SDX Lays-Out Q1 Highlights

Thursday, May 20, 2021

SDX Energy Plc announced its unaudited financial and operating results for the three months ended 31 March 2021 wherein highlights from its operations in both Egypt and Morocco are covered.

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 CO2e/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 program 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 recognize 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.

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 program 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.”

The full release with financials can be found here.

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SDX Lays-Out Q1 Highlights

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SDX Lays-Out Q1 Highlights

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