TIDMSDX
RNS Number : 7257O
SDX Energy PLC
14 June 2022
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.
14 June 2022
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
2022 AGM TRADING AND OPERATIONS UPDATE
SDX Energy Plc (AIM: SDX), the MENA-focused energy company,
issues the following trading and operations update in advance of
the Company's AGM today at 10.00 am BST. The information contained
herein has not been audited and may be subject to further review
and amendment. All monetary values are expressed in United States
dollars net to the Company unless otherwise stated.
Mark Reid, CEO of SDX, commented:
"I am very pleased to report a strong operational and financial
performance update ahead of this year's AGM. Our drilling results
in South Disouq and West Gharib over the past five months have been
excellent with six successful wells and with operations ongoing on
another well at West Gharib. A one hundred percent success rate to
date. Our drilling success in South Disouq in particular has
enabled us to identify further material prospectivity in and around
our leases. Production continues to be above guidance and we have
further grown our cash balance to US$15.2 million as at 31 May
2022."
Year to date 2022 Operations Highlights
-- Average entitlement production as at 31 May 2022 of 3,778
boe/d was 10% higher than mid-point 2022 market guidance of 3,425
boe/d.
-- Production in Morocco and at South Disouq was above 2022
guidance, with West Gharib below due to mechanical issues with a
previous rig that is now being replaced. West Gharib production is
expected to increase in the second half of the year.
-- In South Disouq, the planned three-well campaign has been
successfully completed with three discoveries being made. SD-5X has
been brought online ahead of schedule and is now contributing to
production and cash flow. SD-12 East is undergoing a pressure build
up test with MA-1X testing expected to commence in the coming
days.
-- Condensate production from SD-5X is also better than expected
at gross 100-110 bbld/d compared to pre-drill expectations of 25-30
bbl/d.
-- Based upon the results of the recent South Disouq drilling
campaign, Management has reassessed the remaining prospectivity in
South Disouq and has identified gross unrisked P50 prospectivity of
145 bcf of which c100bcf is in acreage that requires re-award by
the Egyptian state.
-- In West Gharib three wells have been successfully completed
with production already commenced from the MSD-21 and MSD-25 wells.
The recently completed MSD-24 well is expected to commence
production in the next four weeks and operations are continuing at
the MSD-20 well.
-- In Morocco, preparations continue for the recommencement of
the drilling campaign that was suspended in December 2021. The
first of up to seven wells to be drilled in the next year is
expected to spud in July 2022
-- In February 2022, the Company announced the disposal of 33%
of the shares in the entity that holds its interests across its
South Disouq concession for US$5.5 million which has been fully
received.
Year to date 2022 Financial Highlights
-- Closing cash as at 31 May 2022 was US$15.2 million
-- Capex as at 31 May 2022 of US$8.3 million, reflects:
o US$5.2 million for the three-well drilling campaign at South
Disouq split between: US$1.8 million for the drilling and
completion of the SD-5X well, US$2.2 million for the drilling and
completion of the SD-12 East well and US$1.2 million for the
drilling of the MA-1X well.
o US$1.2 million of pre-drilling and standby costs associated
with the re-commencement of the Moroccan drilling campaign, US$0.3
million on the SAH-4 workover as well as US$0.3 million of
infrastructure works; and
o US$1.3 million of West Gharib drilling costs across the
MSD-20, MSD-21, MSD-24, and MSD-25 wells.
First disbursement of EBRD credit facility
The Company has submitted a disbursement application for the
first draw down of its credit facility with the European Bank of
Reconstruction and Development ("EBRD") for an amount of US$2.5
million reimbursing some of the Moroccan capex that was originally
funded from the Company's cash resources. One of the drivers for
the proposed draw down is that global macroeconomic circumstances
in recent months have made it more challenging to repatriate cash
from the Company's Egyptian operations, and at present,
restrictions have been placed on outgoing US dollar transfers by
the Central Bank of Egypt. The interest rate at this level of draw
down on the credit facility is LIBOR plus 4%. As at 31 May 2022,
the Group's reported cash balance was US$15.2 million and all
ongoing and planned operations in Morocco and Egypt remain
fully-funded from in-country cash flows and existing cash
balances.
Following the initial draw down, the Company expects to have an
additional US$3.2 million of available liquidity under the EBRD
facility as per the last redetermination completed as at end of
April 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
two producing assets: a 36.9% operated interest in the South Disouq
and Ibn Yunus gas fields and a 67.0% operated interest in the Ibn
Yunus North 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 four 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.sdxenergygroup.com or the Company's filed documents at
www.sedar.com .
Standard
Estimates of reserves and resources have been prepared in
accordance with the June 2018 Society of Petroleum Engineers
("SPE") Petroleum Resources Management System ("PRMS") as the
standard for classification and reporting with an effective date of
31 December 2021 and the SPE's Canadian Oil and Gas Evaluation
Handbook and in accordance with NI 51-101.
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 Dr Rob Cook, VP
Subsurface of SDX. Dr. Cook has 30 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 Broker)
Callum Stewart
Jason Grossman
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 (0) 203 757 4980
Glossary
"bcf" Billions of standard cubic feet
"bbl/d" Barrels per day
-----------------------------------
"b oe/d " Barrels of oil equivalent per
day
-----------------------------------
"P50" 50 percent probability that
the quantities actually recovered
will equal or exceed the best
estimate
-----------------------------------
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
future drilling developments and results, 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 2021, 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.
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 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 2022. 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.
"P50" means that there is at least a 50% probability that the
quantities actually recovered will equal or exceed the best
estimate.
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