TIDMSDX
RNS Number : 3956W
SDX Energy PLC
18 August 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.
18 August 2022
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
ANNOUNCES ITS FINANCIAL AND OPERATING RESULTS FOR THE THREE AND
SIX MONTHSED 30 JUNE 2022
SDX Energy Plc (AIM: SDX), the EMEA-focused oil and gas company,
is pleased to announce its unaudited financial and operating
results for the three and six months ended 30 June 2022. All
monetary values are expressed in United States dollars net to the
Company unless otherwise stated.
H1 2022 Key Highlights:
-- Production of 3,724 boe/d, 2% higher than mid-point of
recently increased full year guidance of 3,480 - 3,795 boe/d
-- Out of nine wells drilled across SDX's portfolio in the year
to date, six are now producing, one, MSD-27 has now completed
drilling and another, MSD-20, is drilling ahead. These two wells
should add a further gross 400 to 500 bbl/d to our West Gharib
production in the next four to six weeks. The final well, MA-1X, is
undergoing testing and analysis.
-- EBITDAX of US$15.3 million and operating cash flow (before capex) of US$10.4 million
-- Capex US$12.2 million compared to full year guidance of US$25.5 - 27.0 million .
-- Net Cash position of US$12.8 million (unaudited) as at 30 June 2022
-- Carbon intensity of 3.8kg CO(2) e/boe in H1 2022, one of the lowest rates in the industry
-- Aleph Commodities Limited introduced as new cornerstone
shareholder. Assisting with strategic review, expansion and
financing plans with a focus on increased production, reserves and
shareholder returns
Mark Reid, CEO of SDX, commented:
"The results for the last quarter have been both positive and
encouraging with our production from Morocco and South Disouq ahead
of our guidance and the drilling success seen at South Disouq
earlier in the year already contributing to cashflows. Whilst
mechanical issues with a rig at West Gharib mean that production is
slightly lower than forecast, our success with the remainder of the
wells, including as announced today, MSD-27, means that we are now
achieving gross production of approximately 2,400-2,500 bbl/d from
this concession, and we are set to continue to add valuable barrels
to our production mix as the year progresses.
We believe that continued strong operational performance from
the Company has been overshadowed to some degree by corporate news
in the past quarter, with the proposed combination with Tenaz
Energy ultimately not progressing and the introduction onto the
Company's register of a new group of shareholders led by Aleph
Commodities Limited. We are very pleased to welcome the Aleph
shareholders as long-term investors who are aligned with
Management's strategy of growth and increasing returns for all SDX
stakeholders. We look forward to updating the market further as we
work with our shareholders to map out what will be an exciting
future for the Group."
Three and six months to 30 June 2022 Operations Highlights
-- H1 2022 entitlement production of 3,724 boe/d was 2% higher
than recently increased 2022 mid point guidance of 3,638 boe/d,
driven by strong performances in Morocco and at South Disouq, with
West Gharib's production lower than expected due to the mechanical
issues with a previous rig that has now been replaced. West Gharib
production is expected to increase in the second half of the
year.
-- The Company's operated assets recorded a carbon intensity of
3.8kg CO(2) e/boe in H1 2022 which is one of the lowest rates in
the industry.
-- In South Disouq, the planned three-well drilling campaign has
been successfully completed. The SD-5X and SD-12_East discoveries
have been brought online ahead of schedule and are now contributing
to production and cash flow. The MA-1X gas discovery well is in the
process of being evaluated to determine a commercialisation
strategy.
-- In West Gharib the MSD-21, -25, -24 and -23 wells have been
successfully completed and are on production. Today, the Company is
pleased to announce the completion of drilling at the MSD-27 infill
development well . The well encountered 137.3 feet of good-quality,
net oil pay sandstone, with an average porosity of 22.8% in the Asl
Formation reservoir. MSD-27 will now be tied-in to the existing
facilities and flow tested. Operations at MSD-20, which had been
temporarily halted due to the replacement of a rig, have now
recommenced and, assuming trouble free operations, the well should
reach its target horizon by mid-September. The development drilling
campaign is aimed at growing production to c.3,500 - 4,000 bbl/d by
mid 2023
-- In Morocco, the SAK-1 exploration well was spud on 6 August
2022 and is targeting the Guebbas Formation reservoir at around
1,108m MD (1,095m TVDSS). The well will also fulfil the remaining
commitment on the Lalla Mimouna Sud Concession. SAK-1 is the first
of a fully-funded, two-well drilling campaign on the SDX Gharb
Basin acreage which is expected to take place during Q3 2022 with
three further wells being considered for Q4'2022.
Three and six months to 30 June 2022 Corporate Highlights
-- On 25 May 2022, it was announced that the boards of directors
of Tenaz Energy Corp. ("Tenaz") and SDX had reached agreement on
the terms of a recommended share-for-share combination pursuant to
which Tenaz would acquire the entire issued ordinary share capital
of SDX (the "Combination") which was proposed to be effected by
means of a Scheme of Arrangement under Part 26 of the Companies Act
2006 (the "Scheme"). On 30 June 2022, Tenaz announced the
introduction of a cash alternative that was made available under
the terms of the Combination, through which shareholders of SDX
could elect to receive cash instead of some or all of the share
consideration to which they would otherwise be entitled to under
the terms of the Combination. On 29 July 2022, SDX convened the
Court Meeting and General Meeting in connection with the
Combination. The total votes in favour of the resolutions were
48.30% at the Court Meeting and 54.27% at the General Meeting,
which were below the minimum threshold (75% of those shares voted)
needed to approve the resolutions. Accordingly, certain of the
conditions of the Scheme were not satisfied and, consequently, the
Combination has been terminated and the Scheme has lapsed.
-- During July 2022, a group of shareholders led by Aleph
Commodities Limited ("Aleph"), acquired 25.65% of the issued share
capital of the Company and in doing so purchased 18.72% of the
Company previously owned by Waha Capital PSJC. Aleph confirmed that
it is assisting the Company with a strategic review and expansion
plans with a focus on increasing production, reserves and
shareholder returns.
-- Aleph Commodities Limited is a global trading and investment
company, founded in 2018 by former executives of Deutsche Bank,
Goldman Sachs, JP Morgan, Engelhart Commodities Trading Partners,
and Credit Suisse, supported by several large US and European
family offices who are also shareholders of Aleph.
Three and six months to 30 June 2022 Financial Highlights
Three months Six months ended
ended 30 June
30 June
US$ million, except per unit
amounts 2022 2021 2022 2021
------ ------- --------- --------
Net revenues(1) 11.1 13.7 22.3 27.1
------ ------- --------- --------
Netback(1)(3) 8.8 11.4 17.9 22.1
------ ------- --------- --------
Net realised average oil service
fees - US$/barrel 88.67 54.61 83.45 51.10
------ ------- --------- --------
Net realised average Morocco
gas price - US$/Mcf 10.60 11.49 10.86 11.40
------ ------- --------- --------
Net realised South Disouq gas
price - US$/Mcf(2) 2.85 2.83 2.85 2.85
------ ------- --------- --------
Netback - US$/boe 20.82 20.81 20.97 20.61
------ ------- --------- --------
EBITDAX(1)(3) 7.1 10.1 15.3 19.9
------ ------- --------- --------
Exploration & evaluation expense
("E&E") (0.3) (10.6) (0.5) (10.9)
------ ------- --------- --------
Depletion, depreciation, and
amortisation ("DD&A") (5.1) (7.5) (10.4) (14.9)
------ ------- --------- --------
Total comprehensive loss(4) (0.6) (10.7) (1.2) (10.1)
------ ------- --------- --------
Capital expenditure 8.9 11.9 12.2 15.8
------ ------- --------- --------
Net cash generated from operating
activities 3.8 8.8 10.4 14.9
------ ------- --------- --------
Net cash and cash equivalents 12.8 9.1 12.8 9.1
------ ------- --------- --------
(1) Net revenues, Netback and EBITDAX for six months ended 30
June 2022 and 2021 includes US$2.3 million and US$2.6 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 (respectively US$1.1
million and US$1.3 million for the three months ended 30 June 2022
and 2021).
(2) South Disouq gas is sold to the Egyptian State at a fixed
price of US$2.65 Mmbtu, which equates to approximately US$2.85/Mcf.
During the three months ended 30 June 2021, a small quantity of
off-specification gas was produced, which reduced the realised
price for this period to US$2.83/Mcf.
(3) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(4) For the three and six months ended 30 June 2022 total
comprehensive loss is stated before minority interest. Total
comprehensive loss attributable to SDX shareholders for the three
and six months ended 30 June 2022 is US$0.6 million and US$0.8
million, respectively.
-- H1 2022 Netback was US$17.9 million, 19% lower than the same
period in 2021. Netback contribution from South Disouq was US$7.4
million (H1 2021: US$7.8 million) due to lower gas and condensate
production owing to natural decline being partly offset by higher
realised price for condensate and lower opex. West Gharib Netback
increased by US$1.0 million compared to the same period in 2021 due
to the increase in the realised oil service fee, partly offset by
lower production. Morocco Netback was lower in H1 2022 by US$4.8
million compared to the same period in 2021 due to lower production
following the Company's decision not to immediately renew a
customer contract, as well as slightly lower realised pricing due
to the weakening of the Moroccan Dirham against the US Dollar.
-- H1 2022 EBITDAX of US$15.3 million was 23% lower than the
same period in 2021 of US$19.9 million due to lower Netback, as
described above.
-- H1 2022 the depletion, depreciation and amortisation
("DD&A") charge of US$10.4 million was lower than the US$14.9
million for the same period in 2021 due to lower production in
Morocco and a lower depreciable asset base in South Disouq
following the impairment recognised at year-end 2021.
-- H1 2022 operating cash flow (before capex) of US$10.4
million, was lower than the same period in 2021 of US$14.9 million,
primarily due to prepayments made in June 2022 and income taxes
paid during Q2 2022.
-- Capex of US$12.2 million, reflects:
o US$7.4 million for the three-well drilling campaign at South
Disouq split between: US$2.0 million for the drilling, completion,
testing and tie in of the SD-5X well, US$3.0 million for the
drilling, completion and tie in of the SD-12_East well and US$2.4
million for the drilling, completion and testing of the MA-1X well.
In addition, US$0.3 million has been spent on a workover of SD-3X
to replace the production tubing;
o US$2.4 million of pre-drilling and preparation costs
associated with the re-commencement of the Moroccan drilling
campaign, US$0.3 million on the SAH-4 well recompletion and US$0.3
million of infrastructure works; and
o US$1.5 million of West Gharib drilling costs across the
MSD-20, -21, -23, -24, and -25 wells
-- Liquidity: The Company's net cash position as at 30 June 2022
was US$12.8 million, with cash balances of US$15.3 million offset
by US$2.5 million drawn debt from the EBRD facility. As a result of
various geopolitical factors, US dollar transfers by the Central
Bank of Egypt have been delayed resulting in the need to draw the
EBRD facility to pay head office G&A and certain US$ dominated
operational expenses. Under the existing facility with the EBRD,
US$3.2 million of additional undrawn lines remain available to the
Company.
-- Together with cash generated from operations, management
believes the Company is fully funded for all its stated objectives
in 2022.
H1 2022 Performance vs 2022 Guidance
Production
-- Average entitlement production as at 30 June 2022 of 3,724
boe/d, which was 2% higher than mid-point 2022 market guidance of
3,638 boe/d.
Gross production SDX entitlement production
(boe/d)
Asset Guidance - Actual - Guidance Actual Actual
12 months ended 6 months ended - 12 months - 6 months - 6 months
31 December 30 June 2022 ended 31 ended 30 ended 30
2022 December June 2022 June 2021
2022
------------------- ----------------- ----------------- ------------ ------------
Core assets
------------------- ----------------- ----------------- ------------ ------------
South Disouq
- WI 36.9% &
67.0%(1) 38 - 40 MMscfe/d 38.7 MMscfe/d 2,500 - 2,700(2) 2,710 4,422(3)
------------------- ----------------- ----------------- ------------ ------------
West Gharib - 2,000 - 2,450
WI 50% bbl/d 1,976 bbl/d 380 - 470 376 516
------------------- ----------------- ----------------- ------------ ------------
Morocco - WI
75% 4.8 - 5.0 MMscf/d 5.1 MMscf/d 600 - 625 638 993
------------------- ----------------- ----------------- ------------ ------------
3,480 -
Total 3,795 3,724 5,931
----------------- ------------ ------------
(1) After completion of the South Disouq disposal with effect
from 1 February 2022.
(2) Net of minority interest. Gross of minority interest,
production guidance is expected to be 3,500 - 3,700 boe/d.
(3) 30 June 2021 South Disouq entitlement production is shown at
pre-disposal working interest of 55%/100%.
o South Disouq : During the first half of 2022, the existing
wells continued to exhibit natural decline and expected sand and
water production, albeit this was partly offset by contribution
from the three wells (IY-2X, SD-5X and SD-12_East) that came into
production after 30 June 2021. Production guidance for 2022
reflects the disposal of 33% of SDX's interest in the asset, 2-3%
CPF and compressor downtime due to planned maintenance, the
successful drilling of SD-12_East, several well workovers and was
recently updated for the successful drilling of SD-5X. The MA-1X
gas discovery well is in the process of being evaluated to
determine a commercialisation strategy.
o West Gharib: The existing wellstock at the asset continued to
produce steadily, albeit exhibiting natural decline as expected,
partly offset by contribution from the recently-drilled three wells
(MSD-21, MSD-24 and MSD-25) and successful well workovers. The
development drilling campaign will arrest the asset's natural
decline, with new wells beginning to grow production during the
second half of the year and into 2023.
o Morocco: H1 2022 saw strong demand from the customer portfolio
in Morocco, which is the reason that the Company is currently
exceeding guidance. 2022 production guidance is lower than 2021
production as the Company decided not to immediately renew a
five-year customer contract that expired on 31 December 2021 until
the Company has better visibility on future gas supply and pricing
to support the full term of a new contract. The Company is
exploring several options for re-entering into discussions with
this customer.
Capex
-- 2022 capex guidance range of US$25.5-27.0 million is fully
funded and predominantly relates to one appraisal and two
exploration wells in South Disouq, up to eight new wells and
facilities upgrades in West Gharib, and up to five new wells in
Morocco.
Asset Guidance - 12 Actual - 6
months ended 31 months ended
December 2022 30 June 2022
South Disouq - WI US$9.0 - 9.5 million(2) US$7.7 million(3)
36.9% & 67.0%(1)
------------------------ ------------------
West Gharib - WI US$4.5 - 5.0 million US$1.5 million
50%
------------------------ ------------------
Morocco - WI 75% US$12.5 - 13.0 US$3.0 million
million
------------------------ ------------------
Total US$25.5 - 27.0 US$12.2 million
million
------------------------ ------------------
(1) After completion of the South Disouq disposal with effect
from 1 February 2022.
(2) As the legal entity that holds the South Disouq asset is
100% consolidated in the financial statements of the Company, capex
guidance is gross of minority interest. Net of minority interest,
capex guidance is US$7.5 - 8.0 million.
(3) Includes US$0.3 million of decommissioning provisions. Net
of minority interest, SDX's share of capex for the 6 months ended
30 June 2022 was US$6.3 million
-- The actual and anticipated timings of planned key capex activities are outlined below:
Asset Activity 2022 Timing
South Disouq SD-5X (Warda) exploration Q1(1)
well
----------------------------- ------------
SD-12_East appraisal well Q2(1)
----------------------------- ------------
MA-1X (Mohsen) exploration Q2(1)
well
----------------------------- ------------
SD-3X Tubing replacement Q3(2)
----------------------------- ------------
SD-3X workover (AM-I) Q3
----------------------------- ------------
SD-4X workover Q3
----------------------------- ------------
SD-3X workover (KES) Q4
----------------------------- ------------
Morocco Two well drilling campaign Q3
----------------------------- ------------
SAH-4 workover Q2 (1)
----------------------------- ------------
Three well drilling campaign Q4'22-Q2'23
----------------------------- ------------
West Gharib Eight development wells Q1(1) -Q4
----------------------------- ------------
Water injection well and Q3-Q4
facilities upgrades
----------------------------- ------------
(1) Activity completed
(2) Activity completed post period-end.
o South Disouq : One appraisal well, SD-12_East, and two
exploration wells, SD-5X (Warda) and MA-1X (Mohsen), have been
drilled during H1 2022. The SD-5X well discovered gas in the basal
Kafr El Sheikh sand, with EUR similar to the pre-drill expectation.
SD-5X was tied-in and started production 13 May 2022 and is
currently producing at around 10 MMscf/d of dry gas and c.100 bbl/d
of condensate. The second well in the campaign, SD-12_East (Ibn
Yunus North development lease) was successfully drilled and brought
onto production just after period end on 1 July 2022 and is
currently producing at around 7 MMscf/d, with no condensate. The
third and final well of the 2022 South Disouq drilling campaign,
MA-1X on the Mohsen prospect in the Exploration Extension Area, is
a gas discovery in the primary Kafr El Sheikh Fm reservoir target
finding 56.3ft of high-quality net gas pay. A well-test was
conducted on MA-1X and is currently being evaluated to determine a
commercialisation strategy. Following the disposal transaction, all
three wells have been drilled with partner participation. In
addition to the drilling activity, several well workovers will be
undertaken to maximise recovery from the fields.
o West Gharib: In early January production commenced from
MSD-21, the first well in a 13-well campaign that commenced in Q4
2021 and will complete in 2023. The second well of the infill
drilling campaign, the MSD-25, reached TD on 22 February 2022,
encountering 85ft of oil pay sand. MSD-25 was then completed,
tied-in and brought on-line. Following MSD-25, the drilling
campaign continued with MSD-20, MSD-24 and MSD-23. MSD-24
encountered 86.5ft of net oil pay sand, MSD-23 encountered 131.5ft
of net oil pay. Both wells have been tied-in and brought on-line.
MSD-20 spudded on 5 April 2022 but encountered technical
difficulties, but at period end operations were continuing at this
well. The fifth well, MSD-27, spud on 22 July 2022 and today the
Company announced that MSD-27 encountered the primary top Asl
Formation reservoir at 3,927 feet MD (3,119 feet TVDSS) and reached
a TD of 4,412 feet MD on 7 August. The well encountered 137.3 feet
of good-quality, net oil pay sandstone, with an average porosity of
22.8% in the Asl Formation reservoir. MSD-27 will now be tied-in to
the existing facilities and flow tested. A total of eleven well
workovers across the concession were completed during H1 2022
relating to a variety of operations (sand clean-out, tubing
replacement, pump replacement, recompletion to shallower
reservoirs).
o Morocco: The Company concentrated on maximising recovery from
its existing well stock, utilising the two compressors we have in
the field. In April 2022, the SAH-4 well was worked over and
recompleted to the Upper Guebbas interval and this well is now
contributing to production. Much of H1 2022 was spent on planning
and preparing for the 2022 drilling campaign and for well workovers
to access behind-pipe opportunities. In the second half of 2022,
SDX will be conducting a two well drilling campaign targeting
around a gross unrisked 1.1 bcf EUR. Post period end, the drilling
rig was mobilised to the first well location, SAK-1, with a planned
spud in August. The SAK-1 well, if successful, will open a new area
for exploration and exploitation in future drilling campaigns.
After the two wells, the rig will go to another operator before
returning to SDX at the end of 2022, to potentially drill a third
well before the year end. Workovers of existing wells, including
re-perforation and sliding sleeve operations to exploit behind-pipe
reserves, will continue throughout 2022, with operations to start
in August 2022 on the KSR-8 well (sliding sleeve operation),
followed by KSR-10 and, depending on results, KSR-11 and then
SAH-W1.
H1 2022 ESG metrics
-- The Company's operated assets recorded a carbon intensity of
3.8kg CO2e/boe in 2022, which is one of the lowest rates in the
industry.
-- Scope 1 greenhouse gas emissions at operated assets were
5,100 tons of CO(2) e. Scope 3 greenhouse gas emissions in Morocco
were 50,100 tons of CO(2) e, which is approximately 25,400 tons of
CO(2) e less than using alternative heavy fuel oil.
-- There were no Lost Time Injuries at any of the Company's assets during H1 2022.
-- No produced water was discharged into the environment in
Morocco (100% contained and evaporated) or at South Disouq (100%
recycled).
-- There were no hydrocarbon spills at operated assets.
-- The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Six months to 30 June 2022 Financial Update
-- H1 2022 Netback was US$17.9 million, US$4.2 million (19%)
lower than the Netback of US$22.1 million for H1 2021, driven
by:
o Net revenue decrease of US$4.8 million compared to the same
period in 2021 due to:
o US$4.8 million lower revenue in Morocco compared to the same
period in 2021 due to the non-renewal of an expired customer
contract and slightly lower realised pricing due to adverse FX
movement;
o US$0.9 million lower South Disouq revenue compared to the same
period in 2021, due to lower production partly offset by improved
condensate pricing; and
o US$0.9 million higher revenue at West Gharib compared to the
same period in 2021 due to higher realised service fees (2022:
US$83.45/bbl, 2021: US$51.10/bbl), partly offset by lower
production (2022: 376 bbl/d, 2021: 516 bbl/d).
o Operating costs decreased by US$0.6 million from the prior
year due to lower production at South Disouq and West Gharib.
-- H1 2022 EBITDAX was US$15.3 million, US$4.6 million (23%)
lower than EBITDAX of US$19.9 million for H1 2021, mainly as a
result of the decrease in Netback described above.
-- The main components of SDX's comprehensive loss (before
minority interest) of US$1.2 million for H1 2022 are:
o US$17.9 million Netback;
o US$0.5 million of E&E expense which relates to ongoing new
venture activity (predominantly internal management time);
o US$10.4 million of DD&A expense reflects lower production
across all assets and a lower depreciable asset base at South
Disouq following the impairment recorded during Q4 2021;
o US$2.0 million of ongoing G&A expense;
o US$0.8 million of transaction costs
o US$2.2 of FX loss following the devaluation of the Egyptian
Pound during the first six months of the year; and
o US$3.2 million of corporate tax, being Egyptian corporate
income tax (South Disouq: US$2.3 million, West Gharib: US$0.8
million) and corporate social tax in Morocco (US$0.1 million).
Operating cash flow (before capex)
-- H1 2022 operating cash flow (before capex) of US$10.4
million, was lower than the same period in 2021 of US$14.9 million,
primarily due to prepayments made in June 2022 and income taxes
paid during Q2 2022.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Three months Six months ended
ended 30 June
Prior Quarter 30 June(3)
---------------------------------- -------------- -------------------------------- --------------------------------
$000s except per unit amounts 2022 2022
(unaudited) 2021 (unaudited) (unaudited) 2021 (unaudited)
---------------------------------- -------------- ----------------- ------------- -----------------
FINANCIAL
---------------------------------- -------------- ----------------- ------------- -----------------
Net revenues 11,235 11,098 13,725 22,333 27,108
Operating costs (2,071) (2,321) (2,363) (4,392) (4,979)
Netback (1) 9,164 8,777 11,362 17,941 22,129
EBITDAX (1) 8,212 7,062 10,103 15,274 19,914
Total comprehensive loss (579) (624) (10,699) (1,203) (10,086)
Total comprehensive loss
attributable
to SDX shareholders (149) (612) (10,699) (671) (10,086)
Net loss per share - basic $(0.001) $(0.003) $(0.052) $(0.004) $(0.049)
Cash, end of period 12,145 15,272 9,108 15,272 9,108
Capital expenditures 3,244 8,929 11,875 12,173 15,839
Total assets 98,916 103,607 114,645 103,607 114,645
Shareholders' equity 77,641 77,073 86,430 77,073 86,430
Common shares outstanding (000's) 205,378 204,563 205,378 205,563 205,378
OPERATIONAL
---------------------------------- -------------- ------------- ----------------- ------------- -----------------
West Gharib production service
fee (bbl/d) 388 363 490 376 516
South Disouq gas sales (boe/d)
(2) 3,610 3,460 4,313 3,534 4,204
Morocco gas sales (boe/d) 640 635 964 638 993
Other products sales (boe/d)
(2) 183 175 235 179 218
---------------------------------- -------------- ------------- ----------------- ------------- -----------------
Total sales volumes (boe/d)
(2) 4,821 4,633 6,002 4,727 5,931
---------------------------------- -------------- ----------------- ------------- -----------------
Realised West Gharib service
fee (US$/bbl) $78,51 $88.66 $54.61 $83.45 $51.10
Realised South Disouq gas price
(US$/Mcf) $2.85 $2.85 $2.83 $2.85 $2.85
Realised Morocco gas price
(US$/Mcf) $11.11 $10.60 $11.49 $10.86 $11.40
Royalties ($/boe) $5.56 $6.17 $5.02 $5.86 $4.93
Operating costs ($/boe) $4.77 $5.50 $4.33 $5.13 $4.64
Netback ($/boe) (1) $21.12 $20.82 $20.81 $20.97 $20.61
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(2) Sales volumes from the South Disouq concession have been
presented gross of minority interest. For the period 1 February
(transaction effective date) to 30 June 2022, the share of volumes
assigned to the Company's minority interest holder equals 1,003
boe/d and therefore the Company's share of South Disouq volumes
(incl. other products) equals 2,710 boe/d. Net of minority interest
total sales volumes are 3,724 boe/d.
Consolidated Balance Sheet (unaudited)
(US$'000s) As at 30 June 2022 As at 31 December
2021
-------------------- ----------------------------------------- -----------------------------------------
Assets
Cash and cash
equivalents 15,272 10,562
Trade and other
receivables 17,991 19,942
Inventory 7,591 6,747
------------------------ ----------------------------------------- -----------------------------------------
Current assets 40,854 37,251
Investments 3,375 3,593
Property, plant and
equipment 31,589 34,593
Exploration and
evaluation
assets 26,647 21,611
Right-of-use assets 1,142 1,367
--------------------- -----------------------------------------
Non-current assets 62,753 61,164
Total assets 103,607 98,415
------------------------ -----------------------------------------
Liabilities
Trade and other
payables 15,542 17,157
Decommissioning
liability - 22
Current income taxes 906 1,150
Borrowings 2,500 -
Lease liability 381 439
--------------------- ----------------------------------------- -----------------------------------------
Current liabilities 19,329 18,768
Decommissioning
liability 6,117 5,747
Deferred income taxes 290 290
Lease liability 798 956
--------------------- -----------------------------------------
Non-current
liabilities 7,205 6,993
Total liabilities 26,534 25,761
--------------------- -----------------------------------------
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment
reserve 7,658 7,536
Accumulated other
comprehensive
loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings 22,773 26,270
Non-controlling
interest 7,794 -
Total equity 77,073 72,654
------------------------ -----------------------------------------
Equity and
liabilities 103,607 98,415
--------------------- -----------------------------------------
Consolidated Statement of Comprehensive Income (unaudited)
Three months Six months ended
ended 30 June
30 June
(US$'000s) 2022 2021 2022 2021
--------------- ----------------------------- ----------------- ----------------- ---------------- ----------------
Revenue, net of royalties 11,098 13,725 22,333 27,108
Direct operating
expense (2,321) (2,363) (4,392) (4,979))
Gross profit 8,777 11,362 17,941 22,129
Exploration and evaluation expense (285) (10,612) (534) (10,880)
Depletion, depreciation and amortisation (5,091) (7,521) (10,366) (14,945)
Share-based compensation (56) (50) (122) (313)
Share of profit from joint venture 141 108 262 223
General and administrative expenses
- Ongoing general and administrative
expenses (1,035) (1,317) (2,042) (2,264)
- Transaction costs (765) - (765) -
------------------------------- --------------- ----------------- ----------------- ---------------- ----------------
Operating income/(loss) 1,686 (8,030) 4,374 (5,911)
Finance costs (97) (334) (188) (276)
Foreign exchange loss (652) (70) (2,238) (162)
Income/(loss)e before income taxes 937 (8,253) 1,948 (6,407)
Current income tax
expense (1,561) (2,446) (3,151) (3,679)
Loss and total comprehensive loss
for the period (624) (10,699) (1,203) (10,086)
------------------------------------------------- ----------------- ---------------- ----------------
Attributable to
SDX shareholders (612) (10,699) (761) (10,086)
Non-controlling interests (12) - (442) -
Net loss, attributable to SDX shareholders,
per share
Basic $(0.003) $(0.052) $(0.004) $(0.049)
Diluted $(0.003) $(0.052) $(0.004) $(0.049)
--------------- ----------------------------- ----------------- ---------------- ----------------
Consolidated Statement of Changes in Equity (unaudited)
Six months ended 30 June
(US$'000s) 2022 2021
------------------------------------ --------------------------------- -----------------------------------
Share capital
Balance, beginning of period 2,601 2,601
Balance, end
of period 2,601 2,601
Share premium
Balance, beginning of period 130 130
Balance, end
of period 130 130
Share-based payment reserve
Balance, beginning of period 7,536 7,269
Share-based compensation for
the period 122 174
----------------------------------- --------------------------------- -----------------------------------
Balance, end
of period 7,658 7,443
Accumulated other comprehensive
loss
Balance, beginning of period (917) (917)
Balance, end
of period (917) (917)
Merger reserve
Balance, beginning of period 37,034 37,034
Balance, end
of period 37,034 37,034
Retained earnings
Balance, beginning of period 26,270 50,225
Part disposal of subsidiary (2,736) -
Total comprehensive loss (761) (10,086)
---------------------------------- --------------------------------- -----------------------------------
Balance, end
of period 22,773 40,139
NCI
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Loss for the period (442) -
---------------------------------- --------------------------------- -----------------------------------
Balance, end 22,773 -
of period
Total equity 77,073 86,430
--------------------------------- -----------------------------------
Consolidated Statement of Cash
Flows (unaudited)
Three months ended Six months ended
30 June 30 June
(US$'000s) 2022 2021 2022 2021
--------------------------------- --------- ------------------- ---------- ------------------
Cash flows generated from/(used
in) operating activities
Income/(loss) before income taxes 937 (8,253) 1,948 (6,407)
Adjustments for:
Depletion, depreciation and
amortisation 5,091 7,521 10,366 14,945
Exploration and evaluation
expense - 10,313 - 10,313
Finance expense 97 153 188 334
Share-based compensation charge 56 50 122 174
Foreign exchange loss/(gain) 652 (137) 2,238 (74)
Tax paid by state (1,137) (1,338) (2,302) (2,566)
Share of profit from joint
venture (141) (108) (262) (223)
--------------------------------- --------- ------------------- ---------- ------------------
Operating cash flow before
working
capital movements 5,555 8,201 12,298 16,496
(Increase)/decrease in trade and
other receivables (120) 1,603 2,090 (273)
Decrease in trade and other
payables (840) (1,057) (2,053) (763)
Payments for inventory 11 73 (1,097) (512)
Payments for decommissioning (13) - (35) -
Cash generated from operating
activities 4,593 8,820 11,203 14,948
Income taxes paid (841) - (841) -
--------------------------------- ---------- ------------------
Net cash generated from operating
activities 3,752 8,820 10,362 14,948
Cash flows generated from/(used
in) investing activities:
Property, plant and equipment
expenditures (3,891) (7,409) (6,175) (10,094)
Exploration and evaluation
expenditures (1,768) (1,907) (5,369) (5,282)
Proceeds on part disposal of
subsidiary 3,603 - 5,500 -
Dividends received 311 - 311 -
Net cash used in investing
activities (1,745) (9,316) (5,733) (15,376)
Cash flows generated from/(used
in) financing activities:
Net proceeds from loans and
borrowings 2,500 - 2,500 -
Payments of lease liabilities (127) (229) (261) (503)
Finance costs paid (11) (40) (17) (95)
--------------------------------- --------- ------------------- ---------- ------------------
Net cash generated from/(used
in) financing activities 2,362 (269) 2,222 (598)
Increase/(decrease) in cash and
cash equivalents 4,369 (765) 6,851 (1,026)
Effect of foreign exchange on
cash and cash equivalents (1,242) 139 (2,141) 78
Cash and cash equivalents,
beginning
of period 12,145 9,734 10,562 10,056
--------------------------------- --------- ------------------- ---------- ------------------
Cash and cash equivalents, end
of period 15,272 9,108 15,272 9,108
--------------------------------- ------------------- ---------- ------------------
About SDX
SDX is an international oil and gas exploration, production, and
development company, headquartered in London, United Kingdom, with
a principal focus on EMEA. 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.
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
"bbl" stock tank barrel
"bbl/d" barrels of oil per day
---------------------------------------
"bcf" billion cubic feet
---------------------------------------
"boe/d" barrels of oil equivalent per
day
---------------------------------------
"CO(2) e/boe" carbon dioxide equivalent per
barrels of oil equivalent
---------------------------------------
"Mcf" thousands of cubic feet
---------------------------------------
"MD" measured depth
---------------------------------------
"MMscf/d" million standard cubic feet
per day
---------------------------------------
"MMscfe/d" million standard cubic feet
equivalent per day
---------------------------------------
"P50" means that there is at least
a 50% probability that the quantities
actually recovered will equal
or exceed the best estimate.
---------------------------------------
"TD" total depth
---------------------------------------
"TVDSS" Total vertical depth sub-sea
---------------------------------------
"2P Reserves" 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 formulation of the Company's strategic review and expansion
plans, the Company's production and capex guidance; liquidity and
sources of cash flows for the remainder of 2022, and the Company's
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.
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.
Use of a Standard
Reserve and resource estimates disclosed or referenced herein
have been prepared in accordance with the SPE's Canadian Oil and
Gas Evaluation Handbook and in accordance with NI 51-101.
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.
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR FLFSATVIDLIF
(END) Dow Jones Newswires
August 18, 2022 02:00 ET (06:00 GMT)
Sdx Energy (LSE:SDX)
Historical Stock Chart
From Jun 2024 to Jul 2024
Sdx Energy (LSE:SDX)
Historical Stock Chart
From Jul 2023 to Jul 2024