TIDMSDX
RNS Number : 8844Y
SDX Energy Inc.
28 August 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.
28 August 2018
SDX ENERGY INC
("SDX" or the "Company")
SDX ENERGY INC. ANNOUNCES ITS SECOND QUARTER AND HALF YEAR TO
JUNE 30, 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 and six months ended June 30, 2018. All
dollar values are expressed in United States dollars net to the
Company unless otherwise stated.
Highlights - three and six months ended June 30, 2018
Corporate and Financial
-- SDX's key financial metrics for the three and six months
ended June 30, 2018 and 2017 are as follows:
Three months
ended Six months ended
June 30 June 30
US$ millions except per unit
amounts 2018 2017 2018 2017
------- ------ --------- --------
Net Revenues 13.5 9.9 24.4 18.0
------- ------ --------- --------
Netback(1) 10.3 6.9 19.3 13.0
------- ------ --------- --------
Net realized average oil/service
fees - US$/barrel 64.23 42.62 61.97 43.44
------- ------ --------- --------
Net realized average Morocco
gas price - US$/mcf 10.51 9.44 10.27 9.38
------- ------ --------- --------
Netback - US$/boe 33.00 21.64 32.91 22.51
------- ------ --------- --------
EBITDAX(1) (2) 8.6 5.2 16.2 7.2
------- ------ --------- --------
Exploration & eval'n expense (2.1) (0.1) (5.3) (0.2)
------- ------ --------- --------
Depletion, depreciation and
amortization (3.7) (4.9) (6.2) (8.4)
------- ------ --------- --------
(Loss)/gain on acquisition - (0.1) (0.2) 29.4
------- ------ --------- --------
Total comprehensive income/(loss) 0.6 (0.4) 1.0 26.5
------- ------ --------- --------
Net cash generated from operating
activities 9.4 8.1 20.3 11.1
------- ------ --------- --------
Cash and cash equivalents 25.2 27.6 25.2 27.6
------- ------ --------- --------
Note:
(1) Refer to "Non-IFRS Measures" section of this release below
for details of Netback and EBITDAX.
(2) EBITDAX for Q2 2018 and 2017 and H2 2018 and 2017 includes
US$1.2 million and US$0.9 million and US$2.2 million and US$1.6
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 six months
ended June 30, 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 consideration of
US$28.1 million.
-- The main components of SDX's comprehensive income of US$1.0
million for the six months ended June 30, 2018 are:
o US$19.3 million netback/gross profit for the period;
o US$5.3 million of E&E write down predominantly relating to
two sub-commercial exploration wells in Morocco and one
sub-commercial exploration well in Egypt;
o US$6.2 million of DD&A;
o US$2.8 million of G&A; and
o US$3.1 million of Corporate Income Tax expense.
-- Netback for the six months to June 30, 2018 was US$19.3
million, up from US$13.0 million for the six months to June 30,
2017. The increase in netback was due to;
o The Circle Acquisition completing on January 27, 2017,
therefore H1 2017 results only included five months of 'Circle'
activity whereas the H2 2018 results included six months; and
o H1 2018 also benefited from improved oil prices impacting
SDX's Egyptian producing assets and higher realised gas pricing in
Morocco due to a contract price increase and favourable currency
movement.
-- Cash position of US$25.2 million as at June 30, 2018 was
US$0.6 million lower than the US$25.8 million at December 31, 2017
and US$2.4 million lower than the US$27.6 million reported at June
30, 2017. However the Company's strong Netback, improving
Receivables position and US$10 million equity placing in September
2017 have enabled it to invest approximately US$45 million of
capital expenditure in the 12 months to June 30, 2018. This
expenditure included 14 wells in Egypt and 9 wells in Morocco,
which did not materially reduce SDX's cash balance over this
period.
-- The Company further improved its available liquidity when it
announced on July 18, 2018 that it had secured a three year, US$10
million Credit Facility (the "Facility") with the European Bank for
Reconstruction and Development. This Facility, which also has an
additional US$10 million accordion feature, will be used for
drilling costs and customer connections in Morocco. Interest on
drawings from the Facility will be charged at US$ Libor plus 4.0%
for drawings up to US$5 million and US$ Libor plus 4.5% on all
drawings if drawings are greater than US$5 million.
-- US$24.7 million of capital expenditure has been invested into
the business during the six months ended June 30, 2018. The main
elements of this were;
o US$11.2 million in Morocco, US$10.4 million of which relates
to the now completed 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$5.7 million on the South Disouq drilling programme, which
includes the costs for the Ibn Yunus-1X and SD-4X discovery wells,
the costs of the sub-commercial Kelvin-1X well and the site
preparation cost for the SD-3X discovery well which reached total
depth ("TD") in July;
o US$6.3 million in North West Gemsa for the costs of the
AASE-25, AASE-27 infill wells and the commencement of the Al-Ola 4
well, all of which were discoveries;
o US$0.8 million in Meseda for the costs of the Rabul-4 and
MSD-16 discovery wells and the ongoing electric submersible pump
("ESP") replacement programme;
o US$0.3 million in South Ramadan relating to pre-spud costs of
the SRM-3 well; and
o US$0.4 million relating to new office equipment in Cairo and
additional technical software.
Operational Highlights
-- The Company's entitlement share of production from its
operations for the six months ended June 30, 2018 was 3,234 BOE/D
and is analysed as follows;
o North West Gemsa 1,941 BOE/D
o Meseda 633 BBL/D
o Morocco 660 BOE/D
-- As a result of the ongoing development drilling and workover
programme in North West Gemsa and the commencement of production
from the successful Rabul-4, Rabul-5 and MSD-16 wells in Meseda
production has increased with actual entitlement production on
August 23, for Egypt and August 14 for Morocco (last day before the
Eid Holiday maintenance shutdown) amounting to 4,444 BOE/D (Gross -
11,257 BOE/D) analysed as follows;
o North West Gemsa 2,777 BOE/D (Gross - 5,553 BOE/D)
o Meseda 917 BBL/D (Gross - 4,704 BOE/D)
o Morocco 750 BOE/D (Gross - 1,000 BOE/D)
Egypt
-- In North West Gemsa (SDX 50% working interest and
non-operator), a seven well workover programme is underway and two
new infill wells, AASE-25 and AASE-27, were successfully completed.
A third well, Al Ola-4, was spud towards the end of the period.
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 and
flowed on test at 549 BOE/D of light crude oil with 1% water cut
prior to being connected to the local infrastructure and placed on
production. 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 and flowed on
test at 537 BOE/D of light crude oil with a 5% water cut. This well
is currently being connected to the infrastructure prior to being
placed on production. Al Ola-4, was drilled as a replacement well
in the Rahmi after the original well failed due to a mechanical
problem. Al Ola-4 was spud during the period but completed
post-period. The well encountered 14 feet of net light crude oil
bearing Rahmi section and, on test, flowed 1,011 BOE/D of dry light
crude oil with 0% water cut and was subsequently completed as a
producer. The results of these wells and the ongoing workover
programme are expected to allow the field production rate for the
year to average approximately 4,400 BOE/D of light crude oil (SDX
net: 2,200 BOE/D) which means that the gross field 2018 production
rate guidance provided by the Company in January is unchanged.
-- In Meseda (SDX 50% working interest and non-operator), an ESP
replacement programme is underway and three wells have been
successfully completed; Rabul-5, Rabul-4 during the period, and
MSD-16 post period end. Rabul-5 encountered 151 feet of net heavy
crude oil pay, with an average porosity of 18% across the Yusr and
Bakr formations. Rabul-4 encountered 43 feet of net heavy crude oil
pay also across the Yusr and Bakr, with an average porosity of 16%.
Both wells were completed as producers and placed on production.
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 1,200 BBL/D of heavy crude oil. Post-period
end, a second lease line development well, MSD-15, was spud, and
subsequently reached TD. The MSD-15 well encountered 226 feet of
net of heavy crude oil pay in the ASL section and is currently
being completed as a producer in this section. Upon production
start-up, it is expected to flow at similar rates to the MSD-16,
again using an ESP to provide artificial lift. Production at MSD-15
is anticipated to start up between late August and early September
2018. The results of these wells and the ongoing workover programme
are expected to allow the field production rate for the year to
average approximately 3,800 BBL/D of heavy crude oil (SDX net: 732
BBL/D) which means that the gross field 2018 production rate
guidance provided by the Company in January is unchanged.
-- 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 well was drilled to
a TD of 9,068 feet and encountered 101 feet of net conventional
natural gas pay in the Abu Madi horizon, with 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. On May 18, 2018 the well successfully flow
tested conventional natural gas at a stabilised rate of 39.3
MMSCF/D on a 32/64" choke. This flow rate exceeded initial
expectations and was limited by the surface facilities in place.
The well was subsequently completed in the Kafr El Sheik section
and then suspended until it can be connected to the surface
facilities that are being developed at the SD-1X location.
The Kelvin-1X exploration well was spud on May 8, 2018 and
drilled to a total depth of 8,075 feet, encountering 606 net feet
of high quality reservoir interval in the Abu--Madi formation with
an average porosity of 21%. However, the sands had low gas
saturation and were not deemed to be commercial. The well was
subsequently plugged and abandoned.
The SD-4X appraisal well was spud on June 4, 2018 and drilled to
a total depth of 7,806 feet and encountered 89 feet of net
conventional natural gas pay in the Abu Madi horizon, with an
average porosity in the pay section of 24%. The well came in on
prognosis with a reservoir section of similar quality but thicker
than the original SD-1X discovery well. The well was completed in
the Abu Madi section and tested at a maximum rate of 30.4 MMSCF/D
during an eight hour clean up period. The well was then shut in for
eight hours, during which time no pressure decline was observed.
Following this the well was flowed at varying choke sizes for two
successive 12-hour periods at average rates of 5.4 MMSCF/D, 8.6
MMSCF/D respectively and then one extended flow period of 24-hours
at an average rate of 10.5 MMSCF/D. The well was then suspended
until it can be connected to the surface facilities that are being
developed at the SD-1X location.
Post-period end, the SD-3X appraisal well was spud on July 5,
2018, drilled to a total depth of 7,842 feet and encountered 32.6
feet of net conventional natural gas pay in the Abu Madi and Kafr
el Sheik horizons, with an average porosity in the pay sections of
21.7%. The well was completed as a producer in the Abu Madi horizon
and tested post period end at flow rate of 16.6MM SCF/D of
conventional natural gas. In order to optimise the potential
recovery from the SD-3X well, the Abu Madi horizon will be
completed and produced initially before re-entering the well to
complete and produce the Kafr el Sheik horizon. The well will be
connected to the infrastructure located adjacent to the original
SD-1X discovery.
Given the above, and assuming all necessary regulatory approvals
are obtained at South Disouq, first gas is targeted by the end of
2018, at an initial gross plateau production rate of conventional
natural gas at between 50-60 MMSCF/D from the Ibn Yunus discovery
and the three development wells in the SD-1X discovery
structure.
-- At South Ramadan (SDX 12.75% working interest and
non-operator), the SRM-3 appraisal well was spud on June 14, 2018.
The well is targeting undrained light oil volumes up-dip of one of
the previous producing wells in the field. The well is anticipated
to take up to 90 days to drill and complete. The SRM-3 well is the
last remaining commitment well on the South Ramadan concession and
based upon the results of this well the Company will decide how
best to optimise its position in the licence.
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
Circle Acquisition 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 programme 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.
o 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
mud log 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 BCF 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.
o 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 was completed as a conventional natural gas producer in the
H-9 interval. Upon test the well flowed at sub-commercial rates
which the Company believes are temporary and due to damage created
by the fluids used to control the elevated pressures encountered in
the well whilst drilling. The damage is thought to result from the
formation clays reacting to certain components used to increase the
mud weight in the drilling fluid. The reservoir section, beyond
this zone of damage, is thought to be of excellent quality based
upon the well log response and is not expected to have been damaged
by the drilling fluids. Once the fluid interaction study is
complete, a stimulation programme will be designed and implemented
and the well test will be repeated.
-- As a result of the success seen in the LNB-1 and LMS-1 wells,
a two year extension to the LM Nord permit was submitted and
granted post-period end. This extends the permit validity from July
2018 to July 2020.
-- The Company continued its land permitting and other
associated activities necessary to conduct its 240 km(2) 3D seismic
acquisition in the Gharb Centre permit. The acquisition started up
post-period end during the first week of August and is anticipated
to be completed early in Q3 2018.
-- Gross production in H1 2018 of approximately 5.3 MMSCF/D of
conventional natural gas (660 BOE/D net to SDX) is expected to
increase in H2 2018 when gas sales to the recently contracted
customers, Peugeot, Setexam and Extralait, will commence. These
contracts are expected to add incremental production of
approximately 1.33 MMSCF/D of conventional natural gas during H2
2018.
-- The achievement of the Company's guidance for the year-end
2018 production rate of 8-10 MMSCF/D of conventional natural gas
from its Morocco operations is dependent upon the number of new
customer connections made and the subsequent commencement/increase
of manufacturing activity at these new customers. The Company will
provide a further update towards achieving its stated guidance when
its Q3 2018 results are issued in November.
Outlook:
Egypt
-- North West Gemsa (50% Working Interest and non-operator)
o Targeting FY 2018 gross production of approximately 4,400
BOE/D of light crude oil, in line with Company guidance provided at
start of year.
o Workover programme to continue in H2 2018, however no further
drilling is planned.
o SDX's share of North West Gemsa FY 2018 capex is expected to
be US$7.9 million with approximately US$1.6 million of this to be
incurred in H2 2018.
-- Meseda (50% Working Interest and non-operator)
o Targeting FY 2018 gross production of 3,800 BBL/D of heavy
crude oil, approximately 700 BBL/D higher than 2017's level, and in
line with Company guidance provided at start of year.
o Workover programme to continue in H2 2018 however no further
drilling planned.
o SDX's share of Meseda FY 2018 capex is expected to be US$1.4
million with approximately US$0.6 million of this to be incurred in
H2 2018.
-- South Disouq (55% Working Interest and operator)
o Complete construction of SD-1X processing facility, well
tie-ins and 10 kilometer pipeline connecting the processing
facilities to the main export line.
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. The gas price is still under
negotiation.
o SDX's share of South Disouq FY 2018 capex is expected to be
approximately US$22 million with approximately US$16 million to be
incurred in H2 2018 for the SD-3X and SD-4X well completions and
testing, the processing facility, well tie-ins and 10 kilometer
pipeline to the main export line.
-- South Ramadan (12.75% Working Interest and non-operator)
o The SRM-3 well is the last remaining commitment well on the
South Ramadan concession and based upon the results of this well
the Company will decide how best to optimise its position in the
licence.
o Gross South Ramadan capex FY 2018 is expected to be
approximately US$23.5 million (SDX net: US$3.0 million). All of
this capex is still to be incurred in H2 2018.
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 the timing of new customer tie-ins and the subsequent
commencement/increase of manufacturing activity at these new
customers, SDX is still 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 commence
planning for the mobilisation of equipment for a further drilling
campaign in 2019 during which the LNB-1 and LMS-1 wells in Lalla
Mimouna will be re-tested.
-- The Company will 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 half 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 significant operational progress across our
portfolio with discoveries from 20 of the 23 wells drilled in the
recent Moroccan and Egyptian drilling campaigns, representing a
success rate of 87%.
In Egypt, at Meseda, we enjoyed success at our Rabul-5, Rabul-4,
MSD-16 and MSD-15 (post-period end) appraisal wells. This was
matched in North West Gemsa with successful wells at AASE-25,
AASE-27 and Al-Ola-4 (post-period end), and at South Disouq, with
discoveries at our Ibn Yunus-1X, SD-4X and SD-3X wells (post-period
end). Due to this drilling success, the Company is able to
reconfirm its FY 2018 gross production guidance for North West
Gemsa and Meseda at 4,400 BOE/D and 3,800 BBL/D respectively. We
also remain on target to commence production at South Disouq at
gross 50-60 MMSCF/D by the end of the year.
In Morocco, the Company completed its nine well drilling
programme with seven gas discoveries, a 78% success rate throughout
the campaign. The last two exploration wells appear to be very
significant successes and upon completion of testing it is hoped
that they will have opened up new producing areas for the Company.
The Company has signed Gas Sales Agreements with three new
customers: Peugeot, Setexam and Extralait, and is still targeting
gross production of 8-10 MMSCF/D of conventional natural gas by the
end of 2018.
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 June 30, 2018,
we are well funded for our remaining work commitments with US$25.2
million of cash and an undrawn Credit Facility of US$10.0 million
and we continue to target doubling our production by the end of
2018."
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim consolidated financial statements with
Management's Discussion and Analysis for Q2 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 Six months ended
Quarter ended June 30 June 30
----------------------------------- --------- ------------------ -------------------
US$000s except per unit
amounts 2018 2017 2018 2017
----------------------------------- --------- -------- --------- --------
FINANCIAL
----------------------------------- --------- -------- --------- --------
Gross Revenues 14,763 18,123 13,420 32,887 24,544
Royalties (3,803) (4,651) (3,519) (8,455) (6,507)
Net Revenues 10,960 13,472 9,901 24,432 18,037
Operating costs (1,994) (3,168) (2,958) (5,162) (5,006)
Netback 8,966 10,304 6,943 19,270 13,031
EBITDAX 7,623 8,585 5,187 16,208 7,207
Total comprehensive income/(loss) 331 640 (427) 971 26,520
per share - basic (0.002) 0.003 (0.002) 0.005 0.155
Cash, end of period 29,277 25,234 27,627 25,234 27,627
Working capital (excluding
cash) 13,814 11,121 15,421 11,121 15,421
Capital expenditures 9,948 14,742 1,504 24,690 2,315
Total assets 140,497 143,176 132,766 143,176 132,766
Shareholders' equity 115,282 116,246 102,559 116,246 102,559
Common shares outstanding
(000's) 204,493 204,493 186,900 204,493 186,900
OPERATIONAL
----------------------------------- --------- -------- -------- --------- --------
NW Gemsa oil sales (bbl/d) 1,507 1,665 1,832 1,586 1,654
Block-H Meseda production
service fee (bbl/d) 558 706 623 633 631
Morocco gas sales (boe/d) 664 656 651 660 543
Other products sales (boe/d) 307 403 419 355 352
Total oil sales and production
service fee boe/d 3,036 3,430 3,525 3,234 3,180
---------
Realized oil price (US$/bbl) 62.81 68.41 45.56 65.77 46.97
Realized service fee (US$/bbl) 50.00 54.37 33.98 52.45 34.16
----------------------------------- --------- -------- -------- --------- --------
Realized oil sales and production
service fees ($/bbl) 59.34 64.23 42.62 61.97 43.44
----------------------------------- --------- -------- --------- --------
Realized Morocco gas price
(US$/mcf) 10.03 10.51 9.44 10.27 9.38
Royalties ($/bbl) 13.92 14.90 10.97 14.44 11.24
Operating costs ($/bbl) 7.30 10.15 9.22 8.82 8.65
Netback ($/bbl) 32.80 33.00 21.64 32.91 22.51
Consolidated
Balance
Sheet
US$'000s As at June 30, As at December
2018 31, 2017
-------------------- ----------------------------------------- -----------------------------------------
Assets
Cash and cash
equivalents 25,234 25,844
Trade and other
receivables 29,141 37,656
Inventory 3,176 5,157
---------------------- ----------------------------------------- -----------------------------------------
Current assets 57,551 68,657
Investments 2,725 2,724
Property, plant and
equipment 58,752 54,445
Intangible
exploration and
evaluation assets 24,391 15,231
-------------------- -----------------------------------------
Non-current
assets 85,868 72,400
Total assets 143,419 141,057
------------------ -----------------------------------------
Liabilities
Trade and other
payables 20,096 19,459
Deferred income 495 495
Decommissioning
liability - 1,063
Current income
taxes 605 915
------------------ ----------------------------------------- -----------------------------------------
Current
liabilities 21,196 21,932
Deferred income 488 737
Decommissioning
liability 5,198 3,479
Deferred income
taxes 290 290
------------------ -----------------------------------------
Non-current
liabilities 5,977 4,506
Total liabilities 27,173 26,438
------------------ -----------------------------------------
Equity
Share capital 88,785 88,785
Contributed
surplus 6,322 5,666
Accumulated other (917) (917)
comprehensive
loss
Retained earnings 22,056 21,085
Total equity 116,246 114,619
------------------ -----------------------------------------
Equity and
liabilities 143,419 141,057
------------------ -----------------------------------------
Consolidated
Statement of
Comprehensive
Income
Three months ended Six months ended June
June 30 30
US$'000s 2018 2017 2018 2017
------------------ ------------------------------ ------------------------------ ------------------------------ ------------------------------
Revenue, net of
royalties 13,472 9,901 24,432 18,037
----------------- ------------------------------ ------------------------------ ------------------------------ ------------------------------
Revenue
Direct operating
expense (3,168) (2,958) (5,162) (5,006)
Gross profit 10,304 6,943 19,270 13,031
Exploration and
evaluation
expense (2,064) (87) (5,314) (160)
Depletion,
depreciation and
amortisation (3,657) (4,892) (6,190) (8,414)
Stock-based
compensation (324) (42) (656) (85)
Share of profit
from
joint venture 292 337 526 711
Release of
historic
operational
tax provision 300 - 300 -
Inventory
write-off (490) - (490) -
Gain on sale of
office
asset 23 - 23 -
General and
administrative
expenses
- Ongoing general
and administrative
expenses (1,520) (1,896) (2,765) (4,077)
- Transaction
costs - (155) - (2,373)
---------------- ------------------------------ ------------------------------ ------------------------------ ------------------------------
Operating
income/(loss) 2,864 208 4,704 (1,367)
Net finance
expense (33) (40) (54) (77)
Foreign exchange
(loss)/gain (452) 529 (438) 608
(Loss)/gain on
acquisition - (63) (174) 29,401
-----------------
Income before
income
taxes 2,379 634 4,038 28,565
Current income
tax
expense (1,739) (1,061) (3,067) (2,045)
Deferred income - - - -
tax
expense
-----------------
Total current and
deferred
income tax
expense (1,739) (1,061) (3,067) (2,045)
Total
comprehensive
income
for the period 640 (426) 971 26,520
------------------ ------------------------------ ------------------------------
Net income per
share
Basic $0.003 $(0.002) $0.005 $0.155
Diluted $0.003 $(0.002) $0.005 $0.153
-------------------- ------------------------------ ------------------------------
Consolidated Statement of Changes
in Equity
Six months ended June 30
US$'000s 2018 2017
----------------------------------- ----------------------------------- -----------------------------------
Share capital
Balance, beginning of
period 88,785 40,275
Issuance of common shares - 39,491
Share issue costs - (781)
--------------------------------- ----------------------------------- -----------------------------------
Balance, end of period 88,785 78,985
Contributed surplus
Balance, beginning of
period 5,666 5,128
Stock-based compensation for
the period 656 85
----------------------------------- ----------------------------------- -----------------------------------
Balance, end of period 6,322 5,213
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 971 26,520
------------------------------------ ----------------------------------- -----------------------------------
Balance, end of period 22,056 19,298
Total equity 116,246 102,579
--------------------------------- -----------------------------------
Consolidated Statement
of Cash Flows
Three months ended Six months ended June
June 30 30
US$'000s 2018 2017 2018 2017
---------------------- ------------------------------------ ---------------------------------- ------------------------------------ ----------------------------------
Cash flows generated
from/(used
in) operating
activities
Income before income
taxes 2,379 634 4,038 28,565
Adjustments for:
Depletion,
depreciation
and amortization 3,657 4,892 6,190 8,414
Exploration and
evaluation
expense 1,783 - 5,033 53
Finance expense 33 40 54 77
Stock based
compensation 324 42 656 85
Loss/(gain) on
acquisition - 63 174 (29,401)
Foreign exchange
(gain)/loss 269 35 (58) 87
Gain on sale
of office asset (23) - (23) -
Release of historic
operational
tax provision (300) - (300) -
Inventory write-off 490 - 490 -
Tax paid by State (1,192) (884) (2,167) (1,638)
Share of profit from
joint venture (292) (337) (526) (711)
---------------------- ------------------------------------ ---------------------------------- ------------------------------------ ----------------------------------
Operating cash flow
before
working capital
movements 7,128 4,485 13,561 5,531
Decrease in trade and
other receivables 1,070 3,928 8,342 5,611
Increase/(decrease) in
trade
and other payables 2,454 (94) 289 240
Increase in inventory (180) - (769) -
Cash generated from
operating activities 10,472 8,319 21,423 11,382
Income taxes
paid (1,091) (229) (1,091) (237)
--------------------- ---------------------------------- ------------------------------------ ----------------------------------
Net cash generated from
operating activities 9,381 8,090 20,332 11,145
Cash flows (used
in)/generated
from investing
activities:
Property, plant and
equipment
expenditures (7,726) (129) (13,203) (242)
Exploration and
evaluation
expenditures (5,946) (1,291) (8,311) (1,579)
Dividends received 525 - 525 -
Acquisition of
subsidiaries - - - (28,056)
Cash balance acquired
during the period - - - 3,108
Net cash used in
investing
activities (13,147) (1,420) (20,989) (26,769)
Cash flows generated
from/(used
in) financing
activities:
Issuance of common
shares - (20) - 38,690
Finance costs
paid (8) (40) (11) (77)
--------------------- ------------------------------------ ---------------------------------- ------------------------------------ ----------------------------------
Net cash (used
in)/generated
from financing
activities (8) (60) (11) 38,613
(Decrease)/increase in
cash
and cash equivalents (3,774) 6,610 (668) 22,989
Effect of foreign
exchange
on cash and cash
equivalents (269) (35) 58 (87)
Cash and cash
equivalents,
beginning of period 29,277 21,052 25,844 4,725
----------------------- ------------------------------------ ---------------------------------- ------------------------------------ ----------------------------------
Cash and cash
equivalents,
end of period 25,234 27,627 25,234 27,627
---------------------- ---------------------------------- ----------------------------------
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
------------------------------
"LIBOR" London interbank offer rate
------------------------------
"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 Company's use of proceeds from the Facility; the timing of
first gas at South Disouq; the Company's plans, production targets,
volume targets, drilling, production start-up dates, seismic work
and the timing and costs thereof; 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 and six months
ended June 30, 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. 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 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, flow rate 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.
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 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 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
IR USVRRWVAWUUR
(END) Dow Jones Newswires
August 28, 2018 02:00 ET (06:00 GMT)
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