viewSDX Energy Inc

SDX Energy seeing record production and strong cash flow as expansion continues


  • North African-focused oil and gas business
  • South Disouq, a major new field, came online in late 2019
  • Multi-well programme onshore Morocco
  • Receivables falling in Egypt as government pays off arrears

Quick facts: SDX Energy Inc

Price: 13 GBX

Market: AIM
Market Cap: £26.61 m

“We have entered 2020 in a strong position with production at record levels, good monthly cash generation, a strong balance sheet and a busy work programme of drilling ahead of us, which is all fully funded,"

Mark Reid, SDX chief executive



What SDX Energy owns:

Gharb Centre (75%, operator, gas)

A twelve well programme started in October and will finish early in 2020.

This will boost gross production to between 9-11 MMscf/d (million cubic feet per day) per day or double the average for 2018.


Meseda Concession (oil, 50%, not operator)

Expected to produce 4,000-4,200 barrels daily gross in 2019.

Two wells are planned for 2019 at Meseda, which is still growing and where SDX earns a high netback.

In September, the  MSD-19 development well in the West Gharib project area encountered 135 feet of net heavy oil pay across the Asl Formation. 

MSD-19 has been completed as a production well and is connected to the central processing facilities at the Meseda project.

Well came online with a stabilised production rate of 315 barrels per day over a five day period.

North West Gemsa  (oil, 50%, not operator)

Production is 2019 is expected at between 3,400 – 3,600 boepd gross

A mature field which is now fully developed and needs little capex so will be a cash generator.

South Disouq (gas, 55%, operator)  

A huge field with potential gas of 1.3 Tcf.

‘First gas’ was achieved in late 2019 and the production ramp up continues.

At full tilt, production is expected to be between 50-60mln mcf per day, which will double SDX’s barrel equivalent production.

That though is only from two wells and SDX expects to increase this to 6 or 7 wells.

The infrastructure to the grid has a daily capacity for 150MMscf or even higher – 150MMcf is the equivalent of 25,000 barrels.

Hook-up costs will be borne this year after which SDX expects South Disouq to churn out cash.

The company is presently preparing two new exploration wells in the South Disouq project area

South Ramadan (oil, 12.75%, not operator)

SRM-3 was drilled down to a depth of 15,635 feet.

It encountered 75 feet of net conventional oil pay in its primary target, the Matulla reservoir, also 20 feet in the Brown Limestone formation and 15 feet in the Sudr section.


How it's doing

SDX Energy PLC (LON:SDX) described 2019 as a successful year as it provided a trading update ahead of its financial results, revealing a 12% rise in production.

For the year, production averaged 4,020 barrels of oil equivalent per day (boepd) and the company noted that, at asset level, it had either exceeded or reached the upper end of guidance.

"2019 was a successful year for SDX, with all key metrics being ahead of expectations, success with the drill bit and our key South Disouq development project completing on time and on budget,” said Mark Reid, SDX chief executive in a statement.

“We have entered 2020 in a strong position with production at record levels, good monthly cash generation, a strong balance sheet and a busy work programme of drilling ahead of us, which is all fully funded,” he added.

Looking to 2020, the company’s guidance is pitched at 6,750 to 7,000 boepd, 68-74% higher than last year, as operations continue to ramp-up.

Albeit, SDX noted that some 1,000 to 1,050 boepd of 2020 guidance includes the North West Gemsa asset which has an uncertain future in the portfolio – the company has said it might exit the project at some point in 2020 if sufficient cost savings cannot be achieved.

Solid cash position

SDX said it ended 2019 with around US$11mln of cash, plus its US$10mln European Bank for Reconstruction and Development (EBRD) credit facility remains undrawn.

Egypt wells planned for 2020

The two new wells slated for 2020 will target the same horizons that have yielded four discoveries to date.

Salah is the first of the two new wells. It is set to spud in mid-to-late February, and, is expected to complete in April. The second well, Sobhi, is expected to spud in late April to early May, completing in early June.

Salah is targeting 71bn cubic feet of gas resources and Sobhi is targeting 33bn cubic feet.

Both wells are located close to infrastructure and would cost US$2.5mln to US$1.9mln respectively to tie-in to the South Disouq production facility. A third South Disouq well could be added to the campaign, subject to a partnering process.

Morocco drilling continues

In 2020, the company is advancing well-drilling programmes in Morocco and Egypt to grow production.

To date, SDX has drilled seven ‘close to infrastructure’ wells in Morocco - all either appraisal or development wells – as part of a twelve well campaign. So far, this has work has significantly increased the company’s reserve base, adding 2bn to 2.5bn cubic feet to take gross reserves to 4bn to 4.5bn in Morocco.

All wells have low connection costs and based on results to date the company expects that the reserves unlocked to date will satisfy customer contracts for the next 30 to 36 months.

Five remaining wells are expected to add incremental reserves, and, the remaining campaign includes two ‘play-opening’ appraisal wells.

Inflection points:

  • South Disouq ramp-up 
  • Drill programmes and well results 
  • Partnering possibilities
  • Acquisition potential


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