TIDMSDX
RNS Number : 3492O
SDX Energy Inc.
17 May 2018
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"),
THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
17 May 2018
SDX ENERGY INC
("SDX" or the "Company")
SDX ENERGY INC. ANNOUNCES ITS QUARTER TO MARCH 31, 2018
FINANCIAL AND OPERATING RESULTS
SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil
and gas company, is pleased to announce its financial and operating
results for the three months ended March 31, 2018. All dollar
values are expressed in United States dollars net to the Company
unless otherwise stated.
Highlights - three months ended March 31, 2018
Corporate and Financial
-- SDX's key financial metrics for the three months ended March
31, 2018 and 2017 are as follows
Three months ended
March 31
US$ million except per unit 2018 2017
amounts
---------- ---------
Net Revenues 11.0 8.1
---------- ---------
Netback(1) 9.0 6.1
---------- ---------
Net realized average oil/service
fees - US$/barrel 59.34 44.38
---------- ---------
Net realized average Morocco
gas price - US$/mcf 10.03 9.29
---------- ---------
Netback - US$/boe 32.80 23.60
---------- ---------
EBITDAX(1) (2) 7.4 1.6
---------- ---------
Non-cash exploration & eval'n
expense (3.3) (0.1)
---------- ---------
Depletion, depreciation and
amortization (2.5) (3.5)
---------- ---------
(Loss)/gain on acquisition (0.2) 29.5
---------- ---------
Total comprehensive income 0.3 26.9
---------- ---------
Net cash generated from operating
activities 11.0 3.1
---------- ---------
Cash and cash equivalents 29.3 21.1
---------- ---------
Note:
(1) Refer to "Non-IFRS Measures" section of this release below
for details of Netback and EBITDAX.
(2) EBITDAX for Q1 2018 and Q1 2017 includes US$1.0 million and
US$0.8 million respectively of non-cash revenue relating to the
grossing up of Egyptian Corporate Tax on the North West Gemsa PSC
which is paid by the Egyptian State on behalf of the Company.
-- The above financial metrics for the three months ended March
31, 2018 and 2017 reflect the impact of the acquisition of the
Egyptian and Moroccan businesses of Circle Oil plc (the "Circle
Acquisition") from January 27, 2017 for a consideration of US$28.1
million.
-- The main components of SDX's comprehensive income of US$0.3
million for the three months ended March 31, 2018 are;
o US$9.0 million netback for the period;
o US$3.3 million of E&E write down predominantly relating to
two sub-commercial exploration wells in Morocco;
o US$2.5 million of DD&A;
o US$1.2 million of G&A; and
o US$1.3 million of Corporate Income Tax expense.
-- Netback for the three months to March 31, 2018 was US$9.0
million, up from US$6.1 million for the three months to March 31,
2017. The increase in netback was due to;
o Q1 2018 reflecting three months of the high margin Moroccan
business whereas, due to the Circle Acquisition completing on
January 27, 2017, Q1 2017 included only two months of the Moroccan
business; and
o Q1 2018 also benefited from improved oil prices impacting
SDX's Egyptian producing assets and higher gas pricing in Morocco
due to a favourable currency movement.
-- Cash position of US$29.3 million as at March 31, 2018 was
US$3.5 million higher than the US$25.8 million reported at December
31, 2017 and US$8.2 million higher than the US$21.1 million
reported at March 31, 2017. The improved cash position reflects
strong netbacks and a reduction in non-cash working capital of
US$4.2 million from December 31, 2017, primarily as a result of a
US$6.0 million receipt of Egyptian receivables in the quarter.
-- US$9.9 million of capital expenditure has been invested into
the business during the three months ended March 31, 2018;
o US$5.8 million in Morocco. US$5.0 million of which relates to
the ongoing nine well drilling programme, and customer connection
projects and US$0.8 million of which relates to the mobilisation
cost for the upcoming 240km(2) 3D seismic programme in Gharb
Centre;
o US$1.9 million on the South Disouq drilling program, which
includes site preparation and mobilisation costs for the Ibn
Yunus-1X discovery well and site preparation costs for the three
follow up wells;
o US$2.0 million at Meseda and North West Gemsa, being the
drilling of the Rabul-5 well in Meseda and preparatory work on the
AASE-25 well and workovers in North West Gemsa; and
o US$0.2 million relating to new office equipment in Cairo and
additional technical software.
Operational Highlights
-- The Company's share of production from its operations for the
three months ended March 31, 2018 was 3,036 BOE/D and is analysed
as follows;
o North West Gemsa 1,814 BOE/D
o Meseda 558 BBL/D
o Morocco 664 BOE/D
-- As a result of the ongoing workover program in North West
Gemsa and the commencement of production from the successful
Rabul-4 and Rabul-5 wells in Meseda, production has increased in
April and May with actual production on May 15, 2018 being 3,474
BOE/D, analysed as follows;
o North West Gemsa 2,059 BOE/D
o Meseda 727 BBL/D
o Morocco 688 BOE/D
Egypt
-- In North West Gemsa (SDX 50% working interest and
non-operator), a seven well workover program has commenced and the
first well, AASE-25, of a two-well infill drilling program was spud
on March 3, 2018. AASE-25 is expected to complete in Q2 2018. The
second well, AASE-27, spud on April 24, 2018 and is also expected
to complete in Q2 2018. The anticipated result of these activities
is to stabilise H2 2018 production at approximately 4,400 BOE/D
(SDX net: 2,200 BOE/D).
-- In Meseda, (SDX 50% working interest and non-operator) the
successful appraisal well, Rabul-5, encountered 151 feet of net
heavy oil pay, with an average porosity of 18% across the Yusr and
Bakr formations. Rabul-5 followed two successful exploration wells,
Rabul-1X and Rabul-2X, that were drilled in 2017. Furthermore, on
April 24, 2018, SDX announced that the follow up Rabul-4 well
encountered approximately 43 feet of net heavy oil pay across the
Yusr and Bakr formations, with an average porosity of 16%. Rabul-4
has now been completed as a producer and connected to the central
processing facilities at Meseda. Rabul-4 and Rabul-5 combined are
currently producing at approximately 2,500 BBL/D. The rig will now
move on to the Meseda field, where it will drill two development
wells.
-- In South Disouq (SDX 55% working interest and operator), the
Company announced on April 12, 2018 that a gas discovery had been
made at its Ibn Yunus-1X exploration well. The Ibn Yunus-1X well
was drilled to a total depth of 9,068 feet and encountered 100.8
feet of net conventional natural gas pay in the Abu Madi horizon,
which had an average porosity in the pay section of 28.5%. The well
came in on prognosis but with a reservoir section that was of
better quality and thicker than pre-drill expectations. The Ibn
Yunus-1X well will be completed as a producer in the Abu Madi
section and then tested after the drilling rig has moved off
location. The testing is anticipated to commence in late May 2018.
After a successful test, it is anticipated that the well will be
connected to the infrastructure located adjacent to the original
SDX discovery in the concession, SD-1X, where production start-up
is anticipated late in 2018.
-- At South Ramadan (SDX 12.75% working interest and
non-operator), preparations are underway to fulfill the last
remaining commitment on this concession with an appraisal well
expected to be spud in late May 2018. The well is up-dip of one of
the previous producing wells in the field and, upon completion, the
Company will determine how best to optimise its position in this
concession.
Morocco
-- The Company's Moroccan acreage consists of three concessions;
Sebou, Lalla Mimouna and Gharb Centre, all of which are located in
the Gharb Basin in northern Morocco (SDX 75% working interest and
operator). Sebou and Lalla Mimouna were obtained as part of the
acquisition of Circle Oil and Gharb Centre was acquired directly
from the Moroccan State on June 1, 2017.
-- In September 2017, the Company commenced a nine well drilling programme covering six appraisal/development wells in Sebou, one appraisal/development well in Gharb Centre and two exploration wells in Lalla Mimouna.
-- The results of the well program to date are as follows with
the Company achieving seven successful wells from the nine that
have been drilled, a 78% success rate;
Permit Name Result Net Pay Rate
Sebou KSR-14 Conventional 20.0m 6.40 MMscf/d
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Sebou KSR-15 Conventional 17.2m 7.52 MMscf/d
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Sebou KSR-16 Conventional 14.2m 8.43 MMscf/d
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Gharb Centre ELQ-1 Uncommercial 2.0m Not Tested
Discovery
-------- ------------- ------------------------ ---------------
Sebou ONZ-7 Conventional 5.0m 15.34 MMscf/d
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Sebou KSS-2 Dry Hole Nil Not Tested
-------- ------------- ------------------------ ---------------
Sebou SAH-2 Conventional 5.2m 13.45 MMscf/d
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Lalla Mimouna LNB-1* Conventional Primary target Not Yet Tested
Natural Gas of 300m of gas
Discovery bearing section
encountered. Secondary
target encountered
net pay of 2.6m
-------- ------------- ------------------------ ---------------
Lalla Mimouna LMS-1** Conventional 16.4m Not Yet Tested
Natural Gas
Discovery
-------- ------------- ------------------------ ---------------
Well results announced *April 20, 2018, **May 7, 2018
-- During Q1 2018, the results of the ELQ-1, ONZ-7, KSS-2 and
SAH-2 wells were announced. ONZ-7 and SAH-2 were successfully
tested in the quarter and have been tied to existing infrastructure
as producers. The ELQ-1 and KSS-2 wells were plugged and
abandoned.
-- On April 20, 2018 and May 7, 2018, respectively, the Company
announced the successes of the LNB-1 and LMS-1 exploration wells in
the Lalla Mimouna concession.
-- The primary target of the LNB-1 well was in the Lafkerena
sequence, where 300 meters of gas bearing horizons were encountered
in a significantly over-pressured section. This section could not
be logged using conventional methods due to hole conditions,
however, the gas shows in this section contained heavier
hydrocarbon components throughout, which is indicative of a
thermogenic hydrocarbon source rock and indicates that a new
petroleum system has been encountered in this area. Based on the
mudlog shows, reservoir quality information from the formation
cuttings, analogue fields (outside the Gharb basin), and the size
of the feature as currently mapped, a preliminary un-risked
mid-case recoverable gas volume of 10.2 Bscf of conventional
natural gas and 55 thousand barrels of condensate has been
estimated by management. This is significantly larger than the
traps typically encountered in Sebou and would exceed the size
required to justify development and connection to the existing
infrastructure in the Sebou area. Additionally in the secondary
target, the Upper Dlalha, 2.6 meters of net conventional natural
gas pay sands were encountered with average porosity in the pay
section of 33%. This pay section is similar to the Guebbas targets,
from which SDX successfully produces on the Sebou permit. The LNB-1
well has been completed as a conventional gas producer in the Upper
Dlalha with the deeper Lafkerena section being suspended until the
appropriate equipment can be mobilized, to test and produce from
this over-pressured section. The timetable to test this section has
not been finalized and will be the subject of a future update.
-- The primary target of the LMS-1 well was in the H-9 sequence,
which is a Miocene aged shallow marine deposit that had not been
previously tested in the area. The well encountered 16.4 meters of
net conventional gas pay sands which had an average porosity of 32%
in an over-pressured section. Similar to the LNB-1 well, heavier
gas shows were encountered indicating the presence of a deeper
thermogenic source rock charging the structure. In addition, the
cuttings showed evidence of fluorescence indicating the potential
presence of liquid hydrocarbons within the section encountered. The
well is now being completed as a conventional natural gas producer
in the H-9 interval and once the rig has left the location, the
well will be perforated and tested. It is anticipated that the test
will be conducted approximately 30 days after the rig has departed
the location. The drilling rig is now being demobilised and
returned to the contractor as this was the last well in the
Company's nine well Moroccan program.
Outlook:
Egypt
-- North West Gemsa (50% Working Interest and non-operator)
o Targeting gross H2 2018 production of c.4,400 boepd, broadly
similar to 2017 production rates. To achieve this, two wells,
AASE-25 and AASE-27 will be drilled and seven others will be worked
over.
o The expected gross cost of the two wells, including processing
facility tie-ins, is US$6.6 million with the seven workovers
expected to cost gross US$1.7 million.
-- Meseda (50% Working Interest and non-operator)
o Targeting gross production of 3,800 bopd, a c.700 bopd
increase on 2017's level. The increase will come from drilling four
new wells in 2018, two of which, Rabul-4 and Rabul-5, have already
been discoveries. Two infill producers, located within the recently
negotiated reduced lease line stand off area updip in the Meseda
field, will complete the four well program in the second half of
2018.
o The Company also aims to replace up to five ESPs in the Meseda
field as required during normal maintenance activities.
o Gross Meseda capex in 2018 is expected to be approximately
US$6.0 million.
-- South Disouq (55% Working Interest and operator)
o A further three wells are planned in 2018, the Kelvin-1X
exploration well and two development wells (SD-4X and SD-3X). These
three wells, together with the recent Ibn-Yunus discovery well,
have an estimated gross capex cost of approximately US$12.0
million.
o Ibn Yunus-1X and Kelvin-1X are targeting up to 150bcf of
conventional natural gas in separate structures from the SD-1X
discovery. If successful, the Kelvin-1X volumes will be tied back
together with those from the Ibn Yunus discovery, to the SD-1X
processing facility.
o Upon success of SD-4X and SD-3X, SDX expects to construct the
SD-1X processing facility together with a 10-kilometer pipeline
connecting the processing facilities to the main export line. Gross
capex is estimated at approximately US$15.0 million, subject to
completion of final tenders and contracts.
o Given the above, and assuming all necessary approvals are
obtained, first gas is targeted before the end of 2018, at an
initial gross plateau production rate of approximately 50-60
MMscf/d of conventional natural gas expected from the Ibn Yunus
discovery and the three development wells in the SD-1X discovery
structure. The gas price is still under negotiation.
-- South Ramadan (12.75% Working Interest and non-operator)
o At South Ramadan, an appraisal well, which is up-dip from one
of the previous producing wells in the field, will be drilled
during Q2 2018. Total cost for the South Ramadan work programme in
2018 will be approximately US$23.5 million (SDX net: US$3.0
million), which includes some platform remediation work and a well
work over, both of which are dependent on the success of the
appraisal well.
Morocco (75% Working Interest and operator)
-- Given the recent drilling success, 2018 gross production is
targeted to increase in line with new customer tie-ins. Depending
on timing of tie-ins, SDX is targeting gross production of 8-10
MMscf/d of conventional natural gas by the end of 2018.
-- SDX's nine well Moroccan drilling programme completed on May
7, 2018 with the LMS-1 discovery. The Company will now test the
LMS-1 well in Lalla Mimouna, and commence planning for the
commercialisation of this significant new play area in the Gharb
basin.
-- In addition, in H2 2018, SDX plans to acquire 240km(2) of 3D
seismic in its Gharb Centre concession at an estimated cost of
US$6.5 million.
Corporate
-- Continue to minimise costs and crystallise synergies from the Circle Oil Acquisition; and
-- As part of the Company's strategy it continues to review and
explore opportunities to expand the asset base in the North Africa
region, including through new licencing rounds and
acquisitions.
Paul Welch, President & CEO of SDX Energy, commented:
"The first quarter of 2018 was a busy period for SDX and one
which saw the Company significantly increase its net revenue and
overall production year on year.
We also made important operational progress across our
portfolio. In Egypt, at Meseda, we enjoyed success at our Rabul-5
and Rabul-4 (post-period end) appraisal wells, which combined, are
currently producing approximately 2,500 BBL/D. We also announced a
discovery at our Ibn Yunus-1X well on South Disouq in April, where
production start-up is anticipated to occur late 2018. At North
West Gemsa, where we have commenced a seven well workover program,
a delay in the drilling of two infill wells led to production being
temporarily below previous guidance. However, I am pleased to
report that, based on the workover results so far in the 2(nd)
quarter and the expected results of the drilling, we are on track
to stabilise production, at a gross rate of c.4,400 BOE/D for the
remainder of H2 2018.
In Morocco, we announced seven gas discoveries from our nine
well drilling programme, a 78% success rate throughout the
campaign. The last two exploration wells, one of which reached
total depth post-period end, were very significant successes and
have opened up new producing areas for the Company. We also
successfully tested the ONZ-7 and SAH-2 wells achieving some of the
highest flow rates seen in the basin and these wells have now been
tied into the existing infrastructure as producers.
Throughout the period, we remained focused on strict capital
discipline and continued to monitor opportunities that would enable
us to increase our asset base in North Africa. As at March 31,
2018, we are well funded for our numerous work commitments this
year with US$29.3 million of cash, no debt and we remain on track
to double our production by the end of 2018."
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim consolidated financial statements with
Management's Discussion and Analysis for Q1 2018 are now available
on the Company's website at www.sdxenergy.com and on SEDAR at
www.sedar.com.
Financial Statements
Prior Three months
Quarter ended March 31
----------------------------------- --------- ------------------
$000s except per unit amounts 2018 2017
----------------------------------- --------- --------
FINANCIAL
----------------------------------- --------- --------
Gross Revenues 13,972 14,763 11,124
Royalties (2,968) (3,803) (2,988)
Net Revenues 11,004 10,960 8,136
Operating costs (2,526) (1,994) (2,048)
Netback 8,478 8,966 6,088
EBITDAX 7,663 7,389 1,646
Total comprehensive (loss)/income (2,621) 331 26,947
per share - basic (0.10) (0.00) 0.17
Cash, end of period 25,844 29,277 21,052
Working capital (excluding
cash) 20,881 13,814 18,987
Capital expenditures 15,302 9,948 822
Total assets 141,057 140,497 132,794
Shareholders' equity 114,619 115,282 102,964
Common shares outstanding
(000's) 204,493 204,493 186,900
OPERATIONAL
----------------------------------- --------- -------- --------
NW Gemsa oil sales (bbl/d) 1,710 1,507 1,493
Block-H Meseda production
service fee (bbl/d) 561 558 646
Morocco gas sales (boe/d) 680 664 441
Other products sales (boe/d) 310 307 287
Total oil sales and production
service fee boe/d 3,261 3,036 2,867
---------
Realized oil price (US$/bbl) 57.77 62.81 48.73
Realized service fee (US$/bbl) 44.11 50.00 34.34
----------------------------------- --------- -------- --------
Realized oil sales and production
service fees ($/bbl) 54.39 59.34 44.38
----------------------------------- --------- --------
Realized Morocco gas price
(US$/mcf) 9.72 10.03 9.29
Royalties ($/bbl) 9.89 13.92 11.37
Operating costs ($/bbl) 8.42 7.30 7.94
Netback ($/bbl) 28.26 32.80 23.60
About SDX
SDX is an international oil and gas exploration, production and
development company, headquartered in London, England, UK, with a
principal focus on North Africa. In Egypt, SDX has a working
interest in two producing assets (50% North West Gemsa & 50%
Meseda) located onshore in the Eastern Desert, adjacent to the Gulf
of Suez. In Morocco, SDX has a 75% working interest in the Sebou
concession situated in the Rharb Basin. These producing assets are
characterised by exceptionally low operating costs making them
particularly resilient in a low oil price environment. SDX's
portfolio also includes high impact exploration opportunities in
both Egypt and Morocco.
For further information, please see the website of the Company
at www.sdxenergy.com or the Company's filed documents at
www.sedar.com.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the
London Stock Exchange the technical information contained in the
announcement has been reviewed and approved by Paul Welch, Chief
Executive Officer of SDX. Mr. Welch, who has over 30 years of
experience, is the qualified person as defined in the London Stock
Exchange's Guidance Note for Mining and Oil and Gas companies. Mr.
Welch holds a BS and MS in Petroleum Engineering from the Colorado
School of Mines in Golden, CO. USA and an MBA in Finance from SMU
in Dallas, TX USA and is a member of the Society of Petroleum
Engineers (SPE).
For further information:
SDX Energy Inc.
Paul Welch
President and Chief Executive Mark Reid
Officer Chief Financial Officer
Tel: +44 203 219 5640 Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint
Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Cantor Fitzgerald Europe (Joint Broker)
David Porter
Tel: +44 207 7894 7000
GMP FirstEnergy (Joint Broker)
Jonathan Wright/David van Erp
Tel: +44 207 448 0200
Celicourt (PR)
Mark Antelme/Jimmy Lea/Ollie Mills
Tel: +44 207 520 9260
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as such term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Glossary
"bbl" stock tank barrel
"boepd" & "boe/d" barrels of oil equivalent per
day
------------------------------
"bopd" & "bbl/d" barrels of oil per day
------------------------------
"Bcf" billion standard cubic feet
------------------------------
"DD&A" depreciation, depletion and
amortisation
------------------------------
"E&E" exploration and evaluation
------------------------------
"ESP" electrical submersible pump
------------------------------
"G&A" general and administrative
------------------------------
"mcf" thousands of cubic feet
------------------------------
"MMscf/d" million standard cubic feet
per day
------------------------------
Forward--Looking Information
Certain statements contained in this press release may
constitute "forward--looking information" as such term is used in
applicable Canadian securities laws. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or are not statements of historical fact should be viewed as
forward-looking information. In particular, statements regarding
the Company's plans, production targets, volume targets, drilling,
production start-up dates, seismic work, customer tie ins, pipeline
and processing facility completion, ESP replacement,
commercialization plans and the timing and costs thereof, as well
as capital expenditures, operational expenditures and the Company's
2018 outlook and corporate strategy, should all be regarded as
forward-looking information.
The forward-looking information contained in this document is
based on certain assumptions and although management considers
these assumptions to be reasonable based on information currently
available to them, undue reliance should not be placed on the
forward-looking information because SDX can give no assurances that
they may prove to be correct. This includes, but is not limited to,
assumptions related to, among other things, commodity prices and
interest and foreign exchange rates; planned synergies, capital
efficiencies and cost--savings; applicable tax laws; future
production rates; receipt of necessary permits; the sufficiency of
budgeted capital expenditures in carrying out planned activities;
and the availability and cost of labor and services.
All timing given in this announcement, unless stated otherwise
is indicative and while the Company endeavors to provide accurate
timing to the market, it cautions that due to the nature of its
operations and reliance on third parties this is subject to change
often at little or no notice. If there is a delay or change to any
of the timings indicated in this announcement, the Company shall
update the market without delay.
Forward-looking information is subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward--looking statements. Such risks and other
factors include, but are not limited to political, social and other
risks inherent in daily operations for the Company, risks
associated with the industries in which the Company operates, such
as: operational risks; delays or changes in plans with respect to
growth projects or capital expenditures; costs and expenses;
health, safety and environmental risks; commodity price, interest
rate and exchange rate fluctuations; environmental risks;
competition; permitting risks; ability to access sufficient capital
from internal and external sources; and changes in legislation,
including but not limited to tax laws and environmental
regulations. Readers are cautioned that the foregoing list of risk
factors is not exhaustive and are advised to reference SDX's
Management's Discussion & Analysis for the three months ended
March 31, 2018, which can be found on SDX's SEDAR profile at
www.sedar.com, for a description of additional risks and
uncertainties associated with SDX's business, including its
exploration activities.
The forward--looking information contained in this press release
is as of the date hereof and SDX does not undertake any obligation
to update publicly or to revise any of the included
forward--looking information, except as required by applicable law.
The forward--looking information contained herein is expressly
qualified by this cautionary statement.
Non-IFRS Measures
This news release contains the terms "Netback," and "EBITDAX"
which are not recognized measures under IFRS and may not be
comparable to similar measures presented by other issuers. The
Company uses these measures to help evaluate its performance.
Netback is a non-IFRS measure that represents sales net of all
operating expenses and government royalties. Management believes
that netback is a useful supplemental measure to analyze operating
performance and provide an indication of the results generated by
the Company's principal business activities prior to the
consideration of other income and expenses. Management considers
netback an important measure as it demonstrates the Company's
profitability relative to current commodity prices. Netback may not
be comparable to similar measures used by other companies. See
Netback reconciliation to operating income/(loss) in note 20 to the
Interim Consolidated Financial Statements.
EBITDAX is a non-IFRS measure that represents earnings before
interest, tax, depreciation, amortization, exploration expense and
impairment which is operating income/(loss) adjusted for the add
back of depreciation and amortization, exploration expense and
impairment of property, plant and equipment (if applicable).
EBITDAX is presented in order for the users of the financial
statements to understand the cash profitability of the Company,
which excludes the impact of costs attributable to exploration
activity, which tend to be one-off in nature, and the non-cash
costs relating to depreciation, amortization and impairments.
EBITDAX may not be comparable to similar measures used by other
companies. See EBITDAX reconciliation to operating income/(loss) in
note 20 to the Interim Consolidated Financial Statements.
Oil and Gas Advisory
Certain disclosure in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 of the
Canadian Securities Administrators because the disclosure in
question may, in the opinion of a reasonable person, indicate the
potential value or quantities of resources in respect of the
Company's resources or a portion of its resources. Without
limitation, the anticipated results disclosed in this news release
include estimates of volume and flow rate attributable to the
resources of the Company. Such estimates have been prepared by
management of the Company and have not been prepared or reviewed by
an independent qualified reserves evaluator or auditor. Anticipated
results are subject to certain risks and uncertainties, including
those described above and various geological, technical,
operational, engineering, commercial and technical risks. In
addition, the geotechnical analysis and engineering to be conducted
in respect of such resources is not complete. Such risks and
uncertainties may cause the anticipated results disclosed herein to
be inaccurate. Actual results may vary, perhaps materially.
In addition to the uncertainties listed above, due to the level
of information available, there is still uncertainty associated
with the volume estimates prepared by management for the Ibn Yunus
discovery and Kelvin prospect in Egypt, and the LNB-1 discovery in
Morocco. Some of the risks and uncertainties are outlined
below:
-- Petrophysical parameters and quality estimates of the
reservoir section.
-- Fluid composition, especially heavy end hydrocarbons and the
potential presence of associated liquids.
-- Accurate estimation of reservoir conditions (pressure and
temperature), currently unknown but roughly estimated based on mud
weight range while drilling of 1.6-1.65 Specific Gravity.
-- Reservoir drive mechanism.
-- Potential well deliverability and long-term
sustainability.
-- The thickness and quality of the reservoir section away from
the well penetration location.
Use of the term "BOE" may be misleading, particularly if used in
isolation. A "BOE" conversion ratio of 6 Mcf: 1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
This information is provided by RNS
The company news service from the London Stock Exchange
END
DRLLLFEAELIRLIT
(END) Dow Jones Newswires
May 17, 2018 02:01 ET (06:01 GMT)
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