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SDX Energy Inc

SDX Energy looks forward to first gas from South Disouq

Snapshot

“Our cashflow generation, liquidity position, and balance sheet remain strong and continue to provide us with the necessary funding to complete all of these medium-term strategic objectives.”

Egypt

Quick facts: SDX Energy Inc

Price: 20.5 GBX

Market: AIM
Market Cap: £41.97 m
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  • North African-focused oil and gas business

  • Major new field set to come onstream at South Disouq by end of 2019

  • Receivables falling in Egypt as government pays off arrears

 

What it owns

 

Morocco

Gharb Centre (75%, operator, gas)

A twelve well programme is being planned to start late in 2019 and 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.

Quality of recently shot seismic is fantastic says Paul Welch, SDX's (LON:SDX) chief executive and there is a lot of potential here, he adds.

Well costs are falling, while a huge gas contract with Peugeot started in April.

 

Egypt

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 has been pushed back until the end of 2019 due to uncertain about when early production facility (EPF) would be deployed.

Without it, the company would need to wait until the installation of the main Central Gas Processing Facility, which is currently scheduled to complete in the fourth quarter of this year.

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.

Two exploration wells planned for later in the year

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.

 

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

In August, SDX Energy Plc (LON:SDX) reported a 9% rise in first-half production following successful drilling at the Meseda field and increased gas sales in Morocco.

Production rose to a net 3,539 barrels of oil per day (boe/d) in the six months to the end of June from 3,234 boe/d a year ago.

Revenue rose 4% to US$25mln as higher production offset a decline in prices to US$57 per boe from US$62 boe last year.

The group said planning for the drilling of 12 wells in Morocco is at an “advanced stage” with the campaign expected to begin in the fourth quarter, completing in the first half of 2020.

In Egypt, first gas from the South Disouq project is expected in the fourth quarter after the construction of a central processing facility completes.

The installation and hook-up of the facility is scheduled to begin later this month.

Solid cash position

As of June 30, the company had cash of US$11mln with its US$10mln loan facility undrawn. SDX said all its drilling and development activities are fully funded from expected future cash flows and its existing sources of liquidity.

 

What the boss says: Mark Reid, interim chief executive

“Achieving first gas at South Disouq in Q4 will be transformative for the Company, as we will benefit from our 55% share of the expected production plateau of 50 MMscfe/d from Q1 2020,”

"The company continues to make good progress toward achieving its three medium-term strategic objectives of securing first gas at South Disouq in Q4 2019, executing an efficient and successful 12-well drilling campaign in Morocco in 2019/20, and continuing with our potential exploration drilling campaign in South Disouq in 2020,” 

“Production and capex from our operations remains within our guided ranges and we look forward to updating the market on the results of our drilling activities in Meseda and Morocco in the coming months.

“Our cashflow generation, liquidity position, and balance sheet remain strong and continue to provide us with the necessary funding to complete all of these medium-term strategic objectives.”

 

Inflexion points

  • South Disouq to come on stream without any additional external finance
  • Balance sheet had US$11mln net cash in June
  • Testing of SRM – 3 at South Ramadan in Egypt
  • More discoveries at Meseda

 

Blue Sky

Acquisition of more acreage – a deal to buy BP Egypt fell through a year ago

South Ramadan potential

Possibility for dividends eventually

 

 

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SDX Energy sets timeline for TSX delisting and provides update on South Disouq

SDX Energy (CVE:SDX-LON:SDX) President and CEO Paul Welch joined Proactive Investors Steve Darling on Skype to update the timing of their delisting from the Toronto Stock Exchange and solely list on the AIM market in London. Welch also providing Proactive with an update on their South...

on 8/4/19

5 min read