TIDMSDX
RNS Number : 4019A
SDX Energy Inc.
24 March 2017
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.
SDX ENERGY INC
("SDX" or the "Company")
SDX ENERGY INC. ANNOUNCES FOURTH QUARTER AND YEAR- 2016
FINANCIAL AND OPERATING RESULTS AND PROVIDES GUIDANCE FOR 2017
SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil
and gas company, is pleased to announce its financial and operating
results for the three months and year ended December 31, 2016 (with
full year results prepared on an audited basis). The Company's full
annual audited financial statements and annual report have been
published on the Company website at www.sdxenergy.com and on SEDAR
at www.sedar.com and will shortly be posted to shareholders. All
dollar values are expressed in United States dollars net to the
Company unless otherwise stated.
Highlights - three months and year ended December 31, 2016
Corporate and Financial
-- SDX's key financial metrics for the 3 and 12 months ended
December 31, 2016 and 2015 are as follows
Three months Twelve months
ended December ended December
31 31 (audited)
------------------------------ ------------------ ------------------
US$ million except 2016 2015 2016 2015
per unit amounts
------------------------------ -------- -------- --------- -------
Net Revenues 5.4 3.4 12.9 11.4
------------------------------ -------- -------- --------- -------
Netback(1) 3.6 1.0 7.6 6.4
------------------------------ -------- -------- --------- -------
Net realized average
oil/service fees
- US$/barrel 36.61 33.09 31.50 35.74
------------------------------ -------- -------- --------- -------
Net realized average
gas price - US$/mcf 1.22 - 1.22 -
------------------------------ -------- -------- --------- -------
Non-cash exploration
and evaluation write
down - - (28.4) -
------------------------------ -------- -------- --------- -------
Non-cash impairment
expense (4.3) (6.8) (4.3) (6.8)
------------------------------ -------- -------- --------- -------
Total comprehensive
income/ (loss) (2.1) 8.5 (28.0) 9.4
------------------------------ -------- -------- --------- -------
Net cash (used in)/generated
from operating activities 0.6 (2.3) (1.9) (5.2)
------------------------------ -------- -------- --------- -------
Note:
(1) Refer to "Non-IFRS Measures" section of this release below
for details of Netback.
-- The above financial metrics do not reflect any impact of the
acquisition of the Egyptian and Moroccan businesses of Circle Oil
PLC which completed on January 27, 2017.
-- Some relevant financial metrics relating to these acquired businesses are;
o Unaudited Revenues and Netback for the 12 months ended
December 31, 2016 for the businesses acquired were US$28.9 MM and
US$22.4 MM respectively; and
o The Fair Value of the net assets acquired as at January 27,
2017 amounted to US$59.6 MM of which US$3.1 MM related to cash and
US$18.4 MM related to non-cash Working Capital excluding deferred
income and decommissioning.
-- The following comments relate only to SDX's key financial
metrics for the 12 months ended December 31, 2016;
-- SDX's comprehensive loss of US$(28.0) MM for 12 months ended
December 31, 2016 is due predominantly to;
o write down of US$(24.4) MM in the Bakassi West, Cameroon
exploration asset resulting from the decision to withdraw from
concession; and
o an impairment of US$(4.3) MM due to the North West Gemsa field
now being projected to reach its economic limit earlier as a result
of the reserve auditor's lower oil price forecast in future
years.
-- US$13.3 MM of capital expenditure has been invested into the
business during the 12 months ended December 31, 2016;
o US$1.7 MM primarily related to the drilling of 2 wells on
North West Gemsa;
o US$6.0 MM on the 3D seismic campaign at South Disouq; and
o US$5.6 MM on the drilling of the Manatee-1 well at West
Bakassi.
-- As at December 31, 2016, SDX had cash on hand of US$4.7 MM
and zero debt. As at February 28, 2017, cash on hand had increased
to US$18.3 MM and the Company remained debt free.
Operational Highlights
-- Average daily oil sales and production service fees equated
to 1,196 barrels of oil per day ("BOP/D") for the 12 months to
December 31, 2016 and 1,147 BOP/D for the 3 months to December 31,
2016.
-- As at March 23, 2017 the Company's share of production from its operations was;
o North West Gemsa 2,794 BOEP/D
o Meseda 776 BOP/D
o Morocco 663 BOE/D
-- In North West Gemsa, six successful well workovers were
completed in the 12 months ended December 31, 2016;
-- In Meseda, following the successful completion of a nine well
workover program and strategic initiative focussed on development
optimization and increasing production, the partners completed a
fluid handling review in H2 2016 which concluded that the Meseda
facility treating capacity had to be increased. A tendering process
to secure the equipment necessary to increase facility treating
capacity has been completed and construction of the new facilities
equipment has commenced. Once completed it will be shipped to
location and installed;
-- In South Disouq the 3D seismic acquisition was completed
ahead of schedule and under budget. Processing and interpretation
has also been completed and has identified potential for both oil
and gas bearing prospects with strong Class III amplitude versus
offset (AVO) responses observed in several prospects. Well planning
and selection of drilling location was completed as planned and the
well operations commenced on March 20, 2017. Enquiries have also
been received from a number of operators regarding farming into the
licence; and
-- At the South Ramadan development concession, a technical
review of prospectivity has been completed and an evaluation of
project economics is underway. An extension to complete the
drilling commitment has been requested from the government with any
drilling now being planned for early 2018.
Outlook:
Egypt
-- North West Gemsa
o Complete 12 well workover program focused on ESP
installation/maintenance and tubing maintenance to ensure
production uptime;
o Complete unitization arrangement with offset operator and
prepare for any additional development activities
-- Meseda
o Drill 2 development wells (pending government approval) and 2
exploration wells
o Replace up to 6 ESPs
o Continue with redevelopment, waterflood program and facility
capacity upgrade;
-- South Disouq
o Complete drilling of SD-1X exploration well and reach TD early
Q2 2017
o Depending on results of SD-1X, decide upon next steps which
may include commencing development planning and deciding whether to
enter the 2(nd) exploration phase
Morocco
-- Sebou
o Drill up to 5 wells in H2 2017; 3 development and 2
appraisal
o Look to increase Gas volumes to existing customers and agree
contracts with, and start supplying volumes to, new customers
-- Lalla Mimouna
o In H1 2017, high-grade 2 prospects for drilling
o Drill these 2 prospects in H2 2017
Corporate
-- Continue to explore opportunities to expand asset base in the North Africa region; and.
-- Continue to minimise costs and crystallise synergies post
completion of the acquisition of Circle Oil PLC's businesses in
Egypt and Morocco
Paul Welch, President & CEO of SDX Energy, commented:
"I am pleased to report on the solid progress that was made
throughout 2016, with high levels of activity across the entire
portfolio. At North West Gemsa and Meseda we successfully completed
extensive workover programmes, with production expected to double
at Meseda over the coming months. Our 3D seismic acquisition at
South Disouq was also successfully completed resulting in the
identification of both oil and gas bearing prospects for our 2017
drilling campaign. Following the completion of the technical review
of prospectivity at South Ramadan, a forward plan for the
concession has been developed which minimises the Company's capital
exposure in 2017.
The successful fundraise and acquisition of Circle's assets in
Egypt and Morocco, announced in January, demonstrates our ability
to deliver on SDX's ambitious growth strategy. With increased
production and cash flow as a result of the acquisition, our
balance sheet has been further strengthened, leaving us well placed
to progress the development of the existing portfolio, while
positioning the Company to capitalise on further opportunities that
we are actively identifying within the North Africa region."
KEY FINANCIAL & OPERATING HIGHLIGHTS
Audited consolidated financial statements with Management's
Discussion and Analysis for the 3 and 12 months ended December 31,
2016 are now available on the Company's website at
www.sdxenergy.com and on SEDAR at www.sedar.com.
Proforma Combined
Business (assumes
merger of Sea Dragon
Energy and Madison
Petrogas occurred
January 1 2015)
Three months Twelve months
Prior ended December ended December
Quarter 31 31
---------------------------- --------- -------------------- -------------------- ---------
$000s except per unit
amounts 2016 2015 2016 2015
---------------------------- --------- --------- --------- ---------------- ---------
FINANCIAL
---------------------------- --------- --------- --------- ---------------- ---------
Gross Revenues(1) 3,752 8,436 4,128 18,362 23,030
Royalties (823) (3,082) (686) (5,448) (5,467)
Net Revenues 2,929 5,354 3,442 12,914 17,563
Operating costs (1,241) (1,752) (2,483) (5,282) (6,039)
Netback 1,688 3,602 959 7,632 11,524
Total comprehensive
(loss)/income 140 (2,059) 8,542 (27,963) 7,358
per share - basic - (0.03) 0.23 (0.39) 0.20
Cash, end of period 4,961 4,725 8,170 4,725 8,170
Working capital (excluding
cash) 4,632 7,098 3,382 7,098 3,382
Capital expenditures 188 856 2,404 13,339 6,359
Total assets 43,901 41,617 60,016 41,617 60,016
Shareholders' equity 39,161 37,264 55,246 37,264 55,246
Common shares outstanding
(000's) 79,844 79,844 37,642 79,844 37,642
OPERATIONAL
Oil sales (bbl/d) 510 468 652 534 759
Gas sales (boe/d)(2) - 3,273 - 823 -
NGL Sales (bbl/d)(2) - 445 - 112 -
Production service
fee (bbl/d) 704 679 704 662 760
---------------------------- --------- --------- --------- ---------------- ---------
Total oil sales and
production service
fee boe/d 1,214 4,865 1,356 2,131 1,519
---------------------------- --------- --------- --------- ---------------- ---------
Realized oil price
(US$/bbl) 40.84 44.56 38.71 38.00 48.02
Realized service fee
(US$/bbl) 28.32 31.12 27.89 26.26 35.10
---------------------------- --------- --------- --------- ---------------- ---------
Net oil sales and
production service
fee realized price
($/bbl) 33.58 36.60 33.09 31.51 41.55
---------------------------- --------- --------- --------- ---------------- ---------
Realized gas price
(US$/mcf) - 1.22 - 1.22 -
Realized NGL price
(US$/bbl) - 57.73 - 57.73 -
---------------------------- --------- --------- --------- ---------------- ---------
Net realized price
- all products (US$/boe) 33.58 18.85 33.09 23.55 41.55
---------------------------- --------- --------- --------- ---------------- ---------
Royalties ($/bbl) 7.37 6.89 5.50 6.99 9.86
Operating costs ($/bbl) 11.11 3.91 19.91 6.77 10.90
Netback ($/bbl) 15.10 8.05 7.68 9.79 20.79
Notes:
(1) Net Revenues for the 3 and 12 months ended 31 December 2016
includes US$2.3 MM relating to gas and natural gas liquids revenue
relating to the period October 1, 2013 to December 31, 2016. This
revenue had previously not been recognised due to uncertainties
relating to entitlement and pricing which have now been resolved.
US$1.8 MM relates to the period October 1, 2013 to December 31,
2015 and US$0.5MM relates to the 12 months ended December 31,
2016.
(2) Average daily natural gas and natural gas liquids sales
relating to the period October 1, 2013 to December 31, 2016 and
recognised in the 3 months to December 31, 2016 equated to 935 and
3,718 barrels of oil equivalent ("BOEP/D") for the 12 and 3 months
to December 31, 2016 respectively. Out of the 935 BOEP/D, 153 BOE/D
was actually generated in the 12 months to December 31, 2016.
Financial Statements
Twelve months
ended December
31
Three months
Prior ended December
Quarter 31 (audited)
---------------------------- --------- -------------------- --- -------------------
$000s except per unit
amounts 2016 2015 2016 2015
---------------------------- --------- --------- --------- --- --------- --------
FINANCIAL
---------------------------- --------- --------- --------- --- --------- --------
Gross Revenues(1) 3,752 8,436 4,128 18,362 12,058
Royalties (823) (3,082) (686) (5,448) (686)
Net Revenues 2,929 5,354 3,442 12,914 11,372
Operating costs (1,241) (1,752) (2,483) (5,282) (4,973)
Netback 1,688 3,602 959 7,632 6,399
Total comprehensive
(loss)/income 140 (2,059) 8,542 (27,963) 9,400
per share - basic - (0.03) 0.23 (0.39) 0.20
Cash, end of period 4,961 4,725 8,170 4,725 8,170
Working capital (excluding
cash) 4,632 7,098 3,382 7,098 3,382
Capital expenditures 188 856 2,404 13,339 5,120
Total assets 43,901 41,617 60,016 41,617 60,016
Shareholders' equity 39,161 37,264 55,246 37,264 55,246
Common shares outstanding
(000's) 79,844 79,844 37,642 79,844 37,642
OPERATIONAL
---------------------------- --------- --------- --------- --- --------- --------
Oil sales (bbl/d) 510 468 652 534 164
Gas sales (boe/d)(2) - 3,273 - 823 -
NGL Sales (bbl/d)(2) - 445 - 112 -
Production service
fee (bbl/d) 704 679 704 662 760
Total oil sales and
production service
fee boe/d 1,214 4,865 1,356 2,131 924
---------------------------- --------- --------- --------- --- --------- --------
Realized oil price
(US$/bbl) 40.84 44.56 38.71 38.00 38.71
Realized service fee
(US$/bbl) 28.32 31.12 27.89 26.26 35.10
---------------------------- --------- --------- --------- --- --------- --------
Net oil sales and
production service
fee realized price
($/bbl) 33.58 36.60 33.09 31.51 35.74
---------------------------- --------- --------- --------- --- --------- --------
Realized gas price
(US$/mcf) - 1.22 - 1.22 -
Realized NGL price
(US$/bbl) - 57.73 - 57.73 -
---------------------------- --------- --------- --------- --- --------- --------
Net realized price
- all products (US$/boe) 33.58 18.85 33.09 23.55 35.74
---------------------------- --------- --------- --------- --- --------- --------
Royalties ($/bbl) 7.37 6.89 5.50 6.99 2.03
Operating costs ($/bbl) 11.11 3.91 19.91 6.77 14.74
Netback ($/bbl) 15.10 8.05 7.68 9.79 18.97
Notes:
(1) Net Revenues for the 3 and 12 months ended 31 December 2016
includes US$2.3 MM relating to gas and natural gas liquids revenue
relating to the period October 1, 2013 to December 31, 2016. This
revenue had previously not been recognised due to uncertainties
relating to entitlement and pricing which have now been resolved.
US$1.8 MM relates to the period October 1, 2013 to December 31,
2015 and US$0.5MM relates to the 12 months ended December 31,
2016.
(2) Average daily natural gas and natural gas liquids sales
relating to the period October 1, 2013 to December 31, 2016 and
recognised in the 3 months to December 31, 2016 equated to 935 and
3,718 barrels of oil equivalent ("BOEP/D") for the 12 and 3 months
to December 31, 2016 respectively. Out of the 935 BOEP/D, 153 BOE/D
was actually generated in the 12 months to December 31, 2016.
SDX is an international oil and gas exploration, production and
development company, headquartered in London, England, UK, with a
principal focus on North Africa. In Egypt, SDX Energy has a working
interest in two producing assets (50% North West Gemsa & 50%
Meseda) located onshore in the Eastern Desert, adjacent to the Gulf
of Suez. In Morocco, SDX has a 75% working interest in the Sebou
concession situated in the Rharb Basin. These producing assets are
characterised by exceptionally low operating costs making them
particularly resilient in a low oil price environment. SDX Energy's
portfolio also includes two high impact exploration opportunities,
South Disouq in Egypt and Lalla Mimouna in Morocco.
For further information, please see the website of the Company
at www.sdxenergy.com or the Company's filed documents at
www.sedar.com.
Unless otherwise defined, capitalised terms used in this
announcement have the same meaning as set out in the Acquisition
Announcements.
For further information:
SDX Energy Inc.
Paul Welch
President and Chief Executive Mark Reid
Officer Chief Financial Officer
Tel: +44 203 219 5640 Tel: +44 203 219 5640
Cantor Fitzgerald Europe
(Nominated Adviser & Joint
Broker)
Sarah Wharry/Craig Francis
Tel: +44 207 894 7000
GMP FirstEnergy (Joint
Broker)
Jonathan Wright/David
van Erp
Tel: +44 207 448 0200
Celicourt (PR)
Mark Antelme/ Joanna Boon
Tel: +44 207 520 9260
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of
this release.
Advisory
Forward-Looking Statements
Certain statements contained in this press release constitute
"forward-looking statements" 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 statements. In particular, statements concerning
the completion of and anticipated results from the workover program
at North West Gemsa; the completion of the redevelopment and
upgrade at Meseda, the exploration plans for the Company's asset at
South Disouq, including the drilling of an exploration well; the
Company's plans to drills wells, and to attempt to increase sales,
at its Sebou property in Morocco; and the Company's drilling plans
at its Lalla Mimouna property in Morocco should be viewed as
forward-looking statements.
The forward-looking statements contained in this document are
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 statements 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; the sufficiency of budgeted capital expenditures
in carrying out planned activities; and the availability and cost
of labour and services.
By their very nature, forward-looking statements are 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; failure to realize the
anticipated benefits of the Transaction and to successfully
integrate the Parties; 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 reference SDX's Annual
Information Form for the year ended December 31, 2015 for a
description of additional risks and uncertainties associated with
SDX's business, including its exploration activities, which can be
found on SDX's SEDAR profile at www.sedar.com.
The forward-looking statements contained in this press release
are made as of the date hereof and SDX does not undertake any
obligation to update publicly or to revise any of the included
forward-looking statements, except as required by applicable law.
The forward-looking statements contained herein are expressly
qualified by this cautionary statement.
Non-IFRS Measures
This news release contains the term "Netback," which is not a
recognized measure under IFRS and may not be comparable to similar
measures presented by other issuers. The Company uses this measure
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR JJMLTMBITBTR
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