AXP Energy Secures Transformational Syria Block 9 Farm-In Deal

AXP Energy Secures Transformational Farm-In Over Tier-1 Hydrocarbon System in Syria – A First-Mover Play with Major Upside

AXP Energy Limited (ASX: AXP, OTC: AUNXF) has announced the execution of a farm-in agreement that fundamentally repositions the company within the global oil and gas landscape. Through a right to earn a 25% participating interest in the 10,039 km² Block 9 Production Sharing Contract (PSC) onshore Syria, AXP has secured entry into one of the Middle East's most geologically prospective basins – the Palmyride Basin – at precisely the moment international sanctions have been lifted and major operators are moving in.

The AXP Energy Syria Block 9 farm-in deal, structured with Simpora Latakia Limited as Operator (holding 75% of Block 9), provides AXP with exposure to two drill-ready prospects carrying historical best-estimate prospective resources of 338 MMboe (Itheria) and 102 MMboe (Bashaer) on a 100% Block 9 basis, as previously reported by the former Block 9 interest holders and evaluated by RPS Energy (effective 31 December 2010). These are unrisked estimates relating to undiscovered accumulations; there is no certainty that any portion will be discovered or, if discovered, commercially produced.

The entry cost is notably capital-efficient: AXP has paid a US$100,000 good-faith deposit and is required to make a US$1 million advance contribution within 60 days – with no obligation to reimburse the former operator's approximately US$25.5 million in historical sunk costs.

"This is transformational for AXP. We have secured entry into a Tier-1 hydrocarbon basin at precisely the moment when geopolitical conditions have shifted from closed to open. We are entering alongside Chevron, ConocoPhillips, and other significant operators as first-movers into a market that will be crowded in 12–24 months."
— Sam Jarvis, Non-Executive Chairman, AXP Energy

Block 9: What AXP Is Acquiring and Why It Matters

A Mature, Data-Rich Asset

Block 9 is not a greenfield exploration position in the conventional sense. Between 2007 and 2011, the original PSC holders invested approximately US$25 million in de-risking the asset before sanctions forced suspension. That investment delivered:

• 1,800 km of 2D seismic reprocessing
• 420 km² of modern 3D seismic acquisition
• Itheria-1 exploration well, drilled to 2,072 metres, suspended safely and in good condition

AXP is therefore stepping into an asset with substantial legacy data, a partially drilled well available for re-entry, and two defined, independently evaluated prospects – all within a fraction of the total 10,039 km² block acreage.

Geological Distinctiveness

Block 9 sits on the northern flank of the Palmyride Basin, a proven Middle East petroleum system with a documented history of significant hydrocarbon discoveries. The basin and broader Syrian territory are regionally notable for the intersection of the African, Arabian, and Asian tectonic plates across the acreage – a geological setting historically associated with prolific hydrocarbon accumulation.

Beyond the two evaluated prospects, the block offers additional exploration optionality across the underexplored Al Ghab Basin and El Kabir Graben, providing potential for multi-stage value creation well beyond the initial drilling programme.

Prospective Resources: What the Numbers Say

The prospective resource estimates below were reported by the former Block 9 interest holders, not by AXP, and were evaluated by RPS Energy Canada Ltd. AXP has not independently validated these estimates. They relate to undiscovered accumulations and carry both discovery risk and development risk.

Prospective Resources Previously Reported by the Former Interest Holders (MMboe, Unrisked)

Note: AXP has a right to earn a 25% participating interest. Its economic interest in any resources, calculated in accordance with the Block 9 PSC and net of the applicable royalty, will be lower than 25% of any 100% figure.

The Itheria prospect targets the Ordovician Khanasser Sandstone (primary objective) and Cambrian Burj Carbonate (secondary objective). The Bashaer prospect, furthermore, targets Ordovician and Permo-Carboniferous sandstones consistent with the regional Palmyride play.

Understanding the Opportunity: What Is a Production Sharing Contract?

For investors less familiar with upstream oil and gas structures, a Production Sharing Contract (PSC) is a legal agreement between a host government and an oil company, whereby the company funds exploration and development in exchange for a defined share of any production. The government retains ownership of the resource, while the investor recovers costs from production revenues and then shares the remaining profit oil or gas according to agreed terms.

Why Does This Matter for AXP Investors?

• PSCs can be highly capital-efficient for junior companies, as the structure defines cost recovery mechanisms before profit sharing
• AXP's 25% participating interest means it bears 25% of costs and receives 25% of the production entitlement (subject to royalties and PSC terms), offering leveraged upside in a discovery scenario
• The disproportionate carry structure (AXP funds 35% of capex to earn 25% interest) is the commercial consideration for entering without paying historical sunk costs of approximately US$25.5 million

Key Glossary Terms:

Syria's Reopening: The Geopolitical Catalyst

The strategic logic behind the AXP Energy Syria Block 9 farm-in deal timing is grounded in a series of concrete regulatory and geopolitical events, not speculation. Following the political transition in Syria in December 2024, international sanctions were systematically lifted across multiple jurisdictions:

The removal of the US Caesar Act is particularly significant. This legislation had been the primary impediment to US and many Western companies engaging with the Syrian energy sector. Its repeal has opened the door for major American operators and created validated commercial activity from some of the world's largest energy companies.

According to the announcement, the following major operators have already moved:

• Chevron: Signed MoU with the Syrian Petroleum Company (SPC) for offshore exploration and development
• ConocoPhillips: Signed MoU to restore the Conoco Gas Complex (450 MMcf/d processing capacity); targeting 4–5 MMm³/day production increase within 12 months
• TotalEnergies, Eni, Gulf Keystone: Reported to be in advanced negotiations for established onshore and offshore fields
• QatarEnergy: Signed a separate MoU with TotalEnergies, ConocoPhillips, and the SPC to perform a technical review of Block 3
• SPC: Has regained central control of approximately 70% of Syria's proved reserves following a February 2026 ceasefire agreement

Syria produced an estimated 383,000 bopd pre-civil war. Current production is estimated at 100,000–110,000 bopd. The gap between current and pre-war production levels represents the rehabilitation opportunity now attracting international capital.

Important context: The involvement of major operators in Syria reflects their own commercial assessments and does not constitute endorsement of AXP's specific project. However, their presence validates the broader investment environment that AXP is entering.

Infrastructure Advantage: An Overlooked Strategic Asset

Block 9's location carries an infrastructure dimension that adds strategic relevance beyond pure geology. Syria's export routes connect directly to the Eastern Mediterranean via established pipeline networks and terminals at Banias, Tartus, and Latakia – entirely independent of the Strait of Hormuz.

Block 9 specifically benefits from proximity to:

• The Kirkuk–Banias oil export pipeline
• The Arab Gas Pipeline
• Refining and gas-processing facilities currently holding spare capacity
• Proven discoveries in adjacent blocks (Hayan, Aphamia, Harbaja) confirming regional charge and seal

For any future discovery, tie-in economics to existing infrastructure could meaningfully reduce development costs relative to a greenfield build, supporting project commerciality at lower commodity prices.

The Farm-In Structure: Capital Efficiency at the Core

The AXP Energy Syria Block 9 farm-in deal structure has been designed to maximise capital efficiency while providing investor-friendly exit optionality at the early stage.

Key Commercial Terms at a Glance:

The structure provides a meaningful opt-out window: within nine months of signing, AXP retains the right to cease participation and recover its US$1 million Subsequent Payment. The US$100,000 initial deposit acts as liquidated damages in a cessation scenario, thereby capping early-stage downside.

Planned Work Programme: Near-Term Milestones to Watch

AXP has outlined a clear three-phase exploration schedule:

1. Immediate (mid-2026): Commencement of 3D seismic reprocessing using modern algorithms, incorporating updated geological insights including the now-recognised Kurrachine Dolomite play and INA analogues from adjacent blocks
2. H1 2027: Seismic re-interpretation complete; detailed well planning and drilling logistics finalised
3. Q4 2027: Two-well drilling programme — potential re-entry of Itheria-1 (target depth ~2,700 m) and drilling of Bashaer-1 (target depth ~2,600 m)

AXP has committed to providing market updates at each material milestone: seismic completion, well spud, and well results. The seismic re-interpretation will determine whether the programme proceeds with Itheria-1 re-entry followed by Bashaer-1, or alternatively with Bashaer-1 and a subsequent well at a new location defined from the reprocessed data.

Oklahoma Operations Continue in Parallel

AXP's existing operations in Kay County, Oklahoma, remain active alongside the Syria initiative. The company holds 1,400 acres of leases with access to more than 30 potential vertical drill locations and a pipeline to expand toward an initial 6,400 acres. The Managing Director has confirmed a targeted field development programme is planned to deliver near-term production value.

Board Strengthening: Operational Credibility Added

As part of the transaction, Michael C.P. Rego will join AXP's Board as a Non-Executive Director. Mr Rego brings directly relevant credentials:

• 45+ years of global oil and gas exploration and development experience
• Managing Director of Septima Energy Limited (parent company of Operator Simpora Latakia Limited) since 2017
• Led the 3.2 Tcf Ntorya gas discovery onshore Tanzania for Aminex PLC (2012)
• Senior roles at BP and LASMO
• Instrumental in doubling production at the West Varyegan oilfield for the White Nights JV in West Siberia

Mr Rego's appointment as both the Qualified Petroleum Reserves and Resources Evaluator for this announcement and incoming Board Director provides a direct operational link between AXP and the Operator.

Investment Thesis: Why This Announcement Is Material

The combination of factors converging in this transaction is genuinely uncommon in junior resource markets. In addition to the low entry cost, several structural advantages make this deal worth tracking closely.

1. Capital-Efficient Entry into a High-Resource Potential Basin

AXP has secured a 25% interest in a block carrying historical best-estimate prospective resources of 440 MMboe (100% basis, 2010 evaluation) across two prospects alone — for an initial outlay of US$1.1 million and a 35% carry rate on forward capex. No reimbursement of ~US$25.5 million in historical sunk costs is required.

2. First-Mover Positioning in a Re-Opening Market

The sanctions dismantlement timeline is complete. The window of entry before the market becomes crowded — as the Chairman notes, "12–24 months" — is currently open. AXP is executing during that window, which is a meaningful competitive advantage for a junior operator.

3. Validation by Major Operators

Chevron, ConocoPhillips, TotalEnergies, Eni, Gulf Keystone, and QatarEnergy are all actively engaged in Syria. For a junior company, entering the same investment environment as these operators — and doing so with a direct PSC position — provides a form of commercial validation that is difficult to replicate.

4. Mature Asset with Clear Catalysts

Unlike pure exploration plays requiring years of baseline work, Block 9 has US$25 million of legacy data, a partially drilled well, and a defined two-well programme with a Q4 2027 target. Investors have a visible catalyst timeline to track, which is an important consideration for risk management.

5. Geological Upside Beyond the Two Evaluated Prospects

The block's frontier exploration potential in the Al Ghab Basin and El Kabir Graben, combined with the newly recognised Kurrachine Dolomite play (now commercialised by INA in adjacent blocks), suggests the resource story has potential depth well beyond the current reported estimates.

6. Structural Investor Protections

The nine-month exit window, the Independent Expert buy-back mechanism if government approval is delayed, and Simpora's 24-month title warranties provide a framework of contractual protections that is unusual in early-stage farm-in transactions.

Why Investors Should Keep AXP on Their Radar

The AXP Energy Syria Block 9 farm-in deal represents a transaction that is atypical in scale relative to its size as a junior ASX-listed energy company. The deal combines low entry cost, significant prospective resource exposure (subject to the cautionary statements regarding undiscovered accumulations and exploration risk), and first-mover timing in a re-opening hydrocarbon market.

However, investors should note that prospective resources are inherently uncertain. These are unrisked estimates of und

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