TIDMSDX
RNS Number : 2012O
SDX Energy Inc.
28 January 2019
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 January 2019
SDX ENERGY INC
("SDX" or the "Company")
Operations and Corporate Update
SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil
and gas company, provides its 2019 operational outlook and advises
of its intention to delist from the TSXV in conjunction with a move
of its corporate residence of the Group's holding company to the UK
from Canada.
Morocco (75% Working Interest, Operator)
-- The Gharb Centre 3D seismic acquisition undertaken in H2 2018
has now been processed and an initial interpretation completed. The
data quality is excellent and as a result, multiple leads and
prospects have been identified. An inversion of the dataset will
now take place after which a ranking and selection exercise will be
undertaken to determine which prospects will be chosen for the 2019
drilling campaign.
-- Planning for a 12 well campaign has begun with drilling set
to commence in late Q3/early Q4 2019 and complete during H1
2020.
-- During this campaign the LNB-1 and LMS-1 wells in Lalla
Mimouna, originally drilled in 2018, will be re-tested, with the
remainder of the programme's targets coming from the recently
acquired Gharb Centre 3D seismic.
-- It is anticipated that three wells from the 12 well programme
will be completed and connected in 2019. The 2019 total gross capex
is expected to be approximately US$10 million with SDX's share
being approximately US$8 million. Out of this US$8.0 million,
US$6.0 million relates to the three planned wells and US$2.0
million relates to the Company's share of facilities and field
maintenance capex.
-- SDX is targeting gross production of 9-11 MMscf/d of conventional natural gas sales in 2019.
Egypt - Meseda Concession (50% Working Interest,
Non-Operator)
-- 2019 gross production guidance of 4,000-4,200 bopd.
-- The operator plans to drill two wells in H1 2019. One well in
Rabul which will continue to develop the discovery area and one
development location in the Meseda field.
-- The operator also plans to replace up to five electrical
submersible pumps ("ESPs") in the wider Meseda area and upgrade
water handling capabilities at the field facilities.
-- Gross capex in 2019 is expected to be approximately US$8
million (US$4 million net to SDX of which US$1.6 million relates to
the two planned wells and US$2.4 million relates to ESP
replacements and the facilities upgrade).
Egypt - North West Gemsa Concession (50% Working Interest,
Non-Operator)
-- 2019 gross production guidance of 3,400-3,600 boepd.
-- The operator is planning to complete up to 10 workovers and
carry out infrastructure maintenance, but not drill any additional
wells.
-- As the field is now fully developed, gross capex in 2019 is
expected to be approximately US$4 million (US$2 million net to
SDX).
Egypt - South Disouq Concession (55% Working Interest,
Operator)
-- During H1 2019, SDX will complete construction of the Central
Processing Facility, the 10km export pipeline and the tie-ins for
the four existing production wells.
-- First gas is targeted for mid-2019, at a gross plateau
production rate of between 50-60 MMscf/d with the conventional
natural gas being sold to the State at a price of US$2.85/Mcf.
-- Prospect inventory for future drilling is expected to
increase with the interpretation of the recently acquired 170km(2)
of 3D seismic in the southern section of the concession.
-- The Company is planning to drill two further exploration
wells in 2019, with multiple additional conventional gas prospects
and a conventional oil prospect also identified for future
drilling.
-- Gross capex in 2019 is expected to be approximately US$40.0
million (US$22.0 million net to SDX of which approximately US$18.5
million relates to the South Disouq development activities and
US$3.5 million relates to the two planned exploration wells).
Egypt - South Ramadan Concession (12.75% Working Interest,
Non-Operator)
-- The Company continues to review technical data from the
recently announced SRM-3 well result and will provide further
updates to the market in due course.
Cash and Working Capital Highlights and Outlook
-- In Q4 2018, the Company recovered approximately US$4.5
million(1) of backdated Egyptian receivables and paid approximately
US$1.0 million of South Disouq 3D seismic costs and US$1.7 million
of Morocco 3D seismic costs.
-- SDX subsequently ended the year with approximately US$17
million(1) of cash and no debt(1) . The Company also has additional
liquidity available by way of an undrawn US$10.0 million credit
facility for Morocco with the EBRD.
-- In 2019, the Company will look to make further reductions in
its backdated receivables balances.
(Notes)
(1) Unaudited
Corporate Update
-- Following the Company's dual listing on AIM in May 2016, the
Company has seen its investor base move increasingly towards the
UK, with limited institutional support from the Canadian market.
The Company has found UK investors to be more receptive to and
active in exploration and production companies with an African
focus, and therefore are more suited to support companies such as
SDX.
-- Given this, the Company has been reviewing its corporate
structure and, as part of this review and subject to shareholder
and court approval, plans to relocate its corporate residence from
Canada to the UK with a group reorganisation and delist from the
TSXV. It is expected that this process will be completed in Q2 2019
and will result in meaningful annual savings in administrative
costs, management time and a more tax efficient corporate
structure.
Paul Welch, President & CEO of SDX Energy, commented:
"We are pleased to provide an update on our operational outlook
for 2019, which is set to be a landmark year for the Company.
Looking ahead, there are a number of important milestones that we
intend to meet across the portfolio, which have the potential to
deliver significant value for shareholders.
In Egypt, a 10 well workover programme is set to commence at
North West Gemsa and further drilling opportunities at Meseda means
that we now expect to grow gross production from this asset in
2019. At South Disouq, completing the Central Processing Facility
and achieving first gas from the licence will be a landmark event
for SDX. We continue to believe that South Disouq contains
considerable upside potential and we look forward to updating the
market on further operational progress on the licence in due
course. We are also excited to start the 12 well drilling campaign
in Morocco in the second half of the year, given the significant
drilling success we achieved with our drilling programme last
year.
In keeping with SDX's corporate strategy, we are keen to be as
cost efficient as possible and we see delisting from the TSXV as a
way to achieve further cost savings for the business. SDX continues
to assess value accretive M&A opportunities that have the
potential to enhance the Company's production scale and generate
value for shareholders. We remain upbeat about the year ahead and
look forward to updating the market across our operations
throughout 2019. "
About SDX
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 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's
portfolio also includes high impact exploration opportunities in
both Egypt and 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.
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
Stifel Nicolaus Europe Limited (Nominated Adviser and Joint
Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Cantor Fitzgerald Europe (Joint Broker)
David Porter/Nick Tulloch
Tel: +44 20 7894 7000
GMP FirstEnergy (Joint Broker)
Jonathan Wright/David van Erp
Tel: +44 207 448 0200
Celicourt (PR)
Mark Antelme/Jimmy Lea/Ollie Mills
Tel: +44 207 520 9260
Neither the TSX Venture Exchange nor its Regulation Services
Provider (as such term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
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 Paul Welch,
President and Chief Executive Officer of SDX. Mr. Welch, who has
over 30 years of experience, is the qualified person as defined in
the London Stock Exchange's Guidance Note for Mining and Oil and
Gas companies. Mr. Welch holds a BS and MS in Petroleum Engineering
from the Colorado School of Mines in Golden, CO. USA and an MBA in
Finance from SMU in Dallas, TX USA and is a member of the Society
of Petroleum Engineers (SPE).
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, forward-looking
information included in this press release includes statements with
respect to: anticipated capital expenditures; plans regarding
drilling activities and the timing thereof; the Company's plans to
replace ESPs in the Meseda area, the timing of first gas at South
Disouq concession; the Company's plans regarding the Company's
interest in the South Ramadan concession; the Company's plans to
redomicile to the UK and the timing thereof; production targets;
volume targets; production start-up dates; seismic work, testing
and the timing thereof; and the Company's outlook.
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; future production rates; receipt of
necessary permits; the sufficiency of budgeted capital expenditures
in carrying out planned activities; the timing of and the Company's
ability to obtain regulatory, statutory and shareholder approvals
in connection with the Company's plans to redomicile to the UK; and
the availability and cost of labor and services.
All timing given in this announcement, unless stated otherwise
is indicative and while the Company endeavors 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; 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
Management's Discussion & Analysis for the three and nine
months ended September 30, 2018, 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, including its
exploration activities.
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.
Oil and Gas Advisory
Certain disclosure in this news release constitute "anticipated
results" for the purposes of National Instrument 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 and production rates attributable to
the resources of the Company. Such estimates have been prepared by
management of the Company 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 1bbl: 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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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