for testing, stimulation and future production, followed by rig down and demobilization of the RED Drilling E200 drill rig. Permit restrictions require drilling and production testing to end by March 31st. Permitting will commence immediately for anticipated testing of the Welchau-1 well in the fourth quarter of 2024.

Future testing and potential deepening of the well can be done with a cost-effective workover rig. The well was drilled efficiently and safely, with some drilling mud fluid losses but without any significant drilling problems. Well penetration rates were faster than the original well plan due to the use of new drilling bit technology. Well costs for this success case are in line with the predicted costs.

ADX Energy Ltd. and MCF Energy conformed and strove to exceed all environmental regulations during the drilling and will continue that practice during the upcoming completion operations, exceeding them when possible. Lech and Lech East Background: Through its German subsidiary Genexco GmbH, MCF Energy has a 20% interest in the Lech Concession (approximately 10 km2), and is carried for the costs of the upcoming Kinsau-1A well up to 5 million euros. Genexco GmbH has a 100% interest in the Lech East Concession (approximately 100 km2).