TIDMSDX
RNS Number : 2085Z
SDX Energy PLC
20 May 2021
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THE PUBLIC DOMAIN.
20 May 2021
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
ANNOUNCES THREE MONTHS TO 31 MARCH 2021 FINANCIAL AND OPERATING
RESULTS
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company,
is pleased to announce its unaudited financial and operating
results for the three months ended 31 March 2021. All monetary
values are expressed in United States dollars net to the Company
unless otherwise stated.
SDX management will be hosting a conference call for analysts
today at 3:00pm UK time, details of which can be found in the
release below.
Mark Reid, CEO of SDX, commented:
"The first quarter of 2021 has been a positive start to the year
as we have continued our strong production and cash generation from
our assets in Egypt and Morocco with all our key financial metrics
improving from the same period last year and our current production
and capex either beating or being in line with guidance.
Consumption from our customers in Morocco was notably stronger this
quarter compared to last year as demand has now fully recovered
from the effects of the pandemic seen in the same period of 2020.
We saw slightly reduced production at South Disouq due to natural
decline, well workovers and expected sand and water production in
two out of the five wells, however this was mostly offset by the
new SD-12X well which came onstream in December, and we remain on
track to meet our guidance.
As a business we remain in a financially strong position, fully
funded for our 2021/2022 work programme with robust cashflows and
now with the full US$10 million available in our credit facility to
draw upon. In this regard, I would like to reiterate my thanks to
the EBRD for their continued support in renewing the facility. We
have now commenced our drilling in Morocco and have made
significant progress with the planning of the Ibn Yunus-2X
development well, and the transformational Hanut-1X exploration
well in Egypt, which will be drilled consecutively, commencing in
Q2 2021. I would finally like to thank the team for their continued
high work rate throughout this period and I look forward to
updating the market as we progress our work streams in the
year."
Three months to 31 March 2021 Operations Highlights
-- Q1 2021 entitlement production of 5,862 boe/d was 2% higher
than 2021 mid point market guidance of 5,770 boe/d and 10% lower
than Q1 2020 mainly due to natural decline, well workovers and
expected sand and water production in two of the five wells at
South Disouq.
-- Capex of US$4.0 million was within guidance, with the
majority of activity scheduled for the remaining nine months of the
year. 2021 guidance for capex is US$25.0-US$26.5 million.
-- The Company's operated assets recorded a carbon intensity of
2.7kg CO(2e) /boe in Q1 2021 which is one of the lowest rates in
the industry.
-- Planning for the two-well South Disouq drilling campaign
continued, and subject to receipt of final Ministerial and
Parliamentary approval for a two-year exploration concession
extension, the Company plans to drill the Hanut prospect targeting
139bcf of P50, unrisked prospective resources with a chance of
success of 33% in Q3 2021.
-- Hanut will be preceded by the IY-2X well, a development well
in the eastern part of the Ibn Yunus field, seeking to bring
forward production and cash flow. The Company's partner has
confirmed that it will participate in both wells.
-- In March 2021, SDX obtained approval for a ten-year extension
to the West Gharib Production Services Agreement increasing audited
2P reserves in this core oil asset as at 31 December 2020, by 60%
year on year, or 119% taking account of 2020 production, to 3.52
million barrels.
-- Preparations were completed for the first three wells of a
four to five-well programme in Morocco, with the first well, the
OYF-3, spud at the end of April.
-- Post-period end, the Company received the COVID-19 delayed
laboratory analysis of the cuttings and side wall cores from the
LMS-2 well. This information confirmed that LMS-2 had successfully
encountered the targeted thermogenically-sourced gas in the Top
Nappe horizon but that the reservoir in the Lalla Mimouna Nord
concession has low permeability and the well is unlikely to flow
conventionally. As such, the Company will not risk US$0.5 million
testing this well, nor will it commit to further investment in the
Lalla Mimouna Nord concession post the end of the concession date
in July 2021 as a result of the low permeability in this concession
and limited likelihood of it being commercially developed.
Accordingly, the Company expects to recognise a US$10.2 million
non-cash impairment charge in Q2 ahead of relinquishment, of which
US$2.8 million relates to LMS-2.
-- As the analysis of LMS-2 has confirmed that a working
thermogenic petroleum system exists and feeds the Top Nappe
horizon, which exists throughout the Company's acreage, work will
continue to identify drillable prospects at this horizon, with the
objective of potentially testing the Top Nappe in drilling planned
for 2022/23.
Three months to 31 March 2021 Financial Highlights
The table below reflects the unaudited results of the Company
for the three months ended 31 March 2021 and 2020. The North West
Gemsa and South Ramadan concessions, which were sold in Q3 and Q4
2020 respectively, are classified as discontinued operations (as
required by IFRS). All revenues, costs and taxation from these
assets have been consolidated into a single line item "profit from
discontinued operations" in both periods reported. Per unit metrics
do not include North West Gemsa or South Ramadan.
Three months ended
31 March (unaudited)
US$ million except per unit 2021 2020
amounts
----------- -----------
Net revenues 13.4 12.7
----------- -----------
Netback(1) 10.8 10.3
----------- -----------
Net realised average oil service
fees - US$/barrel 47.90 38.88
----------- -----------
Net realised average Morocco
gas price - US$/Mcf 11.32 10.33
----------- -----------
Net realised South Disouq gas
price - US$/Mcf 2.85 2.85
----------- -----------
Netback - US$/boe 20.41 17.31
----------- -----------
EBITDAX(1) (2) 9.8 9.4
----------- -----------
Exploration & evaluation expense(3) (0.3) (4.8)
----------- -----------
Depletion, depreciation, and
amortisation (7.4) (6.7)
----------- -----------
Profit from discontinued operations - 1.1
----------- -----------
Total comprehensive profit/(loss) 0.6 (3.2)
----------- -----------
Capital expenditure 4.0 15.5
----------- -----------
Net cash generated from operating
activities(4) 6.1 4.9
----------- -----------
Cash and cash equivalents 9.7 8.8
----------- -----------
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(2) EBITDAX for three months ended 31 March 2021 and 2020
includes US$1.2 million and US$1.4 million respectively of non-cash
revenue relating to the grossing up of Egyptian corporate tax on
the South Disouq PSC which is paid by the Egyptian State on behalf
of the Company.
(3) For the three months ended 31 March 2020, US$4.4 million of
non-cash Exploration & Evaluation ("E&E") write offs in
total are included within this line item.
(4) Excludes discontinued operations.
-- Netback of US$10.8 million, 5% higher than the same period in
2020 of US$10.3 million, was primarily driven by strong demand in
Morocco, which at the end of Q1 2020 was impacted by COVID-19
shutdowns at three customers. West Gharib netback increased due to
higher service fee realisations, which outweighed the impact of
lower production due to natural decline. These factors were partly
offset by a lower netback at South Disouq as a result of lower
production due to natural decline and well management activity, and
a well workover.
-- EBITDAX of US$9.8 million was 4% higher than the same period
in 2020 of US$9.4 million due to the netback factors described
above.
-- Depletion, depreciation and amortisation ("DD&A") charge
of US$7.4 million was higher than the US$6.7 million for the same
period in 2021 due to higher production and lower 2P reserves in
Morocco, partly offset by lower production at South Disouq and West
Gharib.
-- There were no non-cash E&E write offs in Q1 2021. In Q1
2020 US$4.4 million was written off following the drilling of two
sub-commercial wells, SD-6X in South Disouq and SAH-5 in
Morocco.
-- Operating cash flow (before capex, excluding discontinued
operations) of US$6.1 million, was higher than the same period in
2020, US$4.9 million, primarily due to the netback drivers
discussed above, as well as lower spend on inventory.
-- Capex of US$4.0 million, reflects:
o US$1.9 million for well workovers in Morocco;
o US$0.9 million for the completion of the SD-12X tie in at
South Disouq, the SD-4X well workover and other minor projects at
South Disouq;
o US$0.4 million for workovers in West Gharib;
o US$0.6 million for pre-drill work ahead of the Morocco well
campaign; and
o US$0.2 million for well drilling preparations at South
Disouq.
-- Liquidity: Closing cash as at 31 March 2021 was US$9.7
million. The Company has now satisfied the conditions precedent on
the new, five-year EBRD credit facility, which is undrawn and has
US$10 million availability.
-- Together with cash generated from operations, management
believes the Company is fully funded for all planned activities in
2021 - 2022.
COVID-19 update
-- During the second half of March 2020 and into April 2020,
COVID-19 containment restrictions in Morocco temporarily impacted
our operations, with three customers being required to close their
operations. However, in early May 2020 these same customers
re-started production and have returned to their pre-closure
consumption rates. Egyptian production has remained unaffected by
COVID-19 . The Company continues to follow applicable government
guidance in each of its territories.
Q1 Performance vs 2021 Guidance
Production
-- Q1 2021 entitlement production of 5,862 boe/d is 2% higher
than mid point guidance of 5,770 boe/d and 10% lower than Q1 2020.
An analysis of Q1 2021 production by asset vs guidance is as
follows:
Gross production SDX entitlement production
Asset Guidance - Actual - Guidance Actual 3 Actual 3
12 months ended 3 months ended - 12 months months ended months ended
31 December 31 March 2021 ended 31 31 March 31 March
2021 Gross December 2021 2020
Gross 2021 Entitlement Entitlement
Entitlement
------------------- ----------------- -------------- -------------- --------------
Core assets
------------------- ----------------- -------------- -------------- --------------
South Disouq
- WI 55% & 100% 44 - 46 MMscfe/d 44.6 MMscfe/d 4,300 - 4,500 4,296 4,995
------------------- ----------------- -------------- -------------- --------------
West Gharib - 2,350 - 2,650
WI 50% bbl/d 2,849 bbl/d 446 - 505 543 666
------------------- ----------------- -------------- -------------- --------------
Morocco - WI
75% 7.0 - 7.3 MMscf/d 8.2 MMscf/d 874 - 915 1,023 863
------------------- ----------------- -------------- -------------- --------------
Total 5,620 - 5,920 5,862 6,524
-------------- -------------- --------------
Discontinued
operations
------------------- ----------------- -------------- -------------- --------------
NW Gemsa - WI
50% N/A N/A N/A N/A 1,538
------------------- ----------------- -------------- -------------- --------------
Total (incl.
disc. ops.) 5,620 - 5,920 5,862 8,062
-------------- -------------- --------------
o South Disouq : During Q1 2021, the existing wells continued to
exhibit natural decline and expected sand and water production from
two of the five wells, albeit this was partly offset by
contribution from the SD-12X well which was brought online in
December 2020. The SD-4X was successfully worked over during the
quarter and was put back on production at a similar rate, as was
the SD-1X well in Q2 2021. Production for the quarter was below
midpoint guidance as the SD-12X well was taken offline for a
pressure build up test in February. Production guidance continues
to reflect planned 2-3% Central Processing Facility ("CPF")
downtime due to scheduled maintenance, the installation of an inlet
compressor and several further well workovers.
o West Gharib: The existing wellstock at the asset continued to
produce steadily, albeit exhibiting natural decline as expected.
Preparations are advanced for a development drilling campaign of
three to four wells which will commence in late Q2/early Q3 and
production will trend towards midpoint guidance until such time as
the new wells are drilled and brought online.
o Morocco: Q1 2021 saw stronger demand from all customers in
Morocco and this is the reason that the Company is currently
exceeding midpoint guidance. In addition, Q1 2021 reflects
additional consumption from an existing customer's second factory
which came online in December 2020. Production guidance is 8-12%
higher than 2020 production and reflects a sustained return to
normal levels of consumption across the customer base, following
COVID shutdowns which impacted 2020 production.
o COVID-19: The 2021 production guidance presented assumes no
significant production curtailments due to COVID-19. Should there
be COVID-19 related disruptions, then production guidance may be
revised.
Capex
-- 2021 capex guidance range of US$25.0 - 26.5 million
predominantly relates to one exploration and one development well
in South Disouq together with workovers and the installation of an
inlet compressor. Up to five new wells and workovers are planned in
Morocco and up to four new wells and facilities upgrades will be
undertaken at West Gharib.
Asset Guidance - 12 Actual - 3 months
months ended 31 ended 31 March
December 2021 2021
South Disouq - WI US$7.0 - 7.5 million US$1.1 million
55% & 100%
--------------------- ------------------
West Gharib - WI US$2.5 - 3.0 million US$0.4 million
50%
--------------------- ------------------
Morocco - WI 75% US$15.5 - 16.0 US$2.5 million
million
--------------------- ------------------
Total US$25.0 - 26.5 US$4.0 million
million
--------------------- ------------------
o South Disouq : One development well, Ibn Yunus-2X, and one
exploration well, Hanut-1X, will be drilled consecutively,
commencing in Q2 2021. The IY-2X well will access the eastern
compartment of the Ibn Yunus field and is expected to be completed
and tied back rapidly once drilled. The Hanut-1X well is targeting
unrisked mean recoverable volumes of 139bcf with a 33% chance of
success. The Company's partner has confirmed that it will
participate in both wells. An inlet compressor will be installed at
the CPF site to maximise recovery from the fields, and several well
workovers are also planned. Once the exploration concession
extension that includes the Hanut and Mohsen prospects has been
ratified by Parliament, the Company will pay its share of signature
and training bonuses. In Q1 2021, US$1.1 million of capex was
invested to complete the SD-12X tie-in, undertake the SD-4X well
workover, commence drilling preparations for the two-well campaign
and on other minor projects at the asset.
o West Gharib: At least three infill development wells will be
drilled with a fourth contingent upon field performance and the
macroeconomic environment. One water injection well will be
drilled, and additional facilities to support this project will be
installed. In Q1 2021, US$0.4 million of capex was spent on a
number of well workovers.
o Morocco: Four to five wells will be drilled in two campaigns
in Q2 and Q4 2021. As the drilling rig was stacked in the Company's
yard in Morocco, there has been no significant mobilisation cost
and, in addition, splitting the campaign into two allocates the
capital investment over approximately eight months which allows the
cost of these wells to be comfortably covered by cash generated in
that period. In Q1 2021, US$2.5 million of capex was spent
predominantly on several well workovers, including re-perforations
and sliding sleeve operations to exploit behind-pipe reserves and
maximise production, as well as pre-drilling campaign preparatory
activities.
-- The anticipated timings of planned key capex activities are outlined below:
Asset Activity 2021 Timing
South Disouq SD-4X workover Q1(1)
----------------------------- ------------
SD-1X workover Q2
----------------------------- ------------
Compressor fabrication & Q2-Q3
installation
----------------------------- ------------
Ibn Yunus-2X development Q2-Q3
well (incl. tie in)
----------------------------- ------------
Hanut-1X exploration well Q3
----------------------------- ------------
SD-3X workover Q4
----------------------------- ------------
Morocco Well workovers Q1 (1)
& Q4
----------------------------- ------------
Drilling campaign- first Q2
three wells
----------------------------- ------------
Drilling campaign- remaining Q3-Q4
wells
----------------------------- ------------
West Gharib Three/four development wells Q2-Q3
----------------------------- ------------
Water injection well and Q2-Q3
facilities upgrades
----------------------------- ------------
(1) Activity completed
2021 Drilling and Operations Update
Morocco drilling campaign update (SDX 75% working interest)
-- Preparations were completed for the first three wells of a
four to five well programme in Morocco, with the first well, OYF-3,
spud at the end of April.
-- This first phase of the Morocco drilling campaign will
consist of three appraisal/development wells, which management
estimates will target a total of 1.3 bcf of P90/1.8 bcf of P50,
gross unrisked prospective recoverable resources.
-- The first well, OYF-3, is targeting the Guebbas reservoir at
approximately 1,160m. The second well, KSR-17, will target the Hoot
reservoir at approximately 1,720m and the third well, KSR-18, is a
dual target well, with the first in the Guebbas reservoir at 1,600m
and the second in the Hoot reservoir at around 1,790m. All three
wells are looking to encounter shallow, biogenic gas accumulations
near to the Company's existing infrastructure, thus enabling
tie-ins to be completed quickly and at low cost.
-- The second part of the campaign, to drill a further one or
two wells, will commence in mid/late Q3.
-- The above developments will allow the Company to continue to
supply gas to our customers in line with our contractual
commitments and continue to support lower CO(2) emissions at our
customers.
South Disouq Egypt exploration drilling campaign update (SDX
55%/100% working interest)
-- Following the success of SD-12X and further review of the 3D
seismic, management has now identified c.233bcf of mean unrisked
recoverable volumes, which are close to our existing
infrastructure, located in horizons that are either productive in
South Disouq or in adjacent blocks and which have now been
high-graded to drill-ready prospects.
-- Subject to receipt of final Ministerial and Parliamentary
approval of the two-year extension to the South Disouq exploration
area, which has already been approved by EGAS, the Company plans to
commence drilling in late June. The campaign will kick off with the
drilling of the IY-2X development well in the Ibn Yunus field to
accelerate production and cash flows. The Hanut prospect will be
drilled immediately afterwards, targeting 139 bcf, with the Mohsen
(26 bcf) and Warda (14bcf) wells planned for 2022/23. The Company's
45% partner will participate in the IY-2X development well and the
Hanut exploration well and has still to confirm whether they will
participate in the other proposed wells.
-- Management's estimate of the mean prospective resources and
chance of success of the prospects identified in the South Disouq
area are shown below.
Prospect Working Interval Concession Comment Unrisked Chance
Name Interest Detail Mean of Success
% (bcf) (%)
Proposed 2 Yr(2)
exploration
Hanut 55 KES extension Single Target 139 33
---------- --------- -------------------- --------------- --------- ------------
Proposed 2 Yr(2)
exploration
Mohsen 55-100(1) KES extension Single Target 26 51
---------- --------- -------------------- --------------- --------- ------------
Proposed 2 Yr(2)
exploration
El Deeb 55-100(1) Qawasim extension Single Target 22 29
---------- --------- -------------------- --------------- --------- ------------
Proposed 2 Yr(2)
KES/Abu exploration
Ibn Newton/Newton 55-100(1) Madi extension Dual Target 16 40-45
---------- --------- -------------------- --------------- --------- ------------
Up to 25 Yr
Shikabala Development
prospects KES/ Lease to 31 Single Target
(two wells) 100 Qawasim August 2045 & Dual Target 16 25-40
---------- --------- -------------------- --------------- --------- ------------
Up to 25 Yr
Development
Lease to 2 January
Warda 55 KES 2044 Single Target 14 35
---------- --------- -------------------- --------------- --------- ------------
Total 233
---------- --------- -------------------- --------------- --------- ------------
(1) Working interest % dependent on Partner's decision to
participate in the extension. The Company's partner has confirmed
its participation in the Hanut-1X well.
(2) Two-year extension period commences on date of Parliamentary
approval
West Gharib Egypt development drilling campaign update (SDX 50%
working interest)
-- In March 2021, SDX obtained approval for a ten-year extension
to the West Gharib Production Services Agreement increasing audited
2P reserves in this core oil asset as at 31 December 2020, by 60%
year on year, or 119% taking account of 2020 production, to 3.52
million barrels.
-- Following this agreement, SDX and its partner commenced
planning for a four well development drilling campaign that is
expected to start in late Q2/early Q3 2021, and is part of a wider
three-year plan to arrest production decline in the asset and
return production levels to c.3,000 bbl/d.
Three months to 31 March 2021 Financial Update
-- Netback was US$10.8 million, 5% higher than the Netback of
US$10.3 million for the three months to 31 March 2020, driven
by:
o Net revenue increase of US$0.7 million due to:
o US$1.4 million higher revenue in Morocco due to increased
production following strong demand rebound following COVID-19
shutdowns and an additional factory being supplied (2021: 1,023
boe/d, 2020: 863 boe/d). Revenue was further boosted by higher
prices due to the strengthening of the Moroccan dirham and the
additional factory taking gas at a higher price than the
contractual average; offset by
o US$0.8 million lower South Disouq revenue due to lower
production (2021: 4,296 boe/d, 2020: 4,995 boe/d) as a result of
natural decline at several wells and downtime for workover
activity, partly offset by new production from the SD-12X well;
o Revenue at West Gharib was in line with the prior year as
lower production (2021: 543 bbl/d, 2020: 666 bbl/d) was offset by
higher realised service fees (2021: US$47.90/bbl, 2020:
US$38.88/bbl).
o Operating costs increasing by US$0.2 million from prior period
due to increased well management costs at South Disouq, partly
offset by lower costs at West Gharib due to cost savings and lower
workover activities.
-- EBITDAX was US$9.8 million, US$0.4 million (4%) higher than
EBITDAX of US$9.4 million for the three months to 31 March 2020,
for the reasons described in the netback section above.
-- The main components of SDX's comprehensive profit of US$0.6
million for the three months ended 31 March 2021 are:
o US$10.8 million Netback explained above;
o US$0.3 million of E&E expense which relates to ongoing new
venture activity (predominantly internal management time);
o US$7.4 million of DD&A expense which reflects lower South
Disouq and West Gharib production offset by increased production in
Morocco;
o US$0.9 million of ongoing G&A expense; and
o US$1.2 million of Egyptian corporation tax predominantly for
South Disouq.
Operating cash flow (before capex, excluding discontinued
operations)
-- Operating cash flow (before capex, excluding discontinued
operations) of US$6.1 million, higher than the same period in 2020
of US$4.9 million primarily due to the netback drivers discussed
above, as well as less cash spent on inventory.
Q1 2021 ESG metrics
-- The Company's operated assets recorded a carbon intensity of
2.7kg CO(2e) /boe in Q1 2021, which is one of the lowest rates in
the industry. This was higher than the 1.8 kg CO(2e) /boe reported
for the twelve months ended 31 December 2020 as the booster
compressor at South Disouq was online throughout Q1 2021, but only
from Q2 2020, and in January 2021 a second production compressor
was commissioned in Morocco. Combined production from the two
assets was also marginally lower in Q1 2021.
-- Scope 1 greenhouse gas emissions at operated assets were
2,231 tons of CO(2e) . Scope 3 greenhouse gas emissions in Morocco
were 28,250 tons of CO(2e) , which is approximately 16,000 tons of
CO(2e) less than using alternative heavy fuel oil.
-- There were no Lost Time Injuries at any of the Company's assets during Q1 2021.
-- No produced water was discharged into the environment in
Morocco (100% contained and evaporated) or at South Disouq (100%
recycled) during Q1 2021.
-- There were no hydrocarbon spills at operated assets during Q1 2021.
-- Whist social projects were severely impacted by COVID-19
restrictions in 2020 and Q1 2021, the Company is working on a
number of initiatives to be launched in 2021 as soon as this can be
done safely.
-- The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Outlook
-- Management believes that the Company is well-placed to
weather the current macroeconomic uncertainties and continues to
screen a number of business development opportunities.
-- Cash generation is expected to continue strongly through 2021
and beyond as approximately 90% of the Company's cash flows are
expected to be generated from fixed-price gas businesses.
-- The current strong oil price and outlook means that the Group
also plans to capitalise on its recent production service agreement
extension at West Gharib by investing in a 12-well development
drilling programme over the next three years, including four wells
in 2021.
-- Anticipated 2021 and 2022 work programmes are fully funded.
-- The Company continues to assess the optimum use of capital in
the interests of all stakeholders, whether that be investment into
new projects or returning cash to shareholders. At present the
Company is focussed on continued investment of its portfolio and
considers this the most appropriate use of the Company's capital.
This will be assessed on an ongoing basis.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Three months
ended
31 March
----------------------------------- ------------------- -------------
2021 2020
$000s except per unit amounts (unaudited) (unaudited)
----------------------------------- ----- -------------
FINANCIAL
----------------------------------- ----- -------------
Net Revenues 13,383 12,693
Operating costs (2,616) (2,414)
Netback (1) 10,767 10,279
EBITDAX 9,810 9,380
Total comprehensive profit/(loss) 613 (3,153)
Net profit/(loss) per share
- basic $0.003 $(0.015)
Cash, end of period 9,734 8,807
Capital expenditures 3,964 15,535
Total assets 123,788 135,648
Shareholders' equity 97,079 95,123
Common shares outstanding
(000's) 205,378 204,723
OPERATIONAL
-------------
West Gharib production service
fee (bbl/d) 543 666
South Disouq gas sales (boe/d) 4,094 4,713
Morocco gas sales (boe/d) 1,023 863
Other products sales (boe/d) 202 282
------------------------------------------ ------------- -------------
Total sales volumes (boe/d)
(2) 5,862 6,524
------------------------------------------ ------------- -------------
Realised West Gharib service
fee (US$/bbl) $47.90 $38.88
Realised South Disouq gas
price (US$/Mcf) $2.85 $2.85
Realised Morocco gas price
(US$/Mcf) $11.32 $10.33
Royalties ($/boe) $4.82 $5.09
Operating costs ($/boe) $4.96 $4.07
Netback ($/boe) (1) $20.41 $17.31
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(2) Excludes discontinued operations
About SDX
SDX is an international oil and gas exploration, production, and
development company, headquartered in London, United Kingdom, with
a principal focus on MENA. In Egypt, SDX has a working interest in
two producing assets: a 55% operated interest in the South Disouq
gas field in the Nile Delta and a 50% non-operated interest in the
West Gharib concession, which is located onshore in the Eastern
Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75%
working interest in five development/production concessions, all
situated in the Gharb Basin. The producing assets in Morocco are
characterised by attractive gas prices and exceptionally low
operating costs. SDX has a strong weighting of fixed price gas
assets in its portfolio with low operating costs and attractive
margins throughout, providing resilience in a low commodity price
environment. SDX's portfolio also includes high impact exploration
opportunities in both Egypt and Morocco.
For further information, please see the Company's website at
www.sdxenergy.com or the Company's filed documents at www.sedar.com
.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the
London Stock Exchange, the technical information contained in the
announcement has been reviewed and approved by Rob Cook, VP
Subsurface of SDX. Dr. Cook has over 25 years of oil and gas
industry experience and is the qualified person as defined in the
London Stock Exchange's Guidance Note for Mining and Oil and Gas
companies. Dr. Cook holds a BSc in Geochemistry and a PhD in
Sedimentology from the University of Reading, UK. He is a Chartered
Geologist with the Geological Society of London (Geol Soc) and a
Certified Professional Geologist (CPG-11983) with the American
Institute of Professional Geologists (AIPG).
For further information:
SDX Energy Plc
Mark Reid
Chief Executive Officer
Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker)
Callum Stewart
Jason Grossman
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Peel Hunt LLP (Joint Broker)
Richard Crichton
David McKeown
Tel: +44 (0) 207 418 8900
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 (0) 203 757 4980
Conference call details
Date: 20 May 2021
Time: 3:00pm GMT
United Kingdom Toll-Free 08003589473
United Kingdom Toll +44 3333000804
US Toll-Free +1 855 85 70686
US Toll +16319131422
Canada Toll-Free +18447479618
Canada Toll +1 4162164189
PIN: 97847549#
The presentation will be made available our website; https://www.sdxenergy.com/investors/results-centre/
Glossary
"bbl" stock tank barrel
"bbl/d" barrels of oil per day
------------------------------
"bcf" billion cubic feet
------------------------------
"boe" barrels of oil equivalent
------------------------------
"boe/d" barrels of oil equivalent per
day
------------------------------
"CO(2e) " carbon dioxide equivalent
------------------------------
"Mcf" thousands of cubic feet
------------------------------
"MMscf/d" million standard cubic feet
per day
------------------------------
"MMscfe/d" million standard cubic feet
equivalent per day
------------------------------
"2P" proved plus probable reserves
------------------------------
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 2021 production and capex guidance, liquidity and
sources of cash flows in 2021, the impact of COVID-19 on customer
consumption, and future drilling developments and results 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 labour and services.
All timing given in this announcement, unless stated otherwise,
is indicative, and while the Company endeavours to provide accurate
timing to the market, it cautions that, due to the nature of its
operations and reliance on third parties, this is subject to
change, often at little or no notice. If there is a delay or change
to any of the timings indicated in this announcement, the Company
shall update the market without delay.
Forward-looking information is subject to certain risks and
uncertainties (both general and specific) that could cause actual
events or outcomes to differ materially from those anticipated or
implied by such forward - looking statements. Such risks and other
factors include, but are not limited to, political, social, and
other risks inherent in daily operations for the Company, risks
associated with the industries in which the Company operates, such
as: operational risks; delays or changes in plans with respect to
growth projects or capital expenditures; costs and expenses;
health, safety and environmental risks; commodity price, interest
rate and exchange rate fluctuations; environmental risks;
competition; permitting risks; the ability to access sufficient
capital from internal and external sources; and changes in
legislation, including but not limited to tax laws and
environmental regulations. Readers are cautioned that the foregoing
list of risk factors is not exhaustive and are advised to refer to
the Principal Risks & Uncertainties section of SDX's Annual
Report for the year ended 31 December 2020, which can be found on
SDX's SEDAR profile at www.sedar.com , for a description of
additional risks and uncertainties associated with SDX's
business.
The forward-looking information contained in this press release
is as of the date hereof and SDX does not undertake any obligation
to update publicly or to revise any of the included forward --
looking information, except as required by applicable law. The
forward -- looking information contained herein is expressly
qualified by this cautionary statement.
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.
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 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.
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 2021. Prospective resources are those quantities of gas,
estimated as of the given date, to be potentially recoverable from
undiscovered accumulations through future development projects. As
prospective resources, there is no certainty that any portion of
the resources will be discovered. The chance that an exploration
project will result in a discovery is referred to as the "chance of
discovery" as defined by the management of the Company.
There is no certainty that it will be commercially viable to
produce any portion of the resources discussed herein; though any
discovery that is commercially viable would be tied back to the
Company's pipeline in Morocco and then connected to customers'
facilities within 9 to 12 months of discovery. Based upon the
economic analysis undertaken on any discovery, management has
attributed an associated chance of development of 100%.
There are uncertainties associated with the volume estimates of
the prospective resources disclosed herein, due to the level of
information available on prospective resources, but ranges are
defined based on data from the Company's nearby existing analogous
wells. Some of the risks and uncertainties are outlined below:
-- Petrophysical parameters of the sand/reservoir;
-- Fluid composition, especially heavy end hydrocarbons;
-- Accurate estimation of reservoir conditions (pressure and temperature);
-- Reservoir drive mechanism;
-- Potential well deliverability; and
-- The thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
"P50" means that there is at least a 50% probability that the
quantities actually recovered will equal or exceed the best
estimate.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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END
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