TIDMSDX
RNS Number : 7203Q
SDX Energy PLC
23 June 2020
23 June 2020
SDX ENERGY PLC ("SDX" or the "Company")
Egypt and Morocco operational update and new corporate
presentation
Post-drilling extension of plateau production at South Disouq
and de-risked prospectivity in both Egypt and Morocco
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company,
is pleased to provide an update on its operations in Egypt and
Morocco following the recent drilling successes, details of which
are included in some detail in a new corporate presentation which
is now available on its website ( www.sdxenergy.com ).
Egypt
-- As a result of the Sobhi discovery in South Disouq (SDX
Working Interest: 55% and operator), which SDX drilled at 100%
Working Interest, gross plateau production of c.50 MMscfe/d is now
expected to be maintained for a further 18-24 months until mid-2023
with the potential for a further extension to mid-2026 depending on
the results of planned future exploration drilling.
-- Management estimates that Sobhi(1) will generate
approximately US$25.0 million of undiscounted post-tax cash flow
after capex to SDX, equivalent to US$1.04/Mcf.
-- After integrating the results of the successful Sobhi well
with the remapped 3D seismic over the South Disouq concession,
management estimates that incremental prospective resources of
c.100 bcf have been identified and de-risked across five prospects.
Approximately 25% of this incremental prospectivity has been
identified in a new Buried Hill play concept which is productive in
a neighbouring field 10 km to the east. Management estimates that
these follow on prospects are expected to have similar costs and
post-tax cash flow profiles to Sobhi.
-- 8 to 10 wells are planned in the West Gharib (SDX Working
Interest: 50%) concession between 2021 and 2023 for a gross cost of
approximately US$8.0-10.0 million (SDX: US$4.0-5.0 million) with
the potential to increase gross production from c.3,200 - 3,300
bbl/d to c.4,000 bbl/d by 2022.
-- After taking account of drilling and other infrastructure
tie-in capex, this incremental production at West Gharib is
expected to generate approximately US$5.0-6.0 million in low-risk,
undiscounted post-tax cash flow net to SDX.
Note 1 - Sobhi is expected to commence production in Q1 2021
after completion of the standard Environmental Impact Assessment
process, agreement of landowners' compensation, obtaining the
necessary Military, Agricultural and Irrigation permits and
completion of the pipeline tie-in.
Morocco
-- Post-drill analysis of the LMS-2 well at Lalla Mimouna (SDX
Working Interest: 75% and operator) has identified similarities
with the LAM-1 discovery made by the previous operator of the
concession which flowed gas and condensate in 2015.
o Subject to successful testing, management estimates that LMS-2
could contain c.1.5 bcf and has the potential to de-risk a further
6.0 bcf in separate compartments within the same feature.
o Management also estimates that a further 3.4 bcf of close by
prospective resources will be de-risked if LMS-2 tests
successfully, increasing the overall prospective resource potential
to 10.9 bcf.
o LMS-2 will be tested after the COVID-19 restrictions in
Morocco enable perforation and testing crews to re-enter the
country. The Company hopes that this will be late Q3/early Q4
2020.
-- In addition to the 10.9bcf of prospective resources that
could be de-risked by LMS-2, management has identified a further
25.5 bcf of prospective resources in multiple prospects across the
concession.
Mark Reid, CEO of SDX, commented:
"After analysing the results of the recent drilling successes in
Egypt and Morocco, we are very excited about the future
prospectivity identified from the Sobhi well in Egypt and from
LMS-2 in Morocco.
With Sobhi, we expect to extend our gross 50 MMscfe/d plateau
production by 18-24 months to 2023 and, with some follow on
drilling success, this could be extended further into 2026. Sobhi
has also helped us identify approximately 100 bcf of follow on,
de-risked, incremental prospectivity in the South Disouq
concession.
In Morocco, a successful test in LMS-2 could create 1.5 bcf of
2P reserves and simultaneously de-risk 6.0 bcf of prospectivity in
the same structure and a further 3.4 bcf nearby, enabling us then
to investigate low cost, early monetisation options. In addition, a
successful LMS-2 test will help us better understand an additional
25.5 bcf of prospectivity in multiple prospects identified across
the broader Lalla Mimouna concession.
Finally, we are also looking forward to commencing our drilling
campaign in West Gharib next year where we will be aiming to
increase production in the Meseda and Rabul fields to approximately
gross 4,000 bbls/d by 2022."
About SDX
SDX is an international oil and gas exploration, production and
development company, headquartered in London, United Kingdom, with
a principal focus on MENA. In Egypt, SDX has a working interest in
four producing assets: a 55% operated interest in the South Disouq
gas field in the Nile Delta, a 50% non-operated interest in each of
the North West Gemsa and West Gharib concessions, which are located
onshore in the Eastern Desert, adjacent to the Gulf of Suez, and a
12.75% non-operated interest in the South Ramadan concession
offshore Gulf of Suez. In Morocco, SDX has a 75% working interest
in five development/production concessions, all situated in the
Gharb Basin. The producing assets in Morocco are characterised by
attractive gas prices and exceptionally low operating costs. SDX
has a strong weighting of fixed price gas assets in its portfolio
with low operating costs and attractive margins throughout,
providing resilience in a low commodity 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 Rob Cook, VP
Subsurface of SDX. Dr. Cook has over 25 years of oil and gas
industry experience and is the qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
companies. Dr. Cook holds a BSc in Geochemistry and a PhD in
Sedimentology from the University of Reading, UK. He is a Chartered
Geologist with the Geological Society of London (Geol Soc) and a
Certified Professional Geologist (CPG-11983) with the American
Institute of Professional Geologists (AIPG).
For further information:
SDX Energy Plc
Mark Reid
Chief Executive Officer
Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)
Callum Stewart
Simon Mensley
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Peel Hunt LLP (Joint Broker)
Richard Crichton
David McKeown
Cantor Fitzgerald Europe (Joint Broker)
David Porter
Tel: +44 207 7894 7000
Camarco (PR)
Billy Clegg
Owen Roberts
Violet Wilson
Tel: +44 203 757 4980
Glossary
"bcf" billion cubic feet
"bbl/d" barrels per day
----------------------------
"Mcf" thousand cubic feet
----------------------------
"MMscfe" million standard cubic feet
equivalent
----------------------------
"MMscfe/d" million standard cubic feet
equivalent 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 ability to increase its plateau production at South
Disouq in Egypt, the results of the upcoming well test at LMS-2 in
Morocco, management estimates of future net revenue and the
potential success of future drilling campaigns should 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 labour and services.
All timing given in this announcement, unless stated otherwise,
is indicative, and while the Company endeavours 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; the 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 refer to
SDX's Financial Review for the year ended 31 December 2019, 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.
Oil and Gas Advisory
Certain disclosures in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities ("NI 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, flow rate and production rates
attributable to the resources of the Company. Such estimates have
been prepared by Company management 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 1 bbl: 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.
Prospective Resources Data
The prospective resources estimates disclosed or referenced
herein have been prepared by Dr. Rob Cook, a qualified reserves
evaluator, in accordance with the Canadian Oil and Gas Evaluation
Handbook and in accordance with NI 51-101. The prospective
resources disclosed herein have an effective date of 1 June 2020.
Prospective resources are those quantities of gas, estimated as of
the given date, to be potentially recoverable from undiscovered
accumulations through future development projects. As prospective
resources, there is no certainty that any portion of the resources
will be discovered. The chance that an exploration project will
result in a discovery is referred to as the "chance of discovery"
as defined by the management of the Company.
There is no certainty that it will be commercially viable to
produce any portion of the resources discussed herein; though any
discovery that is commercially viable would be tied back to the
Company's pipeline in Morocco and then connected to customers'
facilities within 9 to 12 months of discovery. Based upon the
economic analysis undertaken on any discovery, management has
attributed an associated chance of development of 100%.
There are uncertainties associated with the volume estimates of
the prospective resources disclosed herein, due to the level of
information available on prospective resources, but ranges are
defined based on data from the Company's nearby existing analogous
wells. Some of the risks and uncertainties are outlined below:
-- petrophysical parameters of the sand/reservoir;
-- fluid composition, especially heavy end hydrocarbons;
-- accurate estimation of reservoir conditions (pressure and temperature);
-- reservoir drive mechanism;
-- potential well deliverability; and
-- the thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
Future Net Revenue Estimates
The future net revenue estimates disclosed or referenced herein
have been prepared by Dr. Rob Cook, a qualified reserves evaluator,
in accordance with the Canadian Oil and Gas Evaluation Handbook and
in accordance with NI 51-101 and the requirements specified in Form
51-101F1. All evaluations of the present value of estimated future
net revenue are stated after provision for estimated future capital
expenditures but prior to indirect costs and do not necessarily
represent the fair market value of the reserves. There is no
assurance that the forecast prices and costs assumptions will be
attained and variances could be material. There are numerous
uncertainties inherent in estimating quantities of reserves and the
future cash flows attributed to such reserves. Estimates of
reserves and future net revenue for individual properties may not
reflect the same level of confidence as estimates of reserves and
future net revenue for all properties, due to the effect of
aggregation. The effective date of the future net revenue estimates
disclosed or referenced herein is 1 June 2020.
This announcement does not contain inside information.
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
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