Petroleum Africa
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Tuesday, January 9, 2024
Press Release
Morocco – KSR-21 well update
The KSR-21 well, which was successfully drilled and tested in Q4 2023, has now been tied into existing infrastructure and will begin producing as soon as the expected government approvals are received, which are envisaged shortly. The Company will update shareholders as soon as production from this well has commenced.
Morocco – SDX/CITIC strengthen partnership
The Company is pleased to announce that it has reached agreement for a second 3-month gas prepayment with its largest offtaker in Morocco on the same terms as the previously announced, Q4 2023 prepayment. The prepayment by DMA covers the supply of gas by SDX for the first quarter of 2024 and is approximately $2.1 million.
Additionally, the Company continues to work directly with CITIC Dicastal to provide a long-term offtake agreement, demonstrating the support of CITIC Dicastal, a company with nearly $1 trillion in assets.
Egypt – sale update
SDX is pleased to confirm that it has agreed with the buyer the terms of an execution version of the sale and purchase agreement (SPA) for its West Gharib assets.
The closing of the transaction remains subject to the completion of certain approvals, including Egyptian government approvals, which are not expected to be withheld, with the execution of the SPA and the final closing date for the sale of these assets is now expected in the second half of January 2024.
Proceeds from the sale of the West Gharib assets are expected to be approximately $6.9 million and will be paid in US dollars. Of the total West Gharib sale proceeds, approximately $3.8 million will be paid immediately. The remaining $3.1 million, which is subject to certain post close events, is expected to be paid during Q1 of 2024.
In parallel, the Company is finalizing the SPA for the divestment of its remaining Egyptian asset, South Disouq, with terms largely agreed. The sale of this SDX-operated asset is also subject to government and joint venture partner approvals.
Corporate update and replacement of bank guarantee
The Company continues to work on delivering on its recently announced new strategy. The proceeds from the sale of the Company’s Egyptian assets and of payments in Morocco will be used to develop its existing assets in Morocco and pay creditors.
Additionally, the Company continues to evaluate areas to improve operational and commercial efficiencies and to reduce costs where possible with the aim of delivering long-term sustainable returns for shareholders. This includes prudent balance sheet optimization and, to that end, the Company has recently replaced a $1.0 million cash-backed bank guarantee with a parent company guarantee (PCG).
It is expected that this change in guarantee structure will enable SDX to access $1.0 million of cash by the end of February 2024.
Both the previous cash-backed bank guarantee and the new PCG cover SDX’s Lalla Mimouna Nord concession obligations to ONHYM.
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