TIDMSDX
RNS Number : 2361D
SDX Energy PLC
28 June 2021
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 AS IT FORMS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("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.
28 June 2021
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
SUCCESSFUL COMPLETION OF THE FIRST PHASE OF DRILLING OPERATIONS
IN MOROCCO
SDX Energy Plc (AIM: SDX), the MENA-focused energy company, is
pleased to announce the successful completion of the initial three
well phase of its 2021 drilling campaign in Morocco, which will
comprise up to a total of five wells over the year.
Mark Reid, CEO of SDX, commented:
"I am pleased to announce that the Company has successfully
drilled the first three wells of its 2021 drilling activities which
will total up to eleven wells across our portfolio of assets. The
OYF-3, KSR-17 and KSR-18 wells in Morocco were all commercial
successes, and OYF-3 and KSR-17 are already connected and producing
into our infrastructure. We expect KSR-18 to be tested and
connected in the next two weeks. The gross 1.5-1.6bcf reserves
added by these wells is in line with pre-drill P50 estimates and it
is anticipated that this will enable us to continue to deliver gas
to our customers in line with their contractual requirements. We
will now commence the preparations to drill up to two additional
wells in Morocco later in the year.
In Egypt we are expecting to commence the drilling of the IY-2
step out development well at South Disouq in the coming days, and
our planning for the potentially transformational HA-1X exploration
well is significantly progressed, with spud expected in Q3 2021.
This gross 139bcf prospective target, which has a 33% chance of
success, has the potential to significantly transform the resource
profile of the Company. Finally, with the four well campaign in
West Gharib also expected to start soon, I look forward to updating
the market in the coming months on what is looking to be a very
busy and exciting period of activity."
Moroccan Drilling Campaign
This first phase of the Morocco drilling campaign consisted of
three appraisal/development wells in SDX's operated Gharb Basin
acreage in Morocco (SDX: 75% working interest).
The first well, OYF-3, which spud on 30 April 2021, reached its
TD at 1,183 metres MD on 11 May 2021. The main Guebbas reservoir
target was thicker than expected and encountered a 5.2 metre net
gas sand. The well also encountered a 1.7 metre net gas sand in a
secondary zone that OYF-3 will also produce from.
The second well, KSR-17, was spud on 13 May 2021 and reached its
TD at 1,848 metres MD on 27 May 2021. In the main Hoot reservoir,
the well encountered a 5.3 metre net gas sand which was slightly
thinner than expected, but with very good reservoir properties.
Both OYF-3 and KSR-17 have been tested, connected, and are now
producing into our infrastructure. Post-drill P50 reserves are
estimated at a combined gross 0.81bcf recoverable which is in line
with predrill estimates.
Finally, the third well of the campaign, KSR-18, was spud on 30
May 2021 and reached its TD of 1,905 metres MD on 14 June 2021.
Both prognosed targets were successfully encountered, with the
shallower Mid Guebbas target comprising of a 3.8 metre net gas sand
and the main Hoot target encountering a 13.9 metre net gas sand. As
expected, the main Hoot had been slightly depleted by production
from a nearby well, however the well is still expected to
contribute incremental volumes and deliverability from this
extensive compartment. Further to these zones, a third 5.5 metre
net gas sand was encountered at the Base Guebbas and will
contribute to production in the future when the Hoot has been
depleted. KSR-18 will be tested in the coming weeks to refine
volumetrics but based upon logging results, the Company expects
that this too will be close to its pre-drill P50 EUR estimate of
gross 0.75bcf.
The second phase of the Moroccan drilling campaign is expected
to commence in September/October 2021.
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
two producing assets: a 55% operated interest in the South Disouq
gas field in the Nile Delta and a 50% non-operated interest in the
West Gharib concession, which is located onshore in the Eastern
Desert, adjacent to the 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
Jason Grossman
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Peel Hunt LLP (Joint Broker)
Richard Crichton
David McKeown
Tel: +44 (0) 207 418 8900
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 (0) 203 757 4980
Glossary
"bcf" billion cubic feet
"EUR" estimated ultimate recovery
---------------------------------------
"MD" measured depth
---------------------------------------
"P50" means that there is at least
a 50% probability that the quantities
actually recovered will equal
or exceed the best estimate
---------------------------------------
"reserves" reserves are those quantities
of petroleum anticipated to
be commercially recoverable
by application of development
projects to known accumulations
from a given date forward under
defined conditions. Reserves
must further satisfy four criteria:
they must be discovered, recoverable,
commercial, and remaining (as
of the evaluation date) based
on the development project(s)
applied. Reserves are further
categorised in accordance with
the level of certainty associated
with the estimates and may be
sub-classified based on project
maturity and/or characterised
by development and production
status
---------------------------------------
"TD" total depth
---------------------------------------
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 volumes of estimated reserves to be produced from the wells
drilled in first phase of the Company's 2021 drilling campaign
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
the Principal Risks & Uncertainties section of SDX's Annual
Report for the year ended 31 December 2020, 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.
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, production rates, porosity,
and pay thickness 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.
Reserves and Resources Data
The reserves and resources estimates disclosed or referenced
herein have been prepared by Dr. Rob Cook, a qualified reserves
evaluator, in accordance with the SPE's Canadian Oil and Gas
Evaluation Handbook and in accordance with NI 51-101. The
prospective resources disclosed herein have an effective date of 1
January 2021. 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.
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END
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