TIDMSDX
RNS Number : 6556T
SDX Energy Inc.
22 March 2019
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.
22 March 2019
SDX ENERGY INC
("SDX" or the "Company")
SDX ENERGY INC. ANNOUNCES FOURTH QUARTER AND YEAR- 2018
FINANCIAL AND OPERATING RESULTS AND PROVIDES GUIDANCE FOR 2019
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 and year ended December 31, 2018 (with
full-year results prepared on an audited basis). The Company's full
annual audited financial statements (the "Annual Consolidated
Financial Statements") and annual report have been published on the
Company website at www.sdxenergy.com and on SEDAR at www.sedar.com.
All monetary values are expressed in United States dollars net to
the Company unless otherwise stated.
Reserves
-- As at December 31, 2018, the Company's working interest share
of audited 2P reserves was 13.1 mmboe(1) . The Company's 2P
reserves estimate has been audited in accordance with the COGE
Handbook by ERC Equipoise Limited, an independent qualified
reserves evaluator and auditor.
Corporate and financial
-- SDX's key financial metrics for the three and twelve months
ended December 31, 2018 and 2017 are:
Three months ended Twelve months
December 31 ended December
31 (audited)
US$ million, except per unit 2018 2017 2018 2017
amounts
---------- --------- -------- --------
Net revenues 13.8 11.0 53.7 39.2
---------- --------- -------- --------
Netback(2) 10.4 8.5 41.7 28.9
---------- --------- -------- --------
Net realized average oil price/service
fees - US$/barrel 59.07 54.39 62.43 46.70
---------- --------- -------- --------
Net realized average Morocco
gas price - US$/mcf 9.78 9.72 10.33 9.51
---------- --------- -------- --------
Netback - US$/boe 28.94 28.26 32.01 24.47
---------- --------- -------- --------
EBITDAX(2) (3) 7.1 8.0 34.3 21.4
---------- --------- -------- --------
Exploration & evaluation expense
("E&E") (0.2) - (5.7) (0.2)
---------- --------- -------- --------
Depletion, depreciation and
amortization ("DD&A") (6.3) (4.8) (17.3) (17.8)
---------- --------- -------- --------
Impairment expense (3.5) - (3.5) -
---------- --------- -------- --------
(Loss)/gain on acquisition - (4.7) (0.2) 29.6
---------- --------- -------- --------
Total comprehensive (loss)/income (4.0) (3.4) 0.1 28.3
---------- --------- -------- --------
Net cash generated from operating
activities 8.9 15.1 36.2 21.6
---------- --------- -------- --------
Cash and cash equivalents 17.4 25.8 17.4 25.8
---------- --------- -------- --------
Note:
(1) Using a conversion ratio of 5.8 Mcf:1 boe.
(2) Refer to the "Non-IFRS Measures" section of this release
below and the Company's MD&A for the three and twelve months
ended December 31, 2018 and 2017 for details of netback and
EBITDAX.
(3) EBITDAX for Q4 2018 and 2017 and twelve months to December
31, 2018 and 2017 includes US$1.4 million and US$0.9 million, and
US$5.0 million and US$3.6 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 and twelve months
ended December 31, 2018 reflect the impact of the acquisition of
the Egyptian and Moroccan businesses of Circle Oil plc (the "Circle
Acquisition") from January 27, 2017 for consideration of US$28.1
million.
-- The main components of SDX's comprehensive income of US$0.1
million for the twelve months ended December 31, 2018 are:
o US$41.7 million netback;
o US$5.7 million of E&E, of which US$5.1 million related to
two sub-commercial wells in Morocco and one sub-commercial well in
Egypt;
o US$17.3 million of DD&A;
o US$3.5 million impairment on North West Gemsa as a result of
the recent reduction in Brent crude oil price forecasts reducing
the asset's economic life;
o US$4.8 million of G&A; and
o US$2.5 million of transaction costs covering M&A
activities and the proposed re-domicile of the Company from Canada
to the UK.
-- Netback for the twelve months ended December 31, 2018 was
US$41.7 million, up from US$28.9 million for the twelve months to
December 31, 2017. This increase has been driven by 2018 production
increasing to 3,574 boe/d from 3,237 boe/d in 2017, and 2018
realized average prices increasing to US$62.43/bbl and US$10.33/mcf
respectively for natural gas liquids and Moroccan natural gas,
compared to US$46.70/bbl and US$9.51/mcf in 2017.
-- The cash position of US$17.4 million as at December 31, 2018
is US$8.4 million lower than the US$25.8 million as at December 31,
2017. This cash movement reflects strong 2018 operating cashflows
of US$36.2 million (2017: US$21.6 million) as a result of improving
netbacks and a US$13.4 million reduction in predominantly Egyptian
receivables, which enabled the Company to fund the US$44.0 million
capital investment program discussed below. In addition, the
Company's three year, US$10.0 million credit facility established
in July 2018 with the European Bank for Reconstruction and
Development ("EBRD"), remains undrawn.
-- US$44.0 million of capital expenditure has been invested into
the business during the twelve months ended December 31, 2018. This
comprised of:
o US$20.3 million in Morocco, comprising US$13.9 million for the
now completed nine-well drilling program and customer connection
projects, and US$6.4 million relating to the 240km(2) 3D seismic
program in Gharb Centre;
o US$10.6 million for the South Disouq drilling program,
including US$8.5 million for the drilling of the Ibn Yunus-1X,
SD-4X and SD-3X discovery wells and the sub-commercial Kelvin-1X
well, and US$2.1 million for the equipment mobilization and start
of data collection for the 170km(2) 3D seismic program;
o US$7.9 million in North West Gemsa for the AASE-25, AASE-27
and Al-Ola-4 development wells and the ongoing well workover
program;
o US$1.9 million in Meseda for the Rabul-5, Rabul-4, MSD-16 and
MSD-15 development wells and the ongoing electrical submersible
pump ("ESP") replacement program;
o US$2.6 million in South Ramadan for the SRM-3 well drilled in
the year, the results of which are currently being assessed;
and
o US$0.7 million relating to new office equipment in Cairo and
additional technical software.
-- Trade and other receivables have reduced to US$24.3 million
as at December 31, 2018, (2017: US$37.7 million), a 36% reduction.
A further US$7.65 million reduction has been achieved post-year end
as a result of an agreed offset of trade receivables due from the
State against costs due to State contractors used on the South
Disouq development project.
Operational highlights
-- The Company's entitlement share of production from its
operations for the year ended December 31, 2018 was 3,574 boe/d
(gross - 9,100 boe/d) split as follows:
o North West Gemsa 2,194 boe/d (gross - 4,388 boe/d)
o Meseda 734 bbl/d (gross - 3,851 bbl/d)
o Morocco 646 boe/d (gross - 861 boe/d)
-- As a result of the ongoing workover program in Meseda and the
new customer connections in Morocco, post-period end production has
increased in both of these concessions. Production in North West
Gemsa is currently below budget due to three wells being offline
for pump replacements and other workovers. It is expected that
these wells will come back on stream during Q2 and Q3 adding
500-750 boe/d to gross production. As at March 21, 2019, actual
entitlement production for Egypt and Morocco amounted to 3,408
boe/d (gross - 9,064 boe/d) split as follows:
o North West Gemsa 1,797 boe/d (gross - 3,598 boe/d)
o Meseda 848 bbl/d (gross - 4,449 bbl/d)
o Morocco 763 boe/d (gross - 1,017 boe/d)
Egypt
-- In North West Gemsa (SDX 50% working interest and
non-operator), a three-well infill drilling program was undertaken
together with a seven-well workover program. The three new infill
wells, AASE-25, AASE-27 and Al Ola-4, were all successfully drilled
and completed as new producers. AASE-25 was targeting an un-swept
area of the field in the Rahmi sand and encountered 32 feet of net
light crude oil-bearing pay in this section. The well was
subsequently completed as a producer in the Rahmi and is currently
producing approximately 810 boe/d of light crude oil. AASE-27 was
also targeting an un-swept area of the field in the Rahmi and
encountered 13.5 feet of net light crude oil-bearing pay. The well
was completed as a producer in the Rahmi and is currently producing
approximately 260 boe/d of light crude oil. Al Ola-4 was drilled as
a replacement well in the Rahmi after the original well failed
because of a mechanical problem. Al Ola-4 encountered 14 feet of
net light crude oil-bearing in the Rahmi section and, on test,
flowed 1,011 boe/d. It is currently producing approximately 894
boe/d of light crude oil. The results of these wells and the
ongoing workover program resulted in an average field production
rate for the year of approximately 4,388 (SDX net: 2,194 boe/d),
which was in line with the Company's 2018 guidance.
-- In Meseda (SDX 50% working interest and joint operator), an
ESP replacement program was undertaken during the year and four
development wells were successfully drilled and completed: Rabul-5,
Rabul-4, MSD-16 and MSD-15. Rabul-5 encountered 151 feet of net
heavy crude oil pay, with an average porosity of 18% across the
Yusr and Bakr formations and Rabul-4 encountered 43 feet of net
heavy crude oil pay, also across the Yusr and Bakr formations, with
an average porosity of 16%. Both wells were completed and placed on
production with Rabul-5 currently producing approximately 500 bbl/d
of heavy crude oil and Rabul-4 producing approximately 250 bbl/d of
heavy crude oil. MSD-16 was drilled as a crestal infill producer in
a newly available area of the field 100 meters from the concession
boundary after an agreement was reached with the offset operator to
reduce the boundary stand-off limits. The well encountered 176 feet
of net heavy crude oil pay in the ASL reservoir section with an
average porosity of 22%. The well was completed as a producer in
the ASL using an ESP pump to provide artificial lift and is
currently producing approximately 1,100 bbl/d of heavy crude oil. A
second lease line development well, MSD-15, was successfully
completed after encountering 226 feet of net heavy crude oil pay in
the ASL section and is currently producing approximately 300 bbl/d
using an ESP to provide artificial lift. The Rabul-2R well was
completed during Q4 2018, accessing additional volumes in the
original Rabul-2 area, with incremental production of approximately
150 bbl/d of heavy crude oil from this well. The results of these
wells and the ongoing workover program resulted in an average field
production rate for the year of 3,851 bbl/d of heavy crude oil (SDX
net: 734 bbl/d) which was in line with the Company's 2018
guidance.
-- In South Disouq (SDX 55% working interest and operator), the
Company completed four wells during the year, three of which were
conventional natural gas discoveries in the Abu Madi and Kafr el
Sheik horizons. Details and test results from the wells are shown
below:
Date Name Result Net pay Porosity Rate
April 12, Ibn Yunus-1X Conventional 101 ft 39.3 MMscf/d
2018 natural gas 28.5%
discovery
------------- ------------- ---------------- --------- -------------
May 22, Kelvin Uncommercial n/a - low Not tested
2018 -1X discovery gas saturation 21.0%
------------- ------------- ---------------- --------- -------------
June 18, SD-4X Conventional 89 ft 30.4 MMscf/d
2018 natural gas 24.0%
discovery
------------- ------------- ---------------- --------- -------------
July 23, SD-3X Conventional 33 ft 16.1 MMscf/d
2018 natural gas 21.7%
discovery
------------- ------------- ---------------- --------- -------------
-- During H1 2019, SDX will complete construction of the central
processing facility, the 10 km export pipeline, and the tie-ins for
the above three discoveries and the initial SD-1X discovery well,
which was drilled in 2017. First gas is targeted for mid-2019, at a
gross plateau production rate of between 50 and 60 MMscf/d, with
the conventional natural gas being sold to the Egyptian National
Gas Holding Company ("EGAS") at a price of US$2.85/Mcf.
-- Prospect inventory for future drilling is expected to
increase with the interpretation of the recently acquired 170 km(2)
of 3D seismic in the southern section of the concession. The
Company is planning to drill two further exploration wells in 2019,
with multiple additional conventional gas prospects and a
conventional oil prospect already identified for drilling in future
periods.
-- At South Ramadan (SDX 12.75% working interest and
non-operator), the SRM-3 appraisal well was spud on June 14, 2018
and reached a target depth of 15,635 feet. The operator reported
encountering 75 feet of net conventional oil pay in the Matulla
section (primary target), 20 feet of net conventional oil pay in
the Brown Limestone formation, and a further 15 feet of net
conventional oil pay in the Sudr section. The Company continues to
review technical data from the well result and will provide further
updates to the market in due course.
Morocco
-- The Company's Moroccan acreage (SDX 75% working interest and
operator) consists of five concessions, all of which are located in
the Gharb Basin in northern Morocco: Sebou, Lalla Mimouna Nord,
Gharb Centre, Lalla Mimouna Sud, and Moulay Bouchta Ouest.
-- During 2018, the Company completed a nine-well drilling
program, starting in September 2017, which covered six
appraisal/development wells in Sebou, one appraisal/development
well in Gharb Centre, and two exploration wells in Lalla Mimouna
Nord.
-- Out of the nine wells drilled, seven were successful,
including the LNB-1 and LMS-1 exploration wells in Lalla Mimouna
Nord, which resulted in a two-year extension being granted to the
concession, extending its validity from July 2018 to July 2020 with
no additional work commitments.
-- In Q3 2018, the Company successfully completed the
acquisition and processing of a 240 km(2) 3D seismic acquisition
program in Gharb Centre and began an initial interpretation in
advance of a proposed 12-well drilling campaign to take place
between Q3 2019 and Q2 2020.
-- During the year, the Company began selling natural gas to the
following new customers: Peugeot, Extralait, and GPC Kenitra. In
addition, post-period end, natural gas sales to another new
customer, Setexam, began and natural gas sales agreements were
signed with Citic Dicastal and Omnium Plastic.
-- Post-period end, on February 7, 2019, the Company announced
the acquisition of the Lalla Mimouna Sud and Moulay Bouchta Ouest
concessions from the Government of Morocco.
-- The Moulay Bouchta Ouest exploration concession has been
awarded to SDX for a period of eight years with a commitment to
reprocess 150 km of 2D seismic data, acquire 100 km(2) of new 3D
seismic, and drill one exploration well within the first 3.5 year
period.
-- The Lalla Mimouna Sud exploration concession has been
re-awarded to SDX for a period of eight years with a commitment to
acquire 50 km(2) of 3D seismic and drill one exploration well
within the first three-year period. The 3D seismic commitment was
met as part of the recent Gharb Centre 240 km(2) 3D seismic
acquisition program described above.
Outlook:
Egypt
-- North West Gemsa (50% working interest)
o Targeting gross average 2019 production of 3,400-3,600
boe/d.
o As the field is now fully developed, gross capex in 2019 is
expected to be approximately US$4 million (US$2 million net to SDX)
consisting of up to 10 well workovers and infrastructure
maintenance, but no additional new wells.
-- Meseda (50% working interest)
o Targeting gross average 2019 production of 4,000-4,200
bbl/d.
o The operator plans to drill two wells in H1 2019, one in
Rabul, which will continue to develop the discovery area, and one
development location in the Meseda field. In addition, two water
injection wells are currently planned, one in Rabul and one in
Meseda.
o The operator also plans to replace up to five ESPs in the
wider Meseda area and upgrade water handling capabilities at the
field facilities.
o Gross capex in 2019 is expected to be approximately US$8
million (US$4 million net to SDX of which US$1.6 million relates to
the two planned wells and the two water injection wells and US$2.4
million relates to ESP replacements and the facilities
upgrade).
-- South Disouq (55% working interest)
o During H1 2019, SDX will complete construction of the central
processing facility, the 10 km export pipeline and the tie-ins for
the four existing production wells.
o First gas is targeted for mid-2019, at a gross plateau
production rate of between 50 and 60 MMscf/d, with the conventional
natural gas being sold to the State ("EGAS") at a price of
US$2.85/Mcf.
o Prospect inventory for future drilling is expected to increase
with the interpretation of the recently acquired 170 km(2) of 3D
seismic in the southern section of the concession.
o The Company is planning to drill two further exploration wells
in 2019, with multiple additional conventional gas prospects and a
conventional oil prospect identified for future drilling from the
existing seismic.
o Gross capex in 2019 is expected to be approximately US$40.0
million (US$22.0 million net to SDX, of which approximately US$18.5
million relates to the South Disouq development activities and
US$3.5 million relates to the two planned exploration wells).
Post-period end, the Company has offset US$7.65 million of its
accounts receivable due from EGPC against costs incurred with
Egyptian State contractors on the South Disouq development.
-- South Ramadan (12.75% working interest)
o The Company continues to review technical data from the
recently announced SRM-3 well result and will provide further
updates to the market in due course.
Morocco (75% working interest)
-- SDX is targeting gross production of 9-11 MMscf/d of
conventional natural gas sales by the end of 2019.
-- The Company's 240 km(2) 3D seismic acquisition program in
Gharb Centre has now been processed and an initial interpretation
is completed. The data quality is excellent and, as a result,
multiple leads and prospects have been identified. An inversion of
the dataset will now take place after which a ranking and selection
exercise will be undertaken to determine prospects for the proposed
12-well drilling campaign to take place between Q3 2019 and Q2
2020.
-- Planning for the drilling campaign has now begun, with three
wells expected to be drilled during 2019.
-- During this campaign, the LNB-1 and LMS-1 discoveries in
Lalla Mimouna Nord, originally drilled in 2018, will be appraised,
and another similar prospect in the area will be drilled. The
remainder of the program's targets will come from the recently
acquired Gharb Centre 3D seismic.
-- The 2019 total gross capex is expected to be approximately
US$10.0 million with SDX's share being approximately US$8.0
million. Out of this US$8.0 million, US$6.0 million relates to the
three planned wells and US$2.0 million relates to the Company's
share of facilities and field maintenance capex.
Corporate
-- Subject to shareholder and court approval, the Company plans
to relocate its corporate residence from Canada to the UK, with a
group reorganisation, and delist from the TSX-V. It is expected
that this process will be completed in Q2 2019 and will result in
meaningful annual savings in administrative costs, management time,
and a more tax efficient corporate structure.
-- 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 new licencing rounds and acquisitions.
Paul Welch, President & CEO of SDX Energy, commented:
"During 2018, we achieved strong operational success across our
portfolio, significantly grew our annual cash flows, achieved our
Egyptian production targets and began to grow our Moroccan business
meaningfully. Thus making 2018 another successful year for the
Company.
In Egypt, we completed our drilling program at South Disouq,
with an 80% success rate, and stand poised to achieve first gas
from the concession in mid-2019. At Meseda and North West Gemsa we
achieved seven discoveries from seven wells drilled and undertook
successful ESP replacement/workover programs in both concessions.
We also reduced our trade and other receivables by 36% (US$13.4
million), during the course of the year, allowing us to
significantly increase our investment program without requiring any
external funding. This increase has continued post-period end, with
a further US$7.65 million of trade receivables in Egypt being
offset against costs from State contractors used on the South
Disouq development project.
In Morocco, we completed our highly successful drilling campaign
in-country, amassing seven discoveries from nine wells. We also
acquired and processed a 240 km(2) 3D seismic program at our Gharb
Centre licence, which has yielded further drilling targets for our
12-well drilling campaign, expected to begin in Q3 2019. We also
signed gas sales agreements with several new customers, all of
which are expected to be highly beneficial to the value of our
business in the future.
Our focus remains on realizing value for shareholders through
low-cost, high-margin production across our current portfolio. We
are looking forward to another exciting year in 2019 and will keep
all our shareholders updated throughout the period."
KEY FINANCIAL & OPERATING HIGHLIGHTS
Audited consolidated financial statements with Management's
Discussion and Analysis for the three and twelve months ended
December 31, 2018 are now available on the Company's website at
www.sdxenergy.com and on SEDAR at www.sedar.com.
Three months Twelve months
Prior ended December ended December
Quarter 31 31
----------------------------------- --------- ------------------- -------------------- ---------
$000s except per unit amounts 2018 2017 2018 2017
----------------------------------- --------- --------- ---------
FINANCIAL
----------------------------------- --------- --------- ---------
Gross revenues 21,444 18,725 13,972 73,055 52,493
Royalties (6,037) (4,885) (2,968) (19,376) (13,327)
Net revenues 15,407 13,840 11,004 53,679 39,166
Operating costs (3,380) (3,392) (2,526) (11,934) (10,254)
Netback (1) 12,027 10,448 8,478 41,745 28,912
EBITDAX (1) 10,955 7,103 7,959 34,306 21,401
Total comprehensive income/(loss) 3,169 (4,029) (2,621) 112 28,307
Net income/(loss) per share
- basic 0.015 (0.020) (0.010) 0.001 0.156
Cash, end of period 18,713 17,345 25,844 17,345 25,844
Working capital (excluding
cash) 14,477 12,064 20,881 12,064 20,881
Capital expenditures 11,017 8,316 15,302 44,023 21,040
Total assets 146,239 138,107 141,057 138,107 141,057
Shareholders' equity 119,848 116,039 114,619 116,039 114,619
Common shares outstanding
(000's) 204,706 204,723 204,493 204,723 204,493
OPERATIONAL
NW Gemsa oil sales (bbl/d) 1,987 1,808 1,710 1,743 1,733
Block-H Meseda production
service fee (bbl/d) 802 864 561 734 595
Morocco gas sales (boe/d) 615 648 680 646 596
Other products sales (boe/d) 485 604 310 451 313
----------------------------------- --------- -------- --------- ---------------- ---------
Total sales volumes (boe/d) 3,889 3,924 3,261 3,574 3,237
----------------------------------- --------- --------- ---------
Realized oil price (US$/bbl) 70.76 62.77 57.77 66.42 50.02
Realized service fee (US$/bbl) 55.50 51.34 44.11 52.96 37.05
----------------------------------- --------- --------- ---------
Realized oil sales price
and service fees ($/bbl) 66.38 59.07 54.39 62.43 46.70
----------------------------------- --------- --------- ---------
Realized Morocco gas price
(US$/mcf) 11.05 9.78 9.72 10.33 9.51
Royalties ($/bbl) 16.88 13.53 9.89 14.86 11.28
Operating costs ($/bbl) 9.45 9.40 8.42 9.15 8.68
Netback ($/bbl) (1) 33.62 28.94 28.26 32.01 24.47
(1) Refer to the "Non-IFRS Measures" section of this release
below and the Company's MD&A for the three and twelve months
ended December 31, 2018 and 2017 for details of netback and
EBITDAX.
Consolidated Balance
Sheet
(US$'000s) As at December As at December
31, 2018 31, 2017
-------------------- ---------------------------------------- ---------------------------------------
Assets
Cash and cash
equivalents 17,345 25,844
Trade and other
receivables 24,324 37,656
Inventory 5,236 5,157
------------------------- ---------------------------------------- ---------------------------------------
Current assets 46,905 68,657
Investments 3,394 2,724
Property, plant and
equipment 48,680 54,445
Exploration and
evaluation
assets 39,128 15,231
---------------------- ---------------------------------------
Non-current assets 91,202 72,400
Total
assets 138,107 141,057
------------------------- ---------------------------------------
Liabilities
Trade and other
payables 14,418 19,459
Deferred income 495 495
Decommissioning
liability 1,125 1,063
Current income
taxes 1,458 915
--------------------- ---------------------------------------- ---------------------------------------
Current liabilities 17,496 21,932
Deferred income 240 737
Decommissioning
liability 4,042 3,479
Deferred income
taxes 290 290
--------------------- ---------------------------------------
Non-current
liabilities 4,572 4,506
Total liabilities 22,068 26,438
--------------------- ---------------------------------------
Equity
Share capital 88,899 88,785
Contributed surplus 6,860 5,666
Accumulated other
comprehensive
loss (917) (917)
Retained earnings 21,197 21,085
Total equity 116,039 114,619
--------------------- ---------------------------------------
Equity and
liabilities 138,107 141,057
--------------------- ---------------------------------------
Consolidated Statement of Comprehensive Income
Twelve months ended December
31
(US$'000s) 2018 2017
------------------------------------------ ----------------------------- -----------------------------
Revenue, net of
royalties 53,679 39,166
-------------------------------------------- ----------------------------- -----------------------------
Revenue
Direct operating
expense (11,934) (10,254)
Gross profit 41,745 28,912
Exploration and evaluation expense (5,744) (187)
Depletion, depreciation and amortisation (17,268) (17,824)
Impairment expense (3,520) -
Stock-based compensation (1,194) (538)
Share of profit from joint venture 1,195 1,022
Bad debt expense (123) -
Release of historic operational tax provision 300 -
(Inventory write-off)/reversal of inventory
provision (370) 798
Gain on sale of office 23 -
asset
General and administrative expenses
- Ongoing general and administrative expenses (4,815) (6,420)
- Transaction
costs (2,455) (2,373)
------------------------------------------- ----------------------------- -----------------------------
Operating
income 7,774 3,390
Net finance expense (542) (129)
Foreign exchange
gain 75 29
(Loss)/gain on
acquisition (174) 29,558
Income before income
taxes 7,133 32,848
Current income tax
expense (7,021) (4,541)
Deferred income tax - -
expense
--------------------------------------------- -----------------------------
Total current and deferred income tax expense (7,021) (4,541)
Total comprehensive income for the period 112 28,307
---------------------------------------------- ----------------------------- -----------------------------
Net income per
share
Basic $0.001 $0.153
Diluted $0.001 $0.151
------------------------------------------ -----------------------------
Consolidated Statement of
Changes in Equity
Twelve months ended December
31
(US$'000s) 2018 2017
-------------------------------- ---------------------------------- ---------------------------------
Share capital
Balance, beginning
of period 88,785 40,275
Issuance of common
shares 114 49,589
Share issue costs - (1,079)
--------------------------------- ---------------------------------- ---------------------------------
Balance, end
of period 88,899 88,785
Contributed surplus
Balance, beginning
of period 5,666 5,128
Stock-based compensation for
the period 1,194 538
----------------------------------- ---------------------------------- ---------------------------------
Balance, end
of period 6,860 5,666
Accumulated other comprehensive
loss
Balance, beginning
of period (917) (917)
Balance, end
of period (917) (917)
Retained earnings/(accumulated
loss)
Balance, beginning
of period 21,085 (7,222)
Total comprehensive income
for the period 112 28,307
----------------------------------- ---------------------------------- ---------------------------------
Balance, end
of period 21,197 21,085
Total equity 116,039 114,619
--------------------------------- ---------------------------------
Consolidated Statement
of Cash Flows
Twelve months ended December
31
(US$'000s) 2018 2017
---------------------------- ----------------------------------- ------------------------------------
Cash flows generated from/(used
in)
operating activities
Income before income
taxes 7,133 32,848
Adjustments for:
Depletion, depreciation and
amortization 17,268 17,824
Exploration and evaluation
expense 5,103 187
Impairment expense 3,520 -
Finance expense 542 129
Stock-based compensation 1,194 538
Loss/(gain) on
acquisition 174 (29,558)
Foreign exchange loss/(gain) 368 (141)
Gain on sale of office (23) -
asset
Bad debt expense 123 -
Release of historic operational (300) -
tax provision
Inventory write-off/(reversal
of inventory provision) 370 (798)
Amortisation of deferred
income (497) (380)
Tax paid by state (5,036) (3,551)
Share of profit from
joint venture (1,195) (1,022)
------------------------------ ----------------------------------- ------------------------------------
Operating cash flow before
working
capital movements 28,744 16,076
Decrease in trade and
other receivables 11,195 4,871
Increase in trade and
other payables 330 2,988
Increase in inventory (2,801) (1,951)
Payments for decommissioning (140) (4)
Cash generated from operating
activities 37,328 21,980
Income taxes
paid (1,091) (364)
----------------------------- ----------------------------------- ------------------------------------
Net cash generated from
operating
activities 36,237 21,616
Cash flows (used in)/generated
from
investing activities:
Property, plant and equipment
expenditures (21,945) (21,132)
Exploration and evaluation
expenditures (22,865) (3,785)
Dividends received 525 760
Acquisition of
subsidiaries - (28,056)
Cash balance acquired during
the period - 3,108
Net cash used in investing
activities (44,285) (49,105)
Cash flows generated from/(used
in)
financing activities:
Issuance of common
shares 114 48,510
Finance costs
paid (197) (43)
----------------------------- ----------------------------------- ------------------------------------
Net cash (used in)/generated
from
financing activities (83) 48,467
(Decrease)/increase in cash
and cash equivalents (8,131) 20,978
Effect of foreign exchange on
cash
and cash equivalents (368) 141
Cash and cash equivalents,
beginning of period 25,844 4,725
------------------------------- ----------------------------------- ------------------------------------
Cash and cash equivalents,
end of period 17,345 25,844
------------------------------- ------------------------------------
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 Gharb Basin. These producing assets are
characterized 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 Company's website 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).
Standard
The estimates of reserves and resources contained in this
announcement have been prepared in accordance with the Canadian
National Instrument 51-101 (NI 51-101) and the Canadian Oil and Gas
Evaluation (COGE) Handbook.
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
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
"2P reserves" proved and probable reserves
"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
--------------------------------------
"mmboe" millions of barrels of oil equivalent
--------------------------------------
"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, the timing of completion of the central
processing facility, timing of completion of the export pipelines
and well tie-ins, production targets, future drilling, seismic
work, new gas sales customers, ESP replacement, field facility
upgrades, well workovers, and the timing and costs thereof, as well
as capital expenditures, operational expenditures, the reduction in
Egyptian receivables and the Company's 2019 outlook, the Company's
plans to re-domicile to the UK and the timing thereof 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;
the timing of and the Company's ability to obtain regulatory,
statutory and shareholder approvals in connection with the
Company's plans to re-domicile to the UK 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 and twelve
months ended December 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 the Company's
MD&A for the three and twelve months ended December 31, 2018
and 2017.
EBITDAX is a non-IFRS measure that represents earnings before
interest, tax, depreciation, amortization, exploration expense and
impairment. EBITDAX is calculated by taking operating income/(loss)
and 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 the Company's MD&A for the three and twelve
months ended December 31, 2018 and 2017.
Oil and Gas Advisory
Estimates of reserves been made assuming the development of each
property in which the estimate is made will actually occur, without
regard to the likely availability to the Company of funding
required for development of such reserves.
Certain disclosure in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 - Standards
for Oil and Gas Activities 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,
flow rate, production rates, porosity and pay thickness
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.
Use of the term "boe" or the term "MMscf" may be misleading,
particularly if used in isolation. A "boe" conversion ratio of 6
Mcf: 1 bbl and a "Mcf" conversion ratio of 1bbl: 6 Mcf are 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UASKRKSAOUAR
(END) Dow Jones Newswires
March 22, 2019 03:00 ET (07:00 GMT)
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