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.
LONDON, May 17, 2019 /CNW/ - SDX Energy Inc. (TSXV, AIM:
SDX), the North Africa-focused oil
and gas company, announces its financial and operating results for
the three months ended March 31, 2019
and a Directorate change. All monetary values are expressed in
United States dollars net to the
Company unless otherwise stated.
Summary
Operations
- Q1 2019 production of 3,715 boe/d, an increase of 22% from Q1
2018, due to successful drilling in North West Gemsa and Meseda and
increased gas sales in Morocco. Q1
2019 production was, however, 5% lower than Q4 2018 due to
increased water cut in North West Gemsa.
- Post period end, production at Meseda and in Morocco remained stable, however, production
in North West Gemsa continued to decline. Workover programs
continued at Meseda and North West Gemsa.
- Construction of the South Disouq central processing facility
("CPF"), pipeline and well tie-ins continued in Q1 2019 with first
gas now expected to be achieved in Q4 2019.
Financial
- Q1 2019 net revenues and netback of US$13 million and US$9
million respectively are 15% and 3%, higher than Q1 2018,
due to increased production and improved gas prices in Morocco, offset by lower Q1 2019 net realized
average oil/service fees of US$55/boe, compared to US$59/boe in Q1 2018.
- Operating cash flow before capex in Q1 2019 remained robust at
US$7 million with US$13 million of capex being invested in the
period, of which US$7 million was
related to the South Disouq CPF, pipeline and well tie-ins.
- Cash at March 31, 2019 was
US$11 million with the US$10 million EBRD facility remaining
undrawn.
Directorate Change
- Paul Welch will be resigning as
a director, and as President and Chief Executive Officer, of the
Company with effect from May 31,
2019. As part of an ongoing succession plan, Mark Reid, Chief Financial Officer will assume
the role of Interim Chief Executive Officer with immediate
effect.
- A leading oil and gas executive search firm has commenced the
process for the recruitment of a new Chief Executive Officer.
Outlook
- A drilling campaign of up to twelve wells is planned for
Morocco in Q4 2019/Q1 2020. This
will target sufficient reserves to satisfy existing customers'
forecast demand and will test new play opening areas of
prospectivity across the portfolio.
- Due to a slower than anticipated run-rate of new customer
additions and a scaling down of certain business lines at an
existing customer, 2019 Morocco gas sales guidance is revised to an
annual average gross rate of 6.0-6.5MMscf/d, being the estimated
contracted volumes from existing customers. Previous guidance was
for a 2019 gross exit rate of 9.0-11.0MMscf/d.
- In South Disouq, first gas is now expected to be achieved in Q4
2019, with the Company aiming for a gross plateau production rate
of c.50 MMscfe/d by Q1 2020 after an initial ramp up phase.
- Subject to partner approval, a drilling campaign of up to five
exploration wells is planned to commence at South Disouq in 2020.
These wells will target the same Abu Madi and Kafr el Sheik
prospective horizons that have seen the Company make four
discoveries from the five wells drilled to date.
- In Meseda, the Company is maintaining its existing gross
production guidance of 4,000-4,200 bbl/d and is looking forward to
the upcoming drilling of two further development wells, one in each
of the Rabul and Meseda discovery areas.
- In North West Gemsa, 2019 gross production guidance is reduced
to 3,000-3,200 boe/d from 3,400-3,600 boe/d due to increased water
cut offsetting the impact of ongoing workovers.
- The Company's drilling and development activities set out above
are fully funded from expected future cash flows and its existing
sources of liquidity.
Michael Doyle, Chairman of SDX
Energy, commented:
"The Board would like to thank Paul for his hard work in
growing SDX Energy and we wish him well in his future
endeavours.
We are also grateful to Mark for taking over as interim CEO.
Mark's focus will be to ensure the delivery of our key operational
targets at the South Disouq development in Egypt and the upcoming Morocco drilling campaign through the use and
optimization of the liquidity that we have available in the Company
today.
It is important that the market now has an updated view of
how our assets will contribute to the business in the coming
months, and our restated guidance today does this. Our focused well
programme in Morocco and our
commitment to ensure that South Disouq commences production in Q4
2019, before any further drilling takes place in this concession,
emphasises our commitment to capital and fiscal discipline in the
business going forward. That said, we are very much looking forward
to recommencing drilling in Morocco and South Disouq during 2019/20, and
we hope to continue with the successes we have had to date in both
locations.
The Board remains very positive about SDX's future growth
plans, both from our high quality existing asset portfolio, as well
as from new opportunities, a number of which we continue to
assess."
Corporate and financial
- SDX's key financial metrics for the three months ended
March 31, 2019 and 2018 are:
|
Three months
ended
March 31
|
US$ million except
per unit amounts
|
2019
|
2018
|
Net
Revenues
|
12.7
|
11.0
|
Netback(1)
|
9.3
|
9.0
|
Net realized
average oil/service fees - US$/barrel
|
54.58
|
59.34
|
Net realized
average Morocco gas price - US$/mcf
|
10.26
|
10.03
|
Netback –
US$/boe
|
27.84
|
32.80
|
EBITDAX(1)
(2)
|
7.8
|
7.4
|
Exploration &
evaluation expense ("E&E")
|
(0.2)
|
(3.3)
|
Depletion,
depreciation and amortization
("DD&A")
|
(5.9)
|
(2.5)
|
(Loss)/gain on
acquisition
|
-
|
(0.2)
|
Total
comprehensive income
|
0.1
|
0.3
|
Net cash generated
from operating activities
|
7.0
|
11.0
|
Cash and cash
equivalents
|
11.4
|
29.3
|
Note:
(1)
|
Refer to "Non-IFRS
Measures" section of this release below for details of Netback and
EBITDAX.
|
(2)
|
EBITDAX for Q1 2019
and Q1 2018 includes US$1.0 million in each quarter 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 main components of SDX's comprehensive income of
US$0.1 million for the three months
ended March 31, 2019 are:
-
- US$9.3 million netback;
- US$5.9 million of DD&A;
- US$1.2 million of G&A;
and
- US$0.3 million of transaction
costs covering business development activities and the proposed
re-domicile of the Company from Canada to the UK.
- Netback for the three months ended March
31, 2019 was US$9.3 million,
up from US$9.0 million for the three
months to March 31, 2018. This
increase has been driven by Q1 2019 production increasing to 3,715
boe/d from 3,036 boe/d in Q1 2018, offset by a reduction in Q1 2019
realized average oil prices in Egypt to US$54.58/bbl from US$59.34/bbl in Q1 2018. Average Moroccan natural
gas prices were broadly flat with Q1 2019 realized price being
US$10.26/mcf compared to US$10.03/mcf in Q1 2018.
- The cash position of US$11.4
million as at March 31, 2019
is US$6.0 million lower than the
US$17.4 million as at December 31, 2018 and US$17.9 million lower than the US$29.3 million as at March 2018. This cash movement in Q1 2019
reflects operating cash flows of US$7.0
million from continuing strong netbacks and a US$0.6 million reduction in working capital
predominantly due to the continued reduction in Egyptian
receivables, which enabled the Company to fund the US$12.9 million capital investment program
discussed below. In addition, the Company's three year,
US$10.0 million credit facility
established in July 2018 with the
EBRD, remains undrawn.
- US$12.9 million of capital
expenditure has been invested into the business during the three
months ended March 31, 2019. This
comprised of:
-
- US$9.4 million for the South
Disouq development program and 3D seismic program, comprising
US$7.0 million for the CPF, pipeline
and well tie-ins and US$2.4 million
for the 170km2 3D seismic program;
- US$0.6 million in North West
Gemsa for the ongoing well workover program;
- US$0.6 million in Meseda for the
ongoing electrical submersible pump ("ESP") and sucker rod pump
replacement programs;
- US$1.4 million in South Ramadan
for the SRM-3 well, the results of which are currently being
assessed; and
- US$0.9 million in Morocco, comprising US$0.7m for customer connections, facilities and
studies and US$0.2 million relating
to the 240km2 3D seismic program in Gharb Centre;
- Trade and other receivables have reduced to US$21.7 million as at March 31, 2019 down from US$24.3 million as at December 31, 2018. This reduction reflected
US$7.9 million of trade receivables
due from the Egyptian State offset against costs due to Egyptian
State contractors used on the South Disouq development project. A
further US$0.9 million of similar
offsets have been achieved post period end.
Operational highlights
- The Company's entitlement share of production from its
operations for the three months ended March
31, 2019 was 3,715 boe/d (gross – 9,605 boe/d) split as
follows:
- North West Gemsa 2,128 boe/d (gross - 4,256 boe/d)
- Meseda 826 bbl/d (gross – 4,334 bbl/d)
- Morocco 761 boe/d (gross –
1,015 boe/d)
- As a result of the 2019 drilling and workover program in Meseda
commencing later than planned, post-period end production has
declined slightly. In Morocco,
production has remained broadly stable as new customers are going
through a process of taking gas periodically, as they test their
newly installed gas fired heating systems, before moving to more
sustained offtake volumes. Production in North West Gemsa is
currently below expectation due to three wells being offline for
pump replacements and other workovers and continued water cut
increases across the concession. As at May
16, 2019, actual average entitlement production for
Egypt and Morocco for the period from April 1, 2019 amounted to 3,306 boe/d (gross –
8,565 boe/d) split as follows:
- North West Gemsa 1,785 boe/d (gross – 3,570 boe/d)
- Meseda 758 bbl/d (gross – 3,978 bbl/d)
- Morocco 763 boe/d (gross –
1,017 boe/d)
Egypt
- In North West Gemsa (SDX 50% working interest and
non-operator), a workover of the water injection well AASE-8 was
successfully carried out and work is continuing on the proposed
recompletion of the AASE-5 well to the Rahmi from the Shagar
reservoir. An update on this will be provided with the Q2 2019
results.
- In Meseda (SDX 50% working interest and joint operator), the
Company participated in the workover of four wells in the Meseda
Field; MSD-5, 6, and 15 all had ESPs replaced and MSD-9 had a
sucker rod pump replaced. All of these wells continue to produce
strongly, with production ranging from c.200 to 600bbl/d across
these wells. In the remainder of 2019, the partners will be
drilling two further development wells, one in each of the Meseda
and Rabul fields. In addition, the partners are planning two water
injection wells, one each in Rabul and Meseda.
- In South Disouq (SDX 55% working interest and operator), the
Company was awarded a 25 year development lease on January 2, 2019 covering the South Disouq
development area which is delineated by the SD-1X, SD-3X and SD-4X
discoveries. A similar 25 year development lease is in the process
of being granted over the Ibn Yunus development area as a result of
the success of the Ibn Yunus exploration well.
- Development of the South Disouq CPF, pipeline and well tie-ins
continued during Q1 2019. Production is expected to commence in Q4
2019 and, after a ramp up phase, an initial gross plateau
production rate of conventional natural gas of c.50 MMscfe/d is
being targeted.
- Field operations to acquire a 170 km2 3D seismic
survey in South Disouq were safely and successfully completed in
February 2019. The data is being
processed and merged with the 300 km2 3D seismic data
acquired in 2016. Preliminary interpretation is encouraging,
confirming the continuation of the Abu Madi play fairway with
several four-way dip closures identified. Final processed data is
expected in Q2, and a revised prospectivity inventory available in
Q3 2019.
- At South Ramadan (SDX 12.75% working interest and
non-operator), the SRM-3 appraisal well was spud on June 14, 2018 and reached a target depth of
15,635 feet. The operator reported encountering 75 feet of net
conventional oil pay in the Matulla section (primary target), 20
feet of net conventional oil pay in the Brown Limestone formation,
and a further 15 feet of net conventional oil pay in the Sudr
section. The well was completed and operations continue on the
flowline upgrade/replacement in order that the well can be
flow-tested. Based on the results of the flow-test, the Company
will decide on how best to optimize its position in the
licence.
Morocco
- The Company's Moroccan acreage (SDX 75% working interest and
operator) consists of five concessions, all of which are located in
the Gharb Basin in northern Morocco: Sebou, Lalla
Mimouna Nord, Gharb Centre, Lalla Mimouna Sud, and Moulay
Bouchta Ouest. The Lalla Mimouna Sud and Moulay Bouchta Ouest
concessions were acquired from the Government of Morocco on February 7,
2019.
- During 2018, the Company began selling natural gas to the
following new customers: Peugeot, Extralait, and GPC Kenitra. In
addition, during Q1 2019, natural gas sales began to another new
customer, Setexam, and natural gas sales agreements were signed
with Citic Dicastal and Omnium Plastic. Post period end Omnium
Plastic and Citic Dicastal began taking natural gas.
- After a period of testing during late Q4 2018, GPC and
Extralait are increasing their gas consumption and this is
reflected in the increase in gross production in Q1 2019 to
6.1mmscf/d from the annual gross production rate in 2018 of
5.2mmscf/d.
- The Moulay Bouchta Ouest exploration concession has been
awarded to SDX for a period of eight years with a commitment to
reprocess 150 km of 2D seismic data, acquire 100 km2 of
new 3D seismic, and drill one exploration well within the first 3.5
year period.
- The Lalla Mimouna Sud exploration concession has been
re-awarded to SDX for a period of eight years with a commitment to
acquire 50 km2 of 3D seismic and drill one exploration
well within the first three-year period.
Outlook and update on 2019 production and capex
guidance:
In light of recent corporate and operational developments, the
Company has reassessed its 2019 production and capex guidance and
reports as follows;
|
Gross
Production
|
|
|
Capex (net
to
SDX)
|
|
|
Current
Guidance
|
Previous
Guidance
|
|
Current
Guidance
|
Previous
Guidance
|
|
|
|
|
|
|
NW Gemsa -
WI 50%
|
3,000 - 3,200
boe/d
|
3,400 - 3,600
boe/d
|
NW Gemsa -
WI 50%
|
US$2.0
million
|
US$2.0
million
|
Meseda -
WI
50%
|
4,000 - 4,200
bbl/d
|
4,000 - 4,200
bbl/d
|
Meseda -
WI
50%
|
US$2.7
million
|
US$4.0
million
|
South
Disouq – WI
55%
|
First gas by
Q4'19.
c.50 MMscfe/d
plateau by Q1'20
|
First gas
by
Q3'19.
50 - 60 MMscf/d
plateau by Q4'19
|
South Disouq
– WI 55%
|
US$19.5
million
|
US$22.0
million
|
Morocco –
WI 75%
|
6.0 - 6.5 MMscf/d
2019 annual
average rate
|
9 -11 MMscf/d
2019 exit rate
|
Morocco – WI
75%
|
US$12.0
million
|
US$8.0
million
|
Egypt
- North West Gemsa (50% working interest)
-
- Targeting 2019 annual average gross production of 3,000-3,200
boe/d, down from previous guidance of 3,400-3,600 boe/d, due to
increased water cut offsetting the impact of the ongoing ten well
workover program.
- Gross capex guidance for 2019 is unchanged at US$4 million (US$2
million net to SDX) consisting of up to ten well workovers
and infrastructure maintenance.
- Meseda (50% working interest)
-
- Targeting 2019 annual average gross production of 4,000-4,200
bbl/d, unchanged from previous guidance.
- As a result of a less extensive facilities upgrade program now
being necessary, 2019 capex guidance has been reduced to gross
US$5.4 million (US$2.7 million net to SDX) down from gross
US$8 million (US$4 million net to SDX). Out of the US$2.7 million net to SDX, US$1.6 million relates to two planned wells and
two water injection wells and US$1.1
million relates to ESP replacements and a facilities
upgrade.
- One well will be drilled in Rabul to continue the development
of this discovery area, and the other at a development location in
the Meseda field. Two water injection wells are also currently
planned, one each in Rabul and Meseda.
- The operator also plans to replace up to five ESPs in the wider
Meseda area and upgrade water handling capabilities at the field
facilities.
- South Disouq (55% working interest)
-
- During 2019, SDX will complete construction of the South Disouq
CPF, the 10km export pipeline and the tie-ins for the four existing
production wells.
- First gas is now expected in Q4 2019, with the Company aiming
for a gross plateau production rate of c.50 MMscfe/d by Q1 2020
after an initial ramp up phase. Natural gas will be sold to EGAS at
a price of US$2.85/Mcf.
- Remaining key activities to reach first gas are; i) a factory
acceptance test on completion of the CPF fabrication process in
Abu Dhabi at the end of
June 2019; ii) transportation of CPF
from Abu Dhabi, customs clearance
in Egypt and transportation to
site by mid-August 2019 and iii)
completion of installation and commissioning to take first gas by
mid-November 2019 (assumes an eight
week general contingency allowance).
- Prospect inventory for future drilling has increased with the
interpretation of the recently acquired 170 km2 of 3D
seismic in the southern section of the concession.
- Subject to partner approval, the Company is proposing to drill
two further exploration wells in 2020 prior to the concession
expiry on March 20, 2020. These wells
will be targeting conventional gas prospects identified on the
Company's 3D seismic over the concession in the Abu Madi and Kafr
el Sheik horizons where the Company has already made four
discoveries from five wells drilled.
- Depending on the results of these two wells, the partnership
may decide to drill a further two/three exploration wells, again
targeting Abu Madi and Kafr el Sheik prospectivity, and thus
utilize the automatic six month extension to the concession expiry
date to September 20, 2020 which is
available if drilling operations are ongoing at the end of the
prescribed concession expiry date.
- Gross capex in 2019 is expected to be approximately
US$35.5 million (US$19.5 million net to SDX) and is lower than
previous guidance, of US$22.0 million
net to SDX. The reduction is due to the Company no longer
proceeding with the early production facility as previously
envisaged. Out of the US$19.5million
net to SDX, approximately US$17.0
million relates to the South Disouq development activities
and US$2.5 million relates to long
lead items and drilling preparations for the two planned
exploration wells in 2020.
- To date in 2019, the Company has offset US$8.8 million of its accounts receivable due
from the Egyptian Petroleum Company, ("EGPC") against costs
incurred with Egyptian State contractors on the South Disouq
development. The Company is hoping that this efficient use of
working capital can continue throughout the remainder of the South
Disouq development project.
- South Ramadan (12.75% working interest)
-
- Drilling operations competed on January
13, 2019 with the operator reporting that the well had
encountered 75 feet of net conventional oil pay in the Matulla
section (primary target), 20 feet of net conventional oil pay in
the Brown Limestone formation and a further 15 feet of net
conventional oil pay in the Sudr section.
- The well was completed and operations continue on the flowline
upgrade/replacement in order that the well can be flow-tested.
Based on the results of the flow-test, the Company will decide on
how best to optimize its interest in the licence.
Morocco (75% working
interest)
- SDX is now targeting 2019 annual average gross production of
6.0 - 6.5 MMscf/d of conventional natural gas sales compared to
previous guidance of achieving 9.0 -11.0 MMscf/d of conventional
natural gas sales by the end of 2019.
- Updated guidance is based on customers currently under contract
and also reflects that, in Q1 2019, the Company's second largest
customer reallocated a production line from Morocco to Spain and thus has reduced its volumes by 30%
compared to 2018 levels. Whilst the Company continues to work to
develop new customer opportunities, given the slowdown in new
companies setting up in the Atlantic Free Zone near the Company's
infrastructure in Kenitra, there is no guarantee that this will
lead to incremental production and revenues by December 31, 2019.
- The Company's 240 km2 3D seismic acquisition program
in Gharb Centre has now been processed and an initial
interpretation is completed. The data quality is good and, as a
result, multiple leads and prospects have been identified. An
inversion of the dataset has taken place and prospects identified
for a proposed drilling campaign of up to twelve wells to take
place between Q4 2019 and Q2 2020.
- Planning for the drilling campaign has now begun and these
wells are targeting sufficient reserves to satisfy existing
customers' forecast demand and to test new play opening areas of
prospectivity across the portfolio. Additional wells maybe drilled
in 2020 depending on the Company's assessment of the time between
drilling these wells and selling gas to any new identified
customers.
- The 2019 total gross capex forecast is unchanged from previous
guidance at approximately US$14.0
million with SDX's share being approximately US$12.0 million. Out of this US$12.0 million, US$3.4
million relates to long lead items for the twelve wells and
US$6.0m relates to the drilling costs
for up to four wells expected to be drilled by the end of 2019. The
remaining US$2.6 million relates to
the Company's share of facilities and field maintenance capex.
Corporate
- The Company expects to receive shareholder approval of a plan
of arrangement at the company's AGM today and, subject to final
court approval on May 21, 2019, the
Company plans to relocate its corporate residence from Canada to the UK, with a group reorganisation,
to place a new UK plc as the holding company of the Group and
delist from the TSX-V. It is expected that this process will be
completed later in Q2 2019 and will result in meaningful annual
savings in administrative costs, management time, and a more tax
efficient corporate structure.
- As part of the Company's strategy, it continues to review and
explore opportunities to expand the asset base in the North Africa region, including new licencing
rounds and acquisitions.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim condensed consolidated financial statements
with Management's Discussion and Analysis for the three months
ended March 31, 2019 are now
available on the Company's website at www.sdxenergy.com and on
SEDAR at www.sedar.com.
|
Prior
Quarter
|
Three months
ended
March
31
|
$000s except per
unit amounts
|
|
2019
|
2018
|
FINANCIAL
|
|
|
|
Gross
revenues
|
18,725
|
16,690
|
14,763
|
Royalties
|
(4,885)
|
(4,009)
|
(3,803)
|
Net
revenues
|
13,840
|
12,681
|
10,960
|
Operating
costs
|
(3,392)
|
(3,374)
|
(1,994)
|
Netback (1)
|
10,448
|
9,307
|
8,966
|
EBITDAX
(1)
|
7,103
|
7,808
|
7,389
|
Total comprehensive
(loss)/income
|
(4,029)
|
132
|
331
|
Net (loss)/income per
share - basic
|
(0.020)
|
0.001
|
0.002
|
Cash, end of
period
|
17,345
|
11,354
|
29,277
|
Working capital
(excluding cash)
|
12,064
|
10,069
|
13,814
|
Capital
expenditures
|
8,316
|
13,040
|
9,948
|
Total
assets
|
138,107
|
137,630
|
140,497
|
Shareholders'
equity
|
116,039
|
116,491
|
115,282
|
Common shares
outstanding (000's)
|
204,723
|
204,723
|
204,493
|
|
|
|
|
OPERATIONAL
|
|
|
|
NW Gemsa oil sales
(bbl/d)
|
1,808
|
1,586
|
1,507
|
Block-H Meseda
production service fee (bbl/d)
|
864
|
826
|
558
|
Morocco gas sales
(boe/d)
|
648
|
761
|
664
|
Other products sales
(boe/d)
|
604
|
542
|
307
|
Total sales
volumes (boe/d)
|
3,924
|
3,715
|
3,036
|
|
|
|
|
Realized oil price
(US$/bbl)
|
62.77
|
58.22
|
62.81
|
Realized service fee
(US$/bbl)
|
51.34
|
47.58
|
50.00
|
Realized oil sales
price and service fees ($/bbl)
|
59.07
|
54.58
|
59.34
|
Realized Morocco gas
price (US$/mcf)
|
9.78
|
10.26
|
10.03
|
Royalties
($/bbl)
|
13.53
|
11.99
|
13.92
|
Operating costs
($/bbl)
|
9.40
|
10.09
|
7.30
|
Netback
($/bbl) (1)
|
28.94
|
27.84
|
32.80
|
|
|
|
|
(1)
|
Refer to the
"Non-IFRS Measures" section of this release below and the Company's
MD&A for the three months ended March 31, 2019 and 2018 for
details of netback and EBITDAX.
|
About SDX
SDX is an international oil and gas exploration, production and
development company, headquartered in London, England, UK, with a principal focus on
North Africa. In Egypt, SDX has a working interest in two
producing assets (50% North West Gemsa & 50% Meseda) located
onshore in the Eastern Desert, adjacent to the Gulf of Suez. In
Morocco, SDX has a 75% working
interest in the Sebou concession, situated in the Gharb Basin.
These producing assets are characterized by exceptionally low
operating costs, making them particularly resilient in a low oil
price environment. SDX's portfolio also includes high impact
exploration opportunities in both Egypt and Morocco.
For further information, please see the Company's website at
www.sdxenergy.com or the Company's filed documents at
www.sedar.com.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the
London Stock Exchange the technical information contained in the
announcement has been reviewed and approved by Paul Welch, Chief Executive Officer of SDX. Mr.
Welch, who has over 30 years of experience, is the qualified person
as defined in the London Stock Exchange's Guidance Note for Mining
and Oil and Gas companies. Mr. Welch holds a BS and MS in Petroleum
Engineering from the Colorado School of
Mines in Golden, CO. USA
and an MBA in Finance from SMU in
Dallas, TX USA and is a member of
the Society of Petroleum Engineers (SPE).
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"
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stock tank
barrel
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"boepd" &
"boe/d"
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barrels of oil
equivalent per day
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"bopd" &
"bbl/d"
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barrels of oil per
day
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"mcf"
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thousands of cubic
feet
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"MMscf/d"
|
million standard
cubic feet per day
|
"MMscfe/d"
|
million standard
cubic feet equivalent per day
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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, the timing of Mr.
Welch's resignation as a director and executive officer, the timing
of Mr. Reid's assumption of the role of Interim Chief Executive
Officer, statements regarding the Company's plans, the timing of
completion of the South Disouq CPF, timing of completion of the
export pipelines and well tie-ins, production targets, future
drilling, seismic work, new gas sales customers, ESP replacement,
field facility upgrades, well workovers, and the timing and costs
thereof, as well as capital expenditures, operational expenditures,
the reduction in Egyptian receivables, the Company's 2019 outlook,
the timing of the receipt of a development lease over the Ibn Yunus
development area, prospective opportunities and business
development activity, the timing of the delisting of the Company's
shares from the TSX-V, the Company's plans to re-domicile to the
UK, the timing thereof and expected accretions to the Company and
the reorganization of the corporate structure should all be
regarded as forward-looking information.
The forward-looking information contained in this document is
based on certain assumptions and although management considers
these assumptions to be reasonable based on information currently
available to them, undue reliance should not be placed on the
forward-looking information because SDX can give no assurances that
they may prove to be correct. This includes, but is not limited to,
assumptions related to, among other things, commodity prices and
interest and foreign exchange rates; planned synergies, capital
efficiencies and cost‐savings; applicable tax laws; future
production rates; receipt of necessary permits; the sufficiency of
budgeted capital expenditures in carrying out planned activities;
the timing of and the Company's ability to obtain regulatory and
statutory approvals in connection with the Company's plans to
re-domicile to the UK and the availability and cost of labor and
services.
All timing given in this announcement, unless stated otherwise
is indicative and while the Company endeavors to provide accurate
timing to the market, it cautions that due to the nature of its
operations and reliance on third parties this is subject to change
often at little or no notice. If there is a delay or change to any
of the timings indicated in this announcement, the Company shall
update the market without delay.
Forward-looking information is subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward‐looking statements. Such risks and other
factors include, but are not limited to political, social and other
risks inherent in daily operations for the Company, risks
associated with the industries in which the Company operates, such
as: operational risks; delays or changes in plans with respect to
growth projects or capital expenditures; costs and expenses;
health, safety and environmental risks; commodity price, interest
rate and exchange rate fluctuations; environmental risks;
competition; permitting risks; ability to access sufficient capital
from internal and external sources; and changes in legislation,
including but not limited to tax laws and environmental
regulations. Readers are cautioned that the foregoing list of risk
factors is not exhaustive and are advised to reference SDX's
Management's Discussion & Analysis for the three months ended
March 31, 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.
Non-IFRS Measures
This news release contains the terms "Netback," and "EBITDAX"
which are not recognized measures under IFRS and may not be
comparable to similar measures presented by other issuers. The
Company uses these measures to help evaluate its performance.
Netback is a non-IFRS measure that represents sales net of all
operating expenses and government royalties. Management believes
that netback is a useful supplemental measure to analyze operating
performance and provide an indication of the results generated by
the Company's principal business activities prior to the
consideration of other income and expenses. Management considers
netback an important measure as it demonstrates the Company's
profitability relative to current commodity prices. Netback may not
be comparable to similar measures used by other companies. See
Netback reconciliation to operating income/(loss) in the Company's
Interim Consolidated Financial Statements for the three months
ended March 31, 2019 and 2018.
EBITDAX is a non-IFRS measure that represents earnings before
interest, tax, depreciation, amortization, exploration expense and
impairment. EBITDAX is calculated by taking operating income/(loss)
and adjusted for the add-back of depreciation and amortization,
exploration expense and impairment of property, plant and equipment
(if applicable). EBITDAX is presented in order for the users
of the financial statements to understand the cash profitability of
the Company, which excludes the impact of costs attributable to
exploration activity, which tend to be one-off in nature, and the
non-cash costs relating to depreciation, amortization and
impairments. EBITDAX may not be comparable to similar measures used
by other companies. See EBITDAX reconciliation to operating
income/(loss) in the Company's Interim Consolidated Financial
Statements for the three months ended March
31, 2019 and 2018.
Oil and Gas Advisory
Estimates of reserves been made assuming the development of each
property in which the estimate is made will actually occur, without
regard to the likely availability to the Company of funding
required for development of such reserves.
Certain disclosure in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 –
Standards for Oil and Gas Activities of the Canadian Securities
Administrators because the disclosure in question may, in the
opinion of a reasonable person, indicate the potential value or
quantities of resources in respect of the Company's resources or a
portion of its resources. Without limitation, the anticipated
results disclosed in this news release include estimates of volume,
flow rate, production rates, porosity and pay thickness
attributable to the resources of the Company. Such estimates have
been prepared by management of the Company and have not been
prepared or reviewed by an independent qualified reserves evaluator
or auditor. Anticipated results are subject to certain risks and
uncertainties, including those described above and various
geological, technical, operational, engineering, commercial and
technical risks. In addition, the geotechnical analysis and
engineering to be conducted in respect of such resources is not
complete. Such risks and uncertainties may cause the anticipated
results disclosed herein to be inaccurate. Actual results may vary,
perhaps materially.
Use of the term "boe" or the term "MMscf" may be misleading,
particularly if used in isolation. A "boe" conversion ratio of 6
Mcf: 1 bbl and a "Mcf" conversion ratio of 1bbl: 6 Mcf are based on
an energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
SOURCE SDX Energy Inc.