SDX Exits H1 with Strong Exploration Results in Egypt and Morocco

Thursday, August 20, 2020

SDX Energy Plc announced its operational highlights in Egypt and Morocco that included successful drilling programs in both countries and record production. The company also confirmed its strong financial position entering H2.

Mark Reid, CEO of SDX, commented: “We are very pleased with what has been a strong first half of 2020 for SDX, despite the many challenges faced in the period. Production hit record levels and we made some important discoveries in both Egypt and Morocco, which have added significant value to the Company’s portfolio, with the Sobhi discovery, in which we have a 100% working interest, expected to be brought on stream in Q1 2021. Our drilling success has also opened up new exploration prospects that we expect to be of significant value to us. With eight confirmed discoveries from our Egypt and Morocco drilling campaigns and one well still to be tested, reduced G&A expenses and a successful disposal, we have allocated capital with success and discipline in the period.

“We enter the second half of 2020 in a very strong position with minimal upcoming capital commitments, a strong balance sheet, and a portfolio of fixed and high price gas assets which will generate significant free cash flow. We will continue to implement our strategy for the remainder of the year, focusing on ways that we can further grow the business, both organically and inorganically, in the best interests of all stakeholders.”

The company’s H1 2020 operational highlights are as follows:

• H1 2020 average entitlement production of 6,980 boe/d, an increase of 97% from H1 2019 and 72% higher than average production during FY 2019 (4,062 boe/d) due to strong production levels mainly from South Disouq, which continued to perform ahead of expectations at gross production of 49.7 MMscf/d of dry gas and 486 bbl/d of condensate (52.6 MMscfe/d) equating to 4,825 boe/d net to SDX.
• The South Disouq two-well drilling campaign was completed during the period, with the second well, SD-12X (100% working interest to SDX), being a commercial discovery in the Kafr el Sheikh formation, and management estimating 24 bcf of recoverable resources. Plans are underway to connect SD-12X to the Company’s gas processing plant via a 5.8km flow line to the Ibn Yunus-1X well location with production expected in Q1 2021. Based upon well-test data, it is anticipated that when connected, the well will produce at a stabilised rate of 10-12 MMscf/d.
• Following the success of SD-12X, management is looking to high grade a number of additional, adjacent and now de-risked, material prospects for drilling in the next two to three years.
• Moroccan drilling campaign has resulted in seven discoveries from nine wells drilled to date, with the tenth well, LMS-2, completed and awaiting crew mobilisation for testing. Discoveries at OYF-2 and BMK-1 confirm the prospectivity in SDX’s existing core production and development area extends to the north and have de-risked c.20 bcf of P50 prospective resources. All objectives of the drilling campaign were achieved with 10 wells with the final two wells deferred in order to preserve capital.
• Following the drilling campaigns at South Disouq and Morocco, SDX has incurred the majority of its planned capex for 2020.
• Post-period end it was announced that the Company has sold its 50% working interest in the non-core North West Gemsa (“NW Gemsa”) license, situated in the Eastern Desert of Egypt for US$3.0 million, of which US$1.4 million was used to discharge the Company’s remaining liabilities on the license. The net US$1.6 million proceeds exceeded management’s expectations.

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