TIDMSDX
RNS Number : 7853X
SDX Energy PLC
28 April 2023
THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY
SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF
THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"),
THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC
DOMAIN.
28 April 2023
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
FULL YEAR 2022 FINANCIAL AND OPERATING RESULTS
SDX Energy Plc (AIM: SDX), reports its audited financial and
operating results for the twelve months ended 31 December 2022. All
monetary values are expressed in United States dollars net to the
Company unless otherwise stated.
The Annual Report & Accounts of the Group for the year ended
31 December 2022 is now available on the Company's website and on
Sedar.
Full year 2022 key results:
-- Net Production, 3,723 boe/d (507 bbls/d and 19.3mmscf/d),
marginally ahead of mid-point full year guidance of 3,480 - 3,795
boe/d.
-- EBITDAX of US$24.6 million and operating cash flow (before capex) of US$16.9 million.
-- Out of 14 wells completed across SDX's portfolio in the year
to date, twelve were put on production during 2022.
-- Capex US$27.6 million compared to revised full year guidance of US$26.5 - 28.0 million .
-- Net Cash of US$4.9 million as at 31 December 2022.
-- As at 31 December 2022, the Company's working interest share
of audited 2P reserves was 4.9 MMboe.
Jay Bhattacherjee, Interim Executive Chairman of SDX,
commented:
"2022 was a busy year for the Company operationally and
corporately. During the summer of 2022 the shareholders rejected a
takeover attempt and the Company welcomed new shareholders to
support the Company's growth. Additionally, during the period there
was significant personnel change at both a Board and Executive
Management level and I joined the company as the non-Executive
Chairman at the end of October and assumed the role as Interim
Executive Chairman in December. SDX enters 2023 with a renewed
focus on delivering long term sustainable returns to shareholders
by pursuing opportunities both within and outside our current
portfolio across the wider energy space.
In Egypt, the planned three well drilling campaign was completed
during the year, as well as a necessary workover programme on
several existing wells. While our Egyptian assets continue to
produce, at present Egypt is a challenging operating environment
for energy companies with sharp devaluation in the value of the
currency, which has impacted the dollar value of the cash we hold
there, and severe limitations on our ability to transfer funds out
of the country due to capital controls. These are both outside our
control. Historically our producing Egyptian assets have funded the
Company's growth initiatives and we are having to find other
solutions, and minimising the risk associated with this has been a
key focus in recent months. This is a dynamic situation and we will
provide further updates in due course.
In Morocco, SDX drilled two new wells which were put into
production during the year and the Company is currently maximising
recovery from our existing wells to maintain customer supply. It is
our intention to have an expanded drilling programme later in 2023
to continue to meet existing demand and to produce to meet any
increase or additional customer demand. Morocco remains a core
piece of the portfolio and as the country's only gas producer, we
maintain an opportunity to grow into a market that is hungry for
every molecule of gas we can produce.
While the Company faces a number of challenges, the changes made
in 2022 and the ongoing modifications we make as part of our
strategic review are positioning SDX with a foundation from which
to grow. We are revaluating our standing in the wider energy sector
and will consider all reasonable avenues, including transition
fuels and alternative energies, to deliver long term sustainable
returns to shareholders. The Company has great strengths, and I'm
confident that we can rise to and overcome the challenges faced and
return to growth, and I thank all shareholders and colleagues for
their support during 2022."
Twelve months to 31 December 2022 Operations Highlights
-- Entitlement production for the twelve months ended 31
December 2022 of 3,723 boe/d was marginally ahead of 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 drilling delays and higher water and sand
production from some wells drilled on the flanks of the Meseda
field.
-- 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, delivering production
and revenues. The MA-1X gas discovery well has been evaluated post
year-end and the Company will progress with developing the area
after it has finalised the area's commercialisation strategy.
-- In West Gharib, eight wells have been successfully completed
and are on production. One exploration well was a dry-hole and is
waiting on a workover to convert it to a water-injector for the
Rabul Field. Eighteen well workovers across the concession were
completed during 2022.
-- In Morocco, both wells (SAK-1 and KSR-20) in the two-well
drilling campaign discovered gas and have been tied into the
Company infrastructure and were contributing to production at the
end of 2022. During the year, several workovers were performed to
access behind-pipe reserves.
-- As at 31 December 2022, the Company's working interest share
of audited 2P reserves was 4.9 MMboe. The Company's 2P reserves and
2C resources estimates have been audited in accordance with the
COGE Handbook & PRMS by Gaffney, Cline & Associates, an
independent qualified reserves evaluator and auditor.
-- The Company's operated assets recorded a carbon intensity of 3.6kg CO(2) e/boe
Twelve months to 31 December 2022 Corporate Highlights
-- During the year a number of Board changes were announced. The
Board is now led by Jay Bhattacherjee as Executive Chairmen, with
his fellow directors being Tim Linacre and Krzysztof Zielicki.
-- New shareholders were introduced to the register and have
provided a clear mandate to the Board for growth.
Twelve months to 31 December 2022 Financial Highlights
Twelve months
ended 31 December
US$ million except per unit
amounts 2022 2021
---------- ---------
Net revenues 43.8 53.9
---------- ---------
Netback(1) 33.2 44.1
---------- ---------
Net realised average oil service
fees - US$/barrel 76.67 55.27
---------- ---------
Net realised average Morocco
gas price - US$/Mcf 10.39 11.34
---------- ---------
Net realised South Disouq gas
price - US$/Mcf 2.85 2.85
---------- ---------
Netback - US$/boe 18.59 20.54
---------- ---------
EBITDAX(1) (2) 24.6 40.0
---------- ---------
Exploration & evaluation expense(3) (25.6) (14.1)
---------- ---------
Impairment expense (4.8) (9.5)
---------- ---------
Depletion, depreciation, and
amortisation (19.3) (32.6)
---------- ---------
Total comprehensive loss attributable
to SDX shareholders (35.1) (24.0)
---------- ---------
Capital expenditure 27.6 27.8
---------- ---------
Net cash generated from operating
activities 16.9 28.7
---------- ---------
Cash and cash equivalents 10.6 10.6
---------- ---------
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(2) EBITDAX for twelve months ended 31 December 2022 and 2021
includes US$4.8 million and US$5.3 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 twelve months ended 31 December 2022 and 2021
US$23.9 million and US$12.3 million respectively of non-cash
Exploration & Evaluation ("E&E") write offs in total are
included within this line item.
-- Netback for the year was US$33.2 million, 25% lower than
during 2021. Netback contribution from South Disouq was US$15.2
million (YTD'21: US$16.5 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$1.5 million compared to 2021 due to the increase in
the realised oil service fee, partly offset by lower production.
Morocco Netback was US$11.1 million, which was lower compared to
2021 due to lower production as a result of the non-renewal of a
customer contract, coupled with lower realised pricing due to the
weakening of the Moroccan Dirham against the US Dollar.
-- EBITDAX for the year of US$24.6 million was 39% lower
year-on-year due to lower Netback, as described above.
-- The 2022 depletion, depreciation and amortisation
("DD&A") charge of US$19.3 million was lower than the US$32.6
million in the prior year due to lower production in Morocco and a
lower depreciable asset base in South Disouq, following the
accelerated depreciation of the SD-12X borehole costs in 2021 and
impairment recognised at year-end 2021.
-- E&E expenditure and non-cash write offs totalled US$25.6
million, predominantly related to the non-cash impairment charge
relating to four exploration wells in Morocco (US$21.5 million) and
the write off seismic costs at South Disouq (US$1.3 million).
-- A non-cash PP&E impairment of US$4.8 million was
recognised for the Gharb Basin (Morocco) Cash Generating Unit
("CGU") as at 31 December 2022, following a downward revision in
the anticipated recoverable reserves from the producing wells.
-- 2022 operating cash flow (before capex) of US$16.9 million,
was 41% lower compared to prior year (US$28.7 million), mainly due
to lower EBITDAX as explained above.
-- Capex of US$27.6 million, reflects:
o US$7.1 million for the three-well drilling campaign at South
Disouq split between: US$1.8 million for the drilling, completion,
testing and tie in of the SD-5X well, US$2.6 million for the
drilling, completion and tie in of the SD-12_East well and US$2.8
million for the drilling, completion, and testing of the MA-1X
well. In addition, US$0.9 million has been spent on several
workovers and US$0.7 million on other exploration costs;
o US$15.4 million in Morocco covering; pre-drilling and standby
expenditure for the recommencement of the Morocco drilling
campaign, the drilling and completion costs for SAK-1 and KSR-20,
additional expenditure on the KSR-19 well and on various workovers
and infrastructure works; and
o US$3.5 million of West Gharib drilling costs across the eight wells drilled.
-- Liquidity: The Company's net cash position as at 30 September
2022 was US$4.9 million, with cash balances of US$10.6 million
offset by US$5.7 million drawn debt (incl. interest) from the
European Bank of Reconstruction and Development ("EBRD") credit
facility. Given the ongoing liquidity needs for corporate G&A
and to develop the Moroccan assets, the Company is exploring
options to maintain and strengthen its liquidity.
-- The Directors have reviewed the cash flow projections
prepared by management for the period ending 31 December 2024 and
believe that a material uncertainty exists that may cast
significant doubt over the ability of the Group to continue as a
going concern. As a result of various geopolitical factors, US
dollar transfers by the Central Bank of Egypt have been restricted
and the Company is currently unable to expatriate any funds
currently in Egypt and there can be no guarantee of timing on when
funds will become available. These factors have also impacted the
Egyptian pound which has been devalued several times since March
2022 and is currently trading at less than half of its value
compared with the USD since that date. Whilst the company's
receivables are not impacted by this devaluation, the company's
cash balance in country is fully exposed to any additional currency
fluctuations. In addition, the Board believes it has options to
raise external capital, the Board however cannot guarantee on the
final quantum and timings of any proposed financing. The Board
would also note that there are no guarantees that current
discussions with the EBRD will be favourably concluded and that
arrangement with creditors will remain negotiable. Notwithstanding
the material uncertainty identified, the Directors have concluded
that the Group will have sufficient resources to continue as a
going concern for the period of assessment, that is for a period of
not less than 12 months from the date of approval of the
consolidated financial statements. Accordingly, the consolidated
financial statements have been prepared in a going concern basis
and do not reflect any adjustments that would be necessary if this
basis were inappropriate.
Detailed Operations Update
Twelve months to 31 December 2022 Production
-- Average entitlement production as at 31 December 2022 of 3,723 boe/d,
Gross production SDX entitlement production
Asset Guidance - Actual - Guidance Actual Actual
12 months ended 12 months - 12 months 12 months 12 months
31 December ended 31 ended 31 ended 31 ended 31
2022 December December December December
2022 2022 2022 2021
------------------- --------------- ----------------- ----------- -----------
Core assets
------------------- --------------- ----------------- ----------- -----------
South Disouq - WI
36.9% &67.0%(1) 38 - 40 MMscfe/d 38.5 MMscfe/d 2,500 - 2,700(2) 2 ,720 4,465(3)
------------------- --------------- ----------------- ----------- -----------
West Gharib - WI 2,000 - 2,450
50% bbl/d 2,033 bbl/d 380 - 470 389 457
------------------- --------------- ----------------- ----------- -----------
Morocco - WI 75% 4.8 - 5.0 MMscf/d 4.9 MMscf/d 600 - 625 614 964
------------------- --------------- ----------------- ----------- -----------
3,480 -
Total 3,795 3,723 5,886
----------------- ----------- -----------
(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) 31 December 2022 South Disouq entitlement production is
shown at pre-disposal working interest of 55%/100%.
o South Disouq : During 2022, the existing wells continued to
exhibit natural decline and expected sand and water production,
albeit this was partly offset by contribution from the two wells
(SD-5X and SD-12_East) that came into production during 2022.
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 and
SD-5X and several well workovers. At the year-end, the MA-1X gas
discovery well was still in the process of being evaluated to
determine a commercialisation strategy.
o West Gharib: The existing well stock at the asset continued to
produce steadily, albeit exhibiting natural decline as expected,
partly offset by contribution from the recently drilled eight
wells, all of which were on production during 2022, and successful
well workovers. Some of the new wells that were drilled on the
flanks of the Meseda field have exhibited higher water and sand
production than previously expected. The goal of the development
campaign is to fully exploit the volumes in the West Gharib
fields.
o Morocco: 2022 production guidance was lower than 2021
production as the Company evaluates its ability to deliver to new
and existing consumers based on its current reserves base and
pricing environment. 2022 saw strong demand from the customer
portfolio.
2022 Drilling and Operations
Morocco drilling campaign update (SDX 75% working interest)
o The Company concentrated on maximising recovery from its
existing well stock, utilising its two compressors.
o The 2022 drilling campaign commenced with the spudding of the
SAK-1 well on 6 August 2022. The SAK-1 well reached TD of 1,196m MD
on 24 August 2022 and encountered a gas sand at the primary target
interval at 1,107m MD finding 3.7m of net pay with an average
porosity of 31%. A secondary gas sand was found at 1,079.6m MD,
with a net pay thickness of 1.1m and an average porosity of 28%.
The well was subsequently tied into the Company's infrastructure
and was contributing to production at the year-end. The second well
in the campaign, KSR-20, spud 12 September 2022 and reached TD of
1,410m MD post period-end on 1 October 2022, finding the primary
target gas sands at 1,265m MD. The well was brought on production
during the last quarter of 2022.
o In addition to the drilling campaign, workovers were performed
to access behind-pipe reserves in a number of wells.
South Disouq Egypt exploration drilling campaign update (SDX
55%/100% working interest pre-farm out, SDX 36.9%/67% working
interest post-farm out)
o One appraisal well, SD-12_East, and two exploration wells,
SD-5X (Warda) and MA-1X (Mohsen), have been drilled during
2022.
o 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.
o The second well in the campaign, SD-12_East (Ibn Yunus North
development lease) was successfully drilled and brought onto
production on 1 July 2022 and is currently producing at around 7
MMscf/d, with no condensate.
o 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 has post year-end been evaluated. The
Company will progress with developing the area after it has
finalised the area's commercialisation strategy.
o 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.
West Gharib Egypt exploration drilling campaign update (SDX 50%
working interest)
o Much of the activity in the West Gharib concession during 2022
was centred around the aforementioned infill drilling campaign.
o During 2022, eight infill wells and one exploration well
(Rabul Deep-1) were drilled. The Rabul Deep-1 well was a dry-hole
but is waiting on workover to convert it to a water-injector for
the Rabul Field.
o Eighteen well workovers across the concession were completed
during 2022.
2022 ESG metrics
-- The Company's operated assets recorded a carbon intensity of 3.6kg CO(2) e/boe in 2022.
-- Scope 1 greenhouse gas emissions at operated assets were
9,600 tons of CO(2) e. Scope 3 greenhouse gas emissions in Morocco
were 93,900 tons of CO(2) e, which is approximately 47,600 tons of
CO(2) e less than using alternative heavy fuel oil.
-- 2022 was an incident and injury-free year for South Disouq,
with the last Lost Time Injury ("LTI") being in October 2020. There
were no LTIs in our Morocco operations during 2022. A Health and
Safety Management system was rolled out by the Morocco asset team,
including safety training of all field and office-based
personnel.
-- 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.
-- Continuing our engagement with local communities who are
affected by our operations, in 2022 SDX was delighted to provide
three hospitals near our South Disouq operation with a ventilator
each to support the medical needs of the local population in
Gharbia State. In Morocco, SDX supported the Dar Lekbira
organisation, an NGO with no political or religious affiliation
that aims to help children in distress in Kenitra and the
surrounding region (within SDX's operating footprint) with winter
clothing, school supplies and non-perishable food items.
-- The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Twelve months to 31 December 2022 Financial Update
-- Netback was US$33.2 million, 25% lower than the Netback of
US$44.1 million for the twelve months to 31 December 2021, driven
by:
o Net revenue decrease of US$10.1 million due to:
o US$9.8 million lower revenue in Morocco compared to 2021 due
to the non-renewal of an expired customer contract and lower
realised pricing due to adverse FX movement;
o US$2.0 million lower South Disouq revenue compared to 2021,
due to lower production partly offset by improved condensate
pricing; and
o US$1.7 million higher revenue at West Gharib compared to 2021
due to higher realised service fees, partly offset by lower
production.
o Operating costs increased by US$0.8 million from the prior
year due to significant one-off costs incurred for handling
production and drilling water produced at one of the worked over
wells in Morocco.
-- EBITDAX was US$24.6 million, (down 39%) compared with US$40.0
million for the twelve months to 31 December 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$35.1 million for the twelve months ended
31 December 2022 are:
o US$33.2 million Netback;
o US$25.1 million of E&E expense, of which:
-- US$21.5 million represents non-cash write off of exploration
expenditure incurred in Morocco relating to the KSR-19, KSR-20,
SAK-1 and BMK-1 wells, representing the total of their book value
exceeding their recoverable amount;
-- a US$1.3 million non-cash write off of seismic cost incurred
in South Disouq as the result of the relinquishment of the Young
area;
-- a US$0.6 million bonus payment to the Egyptian Natural Gas
Holding Company ("EGAS") as a result of the indirect assignment of
part of the South Disouq concession;
-- a write off of US$0.5 million for an unsuccessful exploration
well drilled in the Rabul area in West Gharib; and
-- other expenditure of US$1.7 million mainly for non-trade
receivable write off (US$0.7 million), new business evaluation
activities (US$0.6 million) and a provision for obsolete drilling
inventory in Morocco (US$0.4 million).
o US$19.3 million of DD&A expense;
o US$4.8 million of impairment of the Gharb Basin (Morocco)
CGU;
o US$5.2 million of ongoing G&A expense;
o US$3.7 million of transaction costs;
o US$4.6 million of FX loss mainly due to the devaluation of the
Egyptian Pound during the first nine months of the year; and
o US$5.8 million of corporate tax.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Twelve months
ended
31 December
-------------------------------- --- ---------------------
$000s except per unit amounts 2022 2021
-------------------------------- ---- -----------
FINANCIAL
-------------------------------- ---- -----------
Net Revenues 43,758 53,860
Operating costs (10,532) (9,732)
Netback (1) 33,226 44,128
EBITDAX (1) 24,577 39,993
Total comprehensive loss
(SDX shareholders) (35,090) (23,955)
Net loss per share - basic $(0.171) $(0.117)
Cash, end of period 10,613 10,562
Capital expenditures 27,574 27,774
Total assets 97,510 98,415
Shareholders' equity 41,408 72,654
Common shares outstanding
(000's) 204,563 205,378
OPERATIONAL
-------------------------------- ---- --------- -----------
West Gharib production service
fee (bbl/d) 389 457
South Disouq gas sales (boe/d) 3,726 4,245
Morocco gas sales (boe/d) 614 964
Other products sales (boe/d) 169 220
-------------------------------------- --------- -----------
Total sales volumes (boe/d) 4,898 5,886
-------------------------------------- --------- -----------
Realised West Gharib service
fee (US$/bbl) $76.67 $55.27
Realised South Disouq gas
price (US$/Mcf) $2.85 $2.85
Realised Morocco gas price
(US$/Mcf) $10.39 $11.34
Royalties ($/boe) $5.68 $5.12
Operating costs ($/boe) $5.89 $4.53
Netback ($/boe) (1) $18.59 $20.54
-------------------------------------- --------- -----------
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
Consolidated Balance Sheet
(US$'000s) As at 31 As at 31
December December
2022 2021
-------------------------------- ------------------ --------------------
Assets
Cash and cash equivalents 10,613 10,562
Trade and other receivables 18,549 19,942
Inventory 7,988 6,747
--------------------------------- ------------------ --------------------
Current assets 37,150 37,251
Investments 3,390 3,593
Property, plant and equipment 25,205 34,593
Exploration and evaluation
assets 11,618 21,611
Right-of-use assets 1,147 1,367
--------------------------------- --------------------
Non-current assets 41,360 61,164
Total assets 78,510 98,415
--------------------------------- --------------------
Liabilities
Trade and other payables 22,787 17,157
Decommissioning liability - 22
Current income taxes 854 1,150
Borrowings 5,658 -
Lease liability 441 439
--------------------------------- ------------------ --------------------
Current liabilities 29,740 18,768
Decommissioning liability 6,349 5,747
Deferred income taxes 290 290
Lease liability 723 956
--------------------------------- --------------------
Non-current liabilities 7,362 6,993
Total liabilities 37,102 25,761
--------------------------------- --------------------
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment reserve 7,174 7,536
Accumulated other comprehensive
loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings (10,872) 26,270
Non-controlling interest 6,258 -
Total equity 41,408 72,654
--------------------------------- --------------------
Equity and liabilities 78,510 98,415
--------------------------------- --------------------
Consolidated Statement of Comprehensive Income
Year ended 31 December
(US$'000s) 2022 2021
-------------------------------------------- ---------------------------------- ----------------------------
Revenue, net of royalties 43,758 53,860
Direct operating expense (10,532) (9,732)
Gross profit 33,226 44,128
Exploration and evaluation expense (25,617) (14,085)
Depletion, depreciation and amortisation (19,345) (32,624)
Impairment expense (4,810) (9,528)
Stock-based compensation (322) (267)
Share of profit from joint venture 502 383
General and administrative expenses
- Ongoing general and administrative
expenses (5,165) (4,251)
- Transaction costs (3,665) -
-------------------------------------------- ---------------------------------- ----------------------------
Operating (loss)/income (25,196) (16,244)
Finance costs (532) (641)
Foreign exchange loss (4,646) (179)
Loss before income taxes (30,374) (17,064)
Current income tax expense (5,803) (6,891)
Loss and total comprehensive loss
for the period (36,177) (23,955)
-------------------------------------------- ----------------------------
Attributable to
SDX shareholders (35,090) -
Non-controlling interests (1,087) -
Net loss, attributable to SDX shareholders,
per share
Basic $(0.171) $(0.117)
Diluted $(0.171) $(0.117)
-------------------------------------------- ----------------------------
Consolidated Statement of Changes in Equity
Year ended 31 December
(US$'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 322 267
Share-based options terminated (684) -
---------------------------------------- ---------------------------------- ----------------------------------
Balance, end of period 7,174 7,536
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) -
Share-based options terminated 684 -
Total comprehensive loss for the year (23,955) (23,955)
---------------------------------------- ---------------------------------- ----------------------------------
Balance, end of period (10,872) 26,270
Non-controlling interest
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Dividends (891) -
Loss for the period (1,087) -
---------------------------------------- ---------------------------------- ----------------------------------
Balance, end of period 6,258 -
Total equity 41,408 72,654
---------------------------------------- ----------------------------------
Consolidated Statement of Cash Flows
Year ended 31 December
(US$'000s) 2022 2021
--------------------------------------------- ---------------- ----------------
Cash flows generated from/(used in)
operating activities
Loss before income taxes (30,374) (17,064)
Adjustments for:
Depletion, depreciation and amortisation 19,345 32,624
Exploration and evaluation expense 24,374 12,327
Impairment expense 4,810 9,528
Finance expense 532 641
Stock-based compensation charge 322 267
Foreign exchange loss 4,646 203
Tax paid by state (4,757) (5,295)
Share of profit from joint venture (502) (383)
--------------------------------------------- ---------------- ----------------
Operating cash flow before working capital
movements 18,396 32,848
Decrease/(increase) in trade and other
receivables 1,746 (1,373)
Decrease in trade and other payables (29) (1,902)
Payments for inventory (2,354) (377)
Payments for decommissioning (66) (205)
----------------
Cash generated from operating activities 17,693 28,991
Income taxes paid (839) (324)
--------------------------------------------- ---------------- ----------------
Net cash generated from operating activities 16,854 28,667
Cash flows generated from/(used in)
investing activities:
Property, plant and equipment expenditures (13,810) (18,947)
Exploration and evaluation expenditures (8,250) (8,675)
Proceeds on disposal 5,500 -
Dividends received 311 522
----------------
Net cash used in investing activities (16,249) (27,100)
Cash flows generated from/(used in)
financing activities:
Net proceeds from loans and borrowings 5,500 -
Payments of lease liabilities (569) (664)
Dividends paid - NCI in Sea Dragon Energy
(Nile) BV (891) -
Finance costs paid (45) (197)
--------------------------------------------- ---------------- ----------------
Net cash generated from/(used in) financing
activities 3,995 (861)
Increase in cash and cash equivalents 4,600 706
Effect of foreign exchange on cash and
cash equivalents (4,549) (200)
Cash and cash equivalents, beginning
of period 10,562 10,056
--------------------------------------------- ---------------- ----------------
Cash and cash equivalents, end of period 10,613 10,562
--------------------------------------------- ----------------
About SDX
SDX is an international energy company, headquartered in London,
United Kingdom. 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 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
Jay Bhattacherjee
Interim Executive Chairman
Tel: +44 203 219 5640
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs/Iain Sexton
Tel: +44 (0) 207 408 4090
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" barrels of oil equivalent
----------------------------------
"boe/d" barrels of oil equivalent per
day
----------------------------------
"CO(2) e " carbon dioxide equivalent
----------------------------------
"DD&A" depletion, depreciation and
amortisation
----------------------------------
"E&E" exploration & evaluation
----------------------------------
"MMboe" million barrels of oil equivalent
----------------------------------
"Mcf" thousands of cubic feet
----------------------------------
"MMscf/d" million standard cubic feet
per day
----------------------------------
"MMscfe/d" million standard cubic feet
equivalent per day
----------------------------------
"WI" working interest
----------------------------------
"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:
liquidity and sources of cash flows in 2023; future drilling
developments, costs and results ; future raising of external
capital and management's beliefs with respect to the Company's
overall economic position 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 2022, 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 adjusting 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 2023. Prospective resources are those quantities of gas,
estimated as of the given date, to be potentially recoverable from
undiscovered accumulations through future development projects. As
prospective resources, there is no certainty that any portion of
the resources will be discovered. The chance that an exploration
project will result in a discovery is referred to as the "chance of
discovery" as defined by the management of the Company.
There is no certainty that it will be commercially viable to
produce any portion of the resources discussed herein; though any
discovery that is commercially viable would be tied back to the
Company's pipeline in Morocco and then connected to customers'
facilities within 9 to 12 months of discovery. Based upon the
economic analysis undertaken on any discovery, management has
attributed an associated chance of development of 100%.
There are uncertainties associated with the volume estimates of
the prospective resources disclosed herein, due to the level of
information available on prospective resources, but ranges are
defined based on data from the Company's nearby existing analogous
wells. Some of the risks and uncertainties are outlined below:
-- Petrophysical parameters of the sand/reservoir;
-- Fluid composition, especially heavy end hydrocarbons;
-- Accurate estimation of reservoir conditions (pressure and temperature);
-- Reservoir drive mechanism;
-- Potential well deliverability; and
-- The thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
"P50" means that there is at least a 50% probability that the
quantities actually recovered will equal or exceed the best
estimate.
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END
FR IRMMTMTBTTJJ
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April 28, 2023 02:00 ET (06:00 GMT)
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