TIDMSDX
RNS Number : 6831G
SDX Energy PLC
17 November 2022
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17 November 2022
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
FINANCIAL AND OPERATING RESULTS FOR THE THREE AND NINE MONTHSED
30 SEPTEMBER 2022
SDX Energy Plc (AIM: SDX), announces its unaudited financial and
operating results for the three and nine months ended 30 September
2022. All monetary values are expressed in United States dollars
net to the Company unless otherwise stated.
YTD 9 months 2022 key highlights:
-- Production of 512 bbls/d and 19.3mmscf/d (3,729 boe/d), 3%
higher than mid-point full year guidance of 3,480 - 3,795
boe/d.
-- EBITDAX of US$21.6 million and operating cash flow (before capex) of US$15.0 million.
-- Out of the 14 wells completed across SDX's portfolio in the
year to date, eight were producing as at 30 September 2022, two
were connected to production post period-end and another two will
be connected by the end of November 2022.
-- Capex US$22.4 million compared to revised full year guidance of US$26.5 - 28.0 million .
-- Net Cash position of US$9.4 million (unaudited) as at 30 September 2022.
-- Aleph Commodities and a group of investors acquired a
strategic stake in the Company with a view to provide support and
financing for growth initiatives.
-- Carbon intensity of 3.8kg CO(2) e/boe YTD'22 at operated assets.
Mark Reid, CEO of SDX, commented:
"SDX's business continued to generate strong EBITDAX and
operating cash flow for the nine months to date. We have also
successfully drilled thirteen development and exploration wells
across our three assets and are delivering on our production
guidance. Due to higher than expected standby costs for equipment
needed to maintain facility operations, we have increased our Capex
guidance for the year.
During the quarter Aleph Commodities along with a group of
strategic investors were warmly welcomed into our Company. Aleph
has stated that it is their intention to further support the
Company with its growth initiatives and at a time of difficult
capital markets, this provides the Company with a significant
differentiator versus its peers. S DX also underwent some changes
to our Board and Senior Management structure during the period with
Krzysztof Zielicki joining as a Non-Executive Director and Yvon
Quillien joining as our new Chief Operating Officer and,
post-period, Jay Bhattacherjee joined as Non-Executive Chairman. I
welcome our new Board members and look forward to the upcoming
period in what is an exciting time for the Company's future growth
"
Three and nine months to 30 September 2022 Operations
Highlights
-- Entitlement production for the nine months ended 30 September
2022 of 3,729 boe/d was 3% higher than 2022 mid-point guidance of
3,638 boe/d, driven by strong performances in Morocco and at South
Disouq, with West Gharib's production lower than expected due to
drilling delays and higher water and sand production from some
wells drilled on the flanks of the Meseda field.
-- The Company's operated assets recorded a carbon intensity of
3.8kg CO(2) e/boe during the first nine months of 2022.
-- In South Disouq, the planned three-well drilling campaign has
been successfully completed. The SD-5X and SD-12_East discoveries
have been brought online ahead of schedule, delivering production
and cash flow. The MA-1X gas discovery well is in the process of
being evaluated to determine a commercialisation strategy.
-- In West Gharib, six wells have been successfully completed
and are on production. Post period-end the next two wells in the
campaign, MSD-28 and MSD-22, were drilled and reached TD on 14
October 2022 and 25 October 2022 respectively. MSD-28 encountered
161ft of net oil pay and MSD-22 103ft of net oil pay. Both wells
are expected to be on production in Q4 2022.
-- In Morocco, both wells (SAK-1 and KSR-20) in the two-well
drilling campaign during Q3 2022 discovered gas. SAK-1 was
subsequently tied into the Company infrastructure with production
commenced post period-end. KSR-20 is currently undergoing testing
and will be brought on production in Q4 2022. During Q3, several
workovers were performed to access behind-pipe reserves.
Three and nine months to 30 September 2022 Corporate
Highlights
-- During the quarter a number of Board changes were announced.
The Board is now led by Jay Bhattacherjee as Non-Executive
Chairman, with his fellow directors being Tim Linacre, Mark Reid
and Krzysztof Zielicki.
Three and nine months to 30 September 2022 Financial
Highlights
Three months Nine months
ended ended
30 September 30 September
US$ million, except per unit
amounts 2022 2021 2022 2021
------- ------- ------- -------
Net revenues(1) 11.1 12.9 33.4 40.0
------- ------- ------- -------
Netback(1)(3) 8.5 10.5 26.4 32.6
------- ------- ------- -------
Net realised average oil service
fees - US$/barrel 77.81 57.90 81.42 52.98
------- ------- ------- -------
Net realised average Morocco
gas price - US$/Mcf 9.91 11.39 10.56 11.40
------- ------- ------- -------
Net realised South Disouq gas
price - US$/Mcf(2) 2.85 2.85 2.85 2.85
------- ------- ------- -------
Netback - US$/boe 18.15 19.53 19.97 20.25
------- ------- ------- -------
EBITDAX(1)(3) 6.4 9.8 21.6 29.7
------- ------- ------- -------
Exploration & evaluation expense
("E&E") (0.3) (1.8) (0.8) (12.7)
------- ------- ------- -------
Depletion, depreciation, and
amortisation ("DD&A") (4.9) (8.4) (15.3) (23.3)
------- ------- ------- -------
Total comprehensive loss(4) (1.2) (2.0) (2.4) (12.1)
------- ------- ------- -------
Capital expenditure 10.3 3.8 22.4 19.6
------- ------- ------- -------
Net cash generated from operating
activities 4.6 7.7 15.0 22.6
------- ------- ------- -------
Net cash and cash equivalents 9.4 9.8 9.4 9.8
------- ------- ------- -------
(1) Net revenues, Netback and EBITDAX for nine months ended 30
September 2022 and 2021 includes US$3.6 million and US$3.9 million
respectively of non-cash revenue relating to the grossing up of
Egyptian corporate tax on the South Disouq PSC which is paid by the
Egyptian State on behalf of the Company (respectively US$1.2
million and US$1.3 million for the three months ended 30 September
2022 and 2021).
(2) South Disouq gas is sold to the Egyptian State at a fixed
price of US$2.65 Mmbtu, which equates to approximately
US$2.85/Mcf.
(3) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(4) For the three and nine months ended 30 September 2022 total
comprehensive loss is stated before minority interest. Total
comprehensive loss attributable to SDX shareholders for the three
and nine months ended 30 September 2022 is US$1.3 million and
US$2.0 million, respectively.
-- Netback for the nine months to 30 September 2022 was US$26.4
million, 19% lower than the same period in 2021. Netback
contribution from South Disouq was US$11.2 million (YTD'21: US$12.1
million) due to lower gas and condensate production owing to
natural decline being partly offset by higher realised price for
condensate and lower opex. West Gharib Netback increased by US$1.8
million compared to the same period in 2021 due to the increase in
the realised oil service fee, partly offset by lower production.
Morocco Netback was lower in the nine months to 30 September 2022
by US$7.1 million compared to the same period in 2021 due to lower
production. Morocco Netback was further impacted by lower realised
pricing due to the weakening of the Moroccan Dirham against the US
Dollar.
-- EBITDAX for the nine months to 30 September 2022 of US$21.6
million was 27% lower than the same period in 2021 of US$29.7
million due to lower Netback, as described above.
-- YTD'22 the depletion, depreciation and amortisation
("DD&A") charge of US$15.3 million was lower than the US$23.3
million for the same period in 2021 due to lower production in
Morocco and a lower depreciable asset base in South Disouq,
following the accelerated depreciation of the SD-12X borehole costs
during H2 2021 and impairment recognised at year-end 2021.
-- YTD'22 operating cash flow (before capex) of US$15.0 million,
was lower than the same period in 2021 of US$22.6 million, mainly
due to lower EBITDAX as explained above.
-- Capex of US$22.4 million, reflects:
o US$8.7 million for the three-well drilling campaign at South
Disouq split between: US$1.9 million for the drilling, completion,
testing and tie in of the SD-5X well, US$3.0 million for the
drilling, completion and tie in of the SD-12_East well and US$2.7
million for the drilling, completion and testing of the MA-1X well.
In addition, US$0.8 million has been spent on several workovers and
US$0.2 million on other exploration costs;
o US$11.5 million in Morocco covering; pre-drilling and standby
expenditure for the recommencement of the Morocco drilling campaign
(US$2.5 million), the drilling and completion costs for SAK-1
(US$4.3 million) and KSR-20 (US$2.1 million), US$1.5 million of
additional expenditure on the KSR-19 well and US$1.1 million on
various workovers and infrastructure works; and
o US$2.2 million of West Gharib drilling costs across the eight wells drilled.
-- Liquidity: The Company's net cash position as at 30 September
2022 was US$9.4 million, with cash balances of US$14.9 million
offset by US$5.5 million drawn debt from the European Bank of
Reconstruction and Development ("EBRD") credit facility. As a
result of various geopolitical factors, US dollar transfers by the
Central Bank of Egypt have been delayed resulting in the need to
draw the EBRD facility to pay head office general and
administrative costs and certain US$ denominated operational
expenses. It has been possible recently to repatriate funds, albeit
this has incurred FX trading costs. Under the existing facility
with the EBRD, US$0.2 million of additional undrawn lines remain
available to the Company.
YTD'22 Performance vs 2022 Guidance
Production
-- Average entitlement production as at 30 September 2022 of
3,729 boe/d, which was 3% higher than mid-point 2022 market
guidance of 3,638 boe/d.
Gross production SDX entitlement production
(boe/d)
Asset Guidance - Actual - Guidance Actual Actual
12 months ended 9 months ended - 12 months - 9 months - 9 months
31 December 30 September ended 31 ended 30 ended 30
2022 2022 December September September
2022 2022 2021
------------------- ----------------- ----------------- ------------ ------------
Core assets
------------------- ----------------- ----------------- ------------ ------------
South Disouq
- WI 36.9% &
67.0%(1) 38 - 40 MMscfe/d 38.7 MMscfe/d 2,500 - 2,700(2) 2,724 4,477(3)
------------------- ----------------- ----------------- ------------ ------------
West Gharib - 2,000 - 2,450
WI 50% bbl/d 2,032 bbl/d 380 - 470 389 473
------------------- ----------------- ----------------- ------------ ------------
Morocco - WI
75% 4.8 - 5.0 MMscf/d 4.9 MMscf/d 600 - 625 616 951
------------------- ----------------- ----------------- ------------ ------------
3,480 -
Total 3,795 3,729 5,901
----------------- ------------ ------------
(1) After completion of the South Disouq disposal with effect
from 1 February 2022.
(2) Net of minority interest. Gross of minority interest,
production guidance is expected to be 3,500 - 3,700 boe/d.
(3) 30 September 2021 South Disouq entitlement production is
shown at pre-disposal working interest of 55%/100%.
o South Disouq : During the first nine months of 2022, the
existing wells continued to exhibit natural decline and expected
sand and water production, albeit this was partly offset by
contribution from the two wells (SD-5X and SD-12_East) that came
into production after 30 September 2021. Production guidance for
2022 reflects the disposal of 33% of SDX's interest in the asset,
2-3% CPF and compressor downtime due to planned maintenance, the
successful drilling of SD-12_East and SD-5X and several well
workovers. The MA-1X gas discovery well is in the process of being
evaluated to determine a commercialisation strategy.
o West Gharib: The existing wellstock at the asset continued to
produce steadily, albeit exhibiting natural decline as expected,
partly offset by contribution from the recently drilled eight wells
of which six wells were on production as at 30 September 2022 and
successful well workovers. Some of the new wells that were drilled
on the flanks of the Meseda field have exhibited higher water and
sand production than previously expected. The development drilling
campaign will arrest the asset's natural decline, with new wells
beginning to grow production into 2023.
o Morocco: The first nine months of 2022 saw strong demand from
the customer portfolio, although consumption in the third quarter
was lower compared to consumption during the first six months of
the year due to summer/EID demand slowdown. 2022 production
guidance is lower than 2021 production as the Company evaluates its
ability to deliver to new and existing consumers based on its
current reserves base and pricing environment.
Capex
-- The Company is updating its 2022 capex guidance to
US$26.5-28.0 million (previously US$25.5-27.0 million) as it has
incurred higher than anticipated standby charges for drilling
equipment in Morocco. It was necessary to incur these charges to
ensure appropriate operational flexibility for the two-well
campaign.
-- 2022 capex is fully-funded and predominantly relates to one
appraisal and two exploration wells in South Disouq, up to eight
new wells and facilities upgrades in West Gharib, and two new wells
and a number of workovers in Morocco.
-- The remaining capex activities for 2022 includes two wells in
West Gharib, a well workover in South Disouq and completion and the
connection of one well in Morocco.
Asset Guidance - 12 Actual - 9
months ended 31 months ended
December 2022 30 September
2022
South Disouq - WI US$9.0 - 9.5 million(2) US$8.7 million(3)
36.9% & 67.0%(1)
------------------------ ------------------
West Gharib - WI US$4.5 - 5.0 million US$2.2 million
50%
------------------------ ------------------
Morocco - WI 75% US$13.5 - 14.0 US$11.5 million
million
------------------------ ------------------
Total US$26.5 - 28.0 US$22.4 million
million
------------------------ ------------------
(1) After completion of the South Disouq disposal with effect
from 1 February 2022.
(2) As the legal entity that holds the South Disouq asset is
100% consolidated in the financial statements of the Company, capex
guidance is gross of minority interest. Net of minority interest,
capex guidance is US$7.5 - 8.0 million.
(3) Includes US$0.7 million of decommissioning provisions. Net
of minority interest, SDX's share of capex for the 9 months ended
30 September 2022 was US$6.3 million.
o South Disouq : One appraisal well, SD-12_East, and two
exploration wells, SD-5X (Warda) and MA-1X (Mohsen), have been
drilled during the first nine months to 30 September 2022. The
SD-5X well discovered gas in the basal Kafr El Sheikh sand, with
EUR similar to the pre-drill expectation. SD-5X was tied-in and
started production 13 May 2022 and is currently producing at around
10 MMscf/d of dry gas and c.100 bbl/d of condensate. The second
well in the campaign, SD-12_East (Ibn Yunus North development
lease) was successfully drilled and brought onto production on 1
July 2022 and is currently producing at around 7 MMscf/d, with no
condensate. The third and final well of the 2022 South Disouq
drilling campaign, MA-1X on the Mohsen prospect in the Exploration
Extension Area, is a gas discovery in the primary Kafr El Sheikh Fm
reservoir target finding 56.3ft of high-quality net gas pay. A
well-test was conducted on MA-1X and is currently being evaluated
to determine a commercialisation strategy. Following the disposal
transaction, all three wells have been drilled with partner
participation. In addition to the drilling activity, several well
workovers will be undertaken to maximise recovery from the
fields.
o West Gharib: The development drilling campaign which saw three
wells being drilled completed, tied-in and brought on-line during
the first half of the year continued throughout the third quarter.
The MSD-23 well, which spudded in Q2, reached TD on 11 July 2022
and encountered 131.5ft of good quality net-oil pay. MSD-23 also
found an undepleted oil sand above the main Meseda reservoir
interval, which represents a new reservoir that will be exploited
at a future date. MSD-27, spudded on 22 July 2022 and reached TD on
7 August 2022, encountering 137.3ft of good-quality, net oil pay
sandstone. The MSD-20 well, which spud 5 April 2022 but encountered
technical difficulties, was side-tracked and ultimately reached TD
on 23 August 2022, finding 58.5ft of good quality net-oil pay. The
Rabul Field exploration well, Rabul Deep-1, spud 21 August 2022 and
reached TD in the Matulla Formation on 17 September 2022. The well
did not encounter hydrocarbons and is likely to be completed as a
water injector. A total of 10 well workovers across the concession
were undertaken during the third quarter of 2022, relating to a
variety of operations (sand
clean-out, tubing replacement, pump replacement, and
recompletions to shallower reservoir sections).
o Morocco: The Company concentrated on maximising recovery from
its existing well stock, utilising its two compressors. During the
third quarter, the 2022 drilling campaign commenced with the
spudding of the SAK-1 well on 6 August 2022. The SAK-1 well reached
TD of 1,196m MD on 24 August 2022 and encountered a gas sand at the
primary target interval at 1,107m MD finding 3.7m of net pay with
an average porosity of 31%. A secondary gas sand was found at
1,079.6m MD, with a net pay thickness of 1.1m and an average
porosity of 28%. The well was subsequently tied into the Company's
infrastructure and production commended post period-end. The second
well in the campaign, KSR-20, spud 12 September 2022 and reached TD
of 1,410m MD post period-end on 1 October 2022, finding the primary
target gas sands at 1,265m MD. The well is currently undergoing
testing and will be brought on production in Q4 2022. In addition
to the drilling campaign, workovers were performed to access
behind-pipe reserves in a number of wells.
YTD'22 ESG metrics
-- The Company's operated assets recorded a carbon intensity of 3.8kg CO2e/boe in 2022.
-- Scope 1 greenhouse gas emissions at operated assets were
7,500 tons of CO(2) e. Scope 3 greenhouse gas emissions in Morocco
were 70,800 tons of CO(2) e, which is approximately 35,900 tons of
CO(2) e less than using alternative heavy fuel oil.
-- There were no Lost Time Injuries at any of the Company's assets YTD'22.
-- No produced water was discharged into the environment in
Morocco (100% contained and evaporated) or at South Disouq (100%
recycled).
-- There were no hydrocarbon spills at operated assets.
-- The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Nine months to 30 September 2022 Financial Update
-- Netback for the nine months to 30 September 2022 was US$26.4
million, US$6.2 million (19%) lower than the Netback of US$32.6
million for the nine months to 30 September 2021, driven by:
o Net revenue decrease of US$6.6 million compared to the same
period in 2021 due to:
o US$7.0 million lower revenue in Morocco compared to 2021 due
to the non-renewal of an expired customer contract and lower
realised pricing due to adverse FX movement;
o US$1.4 million lower South Disouq revenue compared to 2021,
due to lower production partly offset by improved condensate
pricing; and
o US$1.8 million higher revenue at West Gharib compared to 2021
due to higher realised service fees (2022: US$81.42/bbl, 2021:
US$52.98/bbl), partly offset by lower production (2022: 389 bbl/d,
2021: 473 bbl/d).
o Operating costs decreased by US$0.4 million from the prior
year due to lower production at South Disouq and West Gharib.
-- EBITDAX for the nine months to 30 September 2022 was US$21.6
million, US$8.1 million (27%) lower than EBITDAX of US$29.7 million
for H1 2021, mainly as a result of the decrease in Netback
described above.
-- The main components of SDX's comprehensive loss (before
minority interest) of US$2.4 million for YTD'22 are:
o US$26.4 million Netback
o US$0.8 million of E&E expense which relates to ongoing new
venture activity (predominantly internal management time)
o US$15.3 million of DD&A expense
o US$3.4 million of ongoing G&A expense
o US$1.7 million of transaction costs
o US$2.8 million of FX loss mainly due to the devaluation of the
Egyptian Pound during the first nine months of the year; and
o US$4.9 million of corporate tax, being Egyptian corporate
income tax (South Disouq: US$3.6 million, West Gharib: US$1.2
million) and corporate social tax in Morocco (US$0.1 million).
-- Operating cash flow (before capex) for the nine months to 30
September 2022 of US$15.0 million, was lower than the same period
in 2021 of US$22.6 million, primarily due to a decline in EBITDAX
and income taxes paid during 2022.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Three months Nine months ended
ended 30 September
Prior Quarter 30 September(3)
---------------------------------- -------------- -------------------------------- --------------------------------
$000s except per unit amounts 2022 2022
(unaudited) 2021 (unaudited) (unaudited) 2021 (unaudited)
---------------------------------- -------------- ----------------- ------------- -----------------
FINANCIAL
---------------------------------- -------------- ----------------- ------------- -----------------
Net revenues 11,098 11,059 12,867 33,392 39,975
Operating costs (2,321) (2,554) (2,378) (6,946) (7,357)
Netback (1) 8,777 8,505 10,489 26,446 32,618
EBITDAX (1) 7,062 6,356 9,826 21,630 29,740
Total comprehensive loss (624) (1,227) (2,060) (2,430) (12,146)
Total comprehensive loss
attributable
to SDX shareholders (612) (1,257) $(0.010) (2,018) $(0.059)
Net loss per share - basic $(0.003) $(0.006) $(0.010) $(0.010) $(0.059)
Cash, end of period 15,272 14,889 9,789 14,889 9,789
Capital expenditures 8,929 10,250 3,806 22,423 19,645
Total assets 103,607 108,585 108,706 108,585 108,706
Shareholders' equity 77,073 74,951 84,450 74,951 84,450
Common shares outstanding (000's) 204,563 204,563 205,378 204,563 205,378
OPERATIONAL
---------------------------------- -------------- ------------- ----------------- ------------- -----------------
West Gharib production service
fee (bbl/d) 363 414 387 389 473
South Disouq gas sales (boe/d)
(2) 3,460 3,944 4,360 3,672 4,257
Morocco gas sales (boe/d) 635 574 867 616 951
Other products sales (boe/d)
(2) 175 162 223 173 220
---------------------------------- -------------- ------------- ----------------- ------------- -----------------
Total sales volumes (boe/d)
(2) 4,633 5,094 5,837 4,850 5,901
---------------------------------- -------------- ----------------- ------------- -----------------
Realised West Gharib service
fee (US$/bbl) $88.66 $77.81 $57.90 $81.42 $52.98
Realised South Disouq gas price
(US$/Mcf) $2.85 $2.85 $2.85 $2.85 $2.85
Realised Morocco gas price
(US$/Mcf) $10.60 $9.91 $11.39 $10.56 $11.40
Royalties ($/boe) $6.17 $5.66 $5.41 $5.79 $5.09
Operating costs ($/boe) $5.50 $5.45 $4.43 $5.25 $4.57
Netback ($/boe) (1) $20.82 $18.15 $19.53 $19.97 $20.25
(1) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
(2) Sales volumes from the South Disouq concession have been
presented gross of minority interest. For the period 1 February
(transaction effective date) to 30 September 2022, the share of
volumes assigned to the Company's minority interest holder equals
1,122 boe/d and therefore the Company's share of South Disouq
volumes (incl. other products) equals 2,723 boe/d. Net of minority
interest total sales volumes are 3,728 boe/d.
Consolidated Balance Sheet (unaudited)
(US$'000s) As at 30 September As at 31 December
2022 2021
-------------------- ----------------------------------------- -----------------------------------------
Assets
Cash and cash
equivalents 14,889 10,562
Trade and other
receivables 18,076 19,942
Inventory 7,549 6,747
------------------------ ----------------------------------------- -----------------------------------------
Current assets 40,514 37,251
Investments 3,483 3,593
Property, plant and
equipment 28,784 34,593
Exploration and
evaluation
assets 34,925 21,611
Right-of-use assets 1,279 1,367
--------------------- -----------------------------------------
Non-current assets 68,071 61,164
Total assets 108,985 98,415
------------------------ -----------------------------------------
Liabilities
Trade and other
payables 18,852 17,157
Decommissioning
liability - 22
Current income taxes 1,194 1,150
Borrowings 5,560 -
Lease liability 464 439
--------------------- ----------------------------------------- -----------------------------------------
Current liabilities 26,070 18,768
Decommissioning
liability 6,825 5,747
Deferred income taxes 290 290
Lease liability 849 956
--------------------- -----------------------------------------
Non-current
liabilities 7,964 6,993
Total liabilities 34,034 25,761
--------------------- -----------------------------------------
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment
reserve 7,654 7,536
Accumulated other
comprehensive
loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings 21,516 26,270
Non-controlling
interest 6,933 -
Total equity 74,951 72,654
------------------------ -----------------------------------------
Equity and
liabilities 108,985 98,415
--------------------- -----------------------------------------
Consolidated Statement of Comprehensive Income (unaudited)
Three months Nine months ended
ended 30 September
30 September
(US$'000s) 2022 2021 2022 2021
--------------- ----------------------------- ---------------- ---------------- --------------- ---------------
Revenue, net of royalties 11,059 12,867 33,392 39,975
Direct operating
expense (2,554) (2,378) (6,946) (7,357)
Gross profit 8,505 10,489 26,446 32,618
Exploration and evaluation expense (307) (1,820) (841) (12,700)
Depletion, depreciation and amortisation (4,900) (8,350) (15,266) (23,295)
Share-based compensation 4 (80) (118) (254)
Share of profit from joint venture 135 186 397 409
General and administrative expenses
- Ongoing general and administrative
expenses (1,336) (769) (3,378) (3,033)
- Transaction costs (951) - (1,716) -
------------------------------- --------------- ---------------- ---------------- --------------- ---------------
Operating income/(loss) 1,150 (344) 5,524 (6,255)
Finance costs (94) (170) (282) (504)
Foreign exchange loss (565) 116 (2,803) (46)
Income/(loss)e before income taxes 491 (398) 2,439 (6,805)
Current income tax
expense (1,718) (1,662) (4,869) (5,341)
Loss and total comprehensive loss
for the period (1,227) (2,060) (2,430) (12,146)
------------------------------------------------- ---------------- --------------- ---------------
Attributable to
SDX shareholders (1,257) (2,060) (2,018) (12,146)
Non-controlling interests 30 - (412) -
Net loss, attributable to SDX shareholders,
per share
Basic $(0.006) $(0.010) $(0.010) $(0.059)
Diluted $(0.006) $(0.010) $(0.010) $(0.059)
--------------- ----------------------------- ---------------- --------------- ---------------
Consolidated Statement of Changes in Equity (unaudited)
Nine months ended 30 September
(US$'000s) 2022 2021
------------------------------------ --------------------------------- -----------------------------------
Share capital
Balance, beginning of period 2,601 2,601
Balance, end
of period 2,601 2,601
Share premium
Balance, beginning of period 130 130
Balance, end
of period 130 130
Share-based payment reserve
Balance, beginning of period 7,536 7,269
Share-based compensation for
the period 118 254
----------------------------------- --------------------------------- -----------------------------------
Balance, end
of period 7,654 7,253
Accumulated other comprehensive
loss
Balance, beginning of period (917) (917)
Balance, end
of period (917) (917)
Merger reserve
Balance, beginning of period 37,034 37,034
Balance, end
of period 37,034 37,034
Retained earnings
Balance, beginning of period 26,270 50,225
Part disposal of subsidiary (2,736) -
Total comprehensive loss (2,018) (12,146)
---------------------------------- --------------------------------- -----------------------------------
Balance, end
of period 21,516 38,079
NCI
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Dividends paid (891)
Loss for the period (412) -
---------------------------------- --------------------------------- -----------------------------------
Balance, end 6,933 -
of period
Total equity 74,951 84,450
--------------------------------- -----------------------------------
Consolidated Statement of Cash
Flows (unaudited)
Three months ended Nine months ended
30 September 30 September
(US$'000s) 2022 2021 2022 2021
--------------------------------- --------- ----------------- ----------- ------------------
Cash flows generated from/(used
in) operating activities
Income/(loss) before income taxes 491 (389) 2,439 (6,805)
Adjustments for:
Depletion, depreciation and
amortisation 4,900 8,350 15,266 23,295
Exploration and evaluation
expense - 1,299 - 11,612
Finance expense 94 170 282 504
Share-based compensation charge (4) 80 118 254
Foreign exchange loss 565 160 2,803 86
Tax paid by state (1,249) (1,383) (3,551) (3,949)
Share of profit from joint
venture (135) (186) (397) (409)
--------------------------------- --------- ----------------- ----------- ------------------
Operating cash flow before
working
capital movements 4,662 8,092 16,960 24,588
(Increase)/decrease in trade and
other receivables (69) 80 2,021 (193)
Increase/(decrease) in trade and
other payables 1,020 (468) (1,033) (1,231)
Payments for inventory (1,009) (48) (2,106) (560)
Payments for decommissioning - - (35) -
Cash generated from operating
activities 4,604 7,656 15,807 22,604
Income taxes paid - - (841) -
--------------------------------- ----------- ------------------
Net cash generated from operating
activities 4,604 7,656 14,966 22,604
Cash flows generated from/(used
in) investing activities:
Property, plant and equipment
expenditures (3,298) (6,699) (9,473) (16,793)
Exploration and evaluation
expenditures (3,157) (372) (8,526) (5,654)
Proceeds on part disposal of
subsidiary (891) - 4,609 -
Dividends received - 522 311 522
Net cash used in investing
activities (7,346) (6,549) (13,079) (21,925)
Cash flows generated from/(used
in) financing activities:
Net proceeds from loans and
borrowings 3,000 - 5,500 -
Payments of lease liabilities (137) (195) (398) (698)
Finance income/(expense) 27 (68) 10 (163)
--------------------------------- --------- ----------------- ----------- ------------------
Net cash generated from/(used
in) financing activities 2,890 (263) 5,112 (861)
Increase/(decrease) in cash and
cash equivalents 148 844 6,999 (182)
Effect of foreign exchange on
cash and cash equivalents (531) (163) (2,672) (85)
Cash and cash equivalents,
beginning
of period 15,272 9,108 10,562 10,056
--------------------------------- --------- ----------------- ----------- ------------------
Cash and cash equivalents, end
of period 14,889 9,789 14,889 9,789
--------------------------------- ----------------- ----------- ------------------
About SDX
SDX is an international oil and gas exploration, production, and
development company, headquartered in London, United Kingdom.. In
Egypt, SDX has a working interest in two producing assets: a 36.9%
operated interest in the South Disouq and Ibn Yunus gas fields and
a 67.0% operated interest in the Ibn Yunus North gas field in the
Nile Delta and a 50% non-operated interest in the West Gharib
concession, which is located onshore in the Eastern Desert,
adjacent to the Gulf of Suez. In Morocco, SDX has a 75% working
interest in four development/production concessions, all situated
in the Gharb Basin. The producing assets in Morocco are
characterised by attractive gas prices and exceptionally low
operating costs. SDX has a strong weighting of fixed price gas
assets in its portfolio with low operating costs and attractive
margins throughout, providing resilience in a low commodity price
environment. SDX's portfolio also includes high impact exploration
opportunities in both Egypt and Morocco.
For further information, please see the Company's website at
www.sdxenergygroup.com or the Company's filed documents at
www.sedar.com.
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 Dr Rob Cook, VP
Subsurface of SDX. Dr. Cook has 30 years of oil and gas industry
experience and is the qualified person as defined in the London
Stock Exchange's Guidance Note for Mining and Oil and Gas
companies. Dr. Cook holds a BSc in Geochemistry and a PhD in
Sedimentology from the University of Reading, UK. He is a Chartered
Geologist with the Geological Society of London (Geol Soc) and a
Certified Professional Geologist (CPG-11983) with the American
Institute of Professional Geologists (AIPG).
For further information:
SDX Energy Plc
Mark Reid
Chief Executive Officer
Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)
Callum Stewart
Jason Grossman
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 (0) 203 757 4980
Glossary
"bbl" stock tank barrel
"bbl/d" barrels of oil per day
---------------------------------------
"bcf" billion cubic feet
---------------------------------------
"boe/d" barrels of oil equivalent per
day
---------------------------------------
"CO(2) e/boe" carbon dioxide equivalent per
barrels of oil equivalent
---------------------------------------
"EUR" estimated ultimate recovery
---------------------------------------
"Mcf" thousands of cubic feet
---------------------------------------
"MD" measured depth
---------------------------------------
"MMscf/d" million standard cubic feet
per day
---------------------------------------
"MMscfe/d" million standard cubic feet
equivalent per day
---------------------------------------
"P50" means that there is at least
a 50% probability that the quantities
actually recovered will equal
or exceed the best estimate.
---------------------------------------
"TD" total depth
---------------------------------------
"TVDSS" Total vertical depth sub-sea
---------------------------------------
"2P Reserves" proved plus probable reserves
---------------------------------------
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, statements regarding
the formulation of the Company's strategic review and expansion
plans, the Company's production and capex guidance; liquidity and
sources of cash flows for the remainder of 2022, and the Company's
future drilling developments and results, should be regarded as
forward-looking information.
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; applicable tax laws; future
production rates; receipt of necessary permits; the sufficiency of
budgeted capital expenditures in carrying out planned activities,
and the availability and cost of labour and services.
All timing given in this announcement, unless stated otherwise,
is indicative, and while the Company endeavours 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; currency control risks;
environmental risks; competition; permitting risks; the 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 refer to
the Principal Risks & Uncertainties section of SDX's Annual
Report for the year ended 31 December 2021, 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.
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.
Non-IFRS Measures
This news release contains the terms "Netback," and "EBITDAX"
which are not recognized measures under IFRS and may not be
comparable to similar measures presented by other issuers. The
Company uses these measures 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.
EBITDAX is a non-IFRS measure that represents earnings before
interest, tax, depreciation, amortization, exploration expense and
impairment. EBITDAX is calculated by taking operating income/(loss)
and adjusted for the add-back of depreciation and amortization,
exploration expense and impairment of property, plant, and
equipment (if applicable). EBITDAX is presented in order for the
users to understand the cash profitability of the Company, which
excludes the impact of costs attributable to exploration activity,
which tend to be one-off in nature, and the non-cash costs relating
to depreciation, amortization and impairments. EBITDAX may not be
comparable to similar measures used by other companies.
Oil and Gas Advisory
Certain disclosures in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities ("NI 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, flow rate, production rates, porosity,
and pay thickness attributable to the resources of the Company.
Such estimates have been prepared by Company management 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 1 bbl: 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.
Use of a Standard
Reserve and resource estimates disclosed or referenced herein
have been prepared in accordance with the SPE's Canadian Oil and
Gas Evaluation (COGE) Handbook and in accordance with NI
51-101.
Prospective Resources Data
The prospective resources estimates disclosed or referenced
herein have been prepared by Dr. Rob Cook, a qualified reserves
evaluator, in accordance with the SPE's Canadian Oil and Gas
Evaluation Handbook (COGE) and in accordance with NI 51-101. The
prospective resources disclosed herein have an effective date of 1
January 2022. Prospective resources are those quantities of gas,
estimated as of the given date, to be potentially recoverable from
undiscovered accumulations through future development projects. As
prospective resources, there is no certainty that any portion of
the resources will be discovered. The chance that an exploration
project will result in a discovery is referred to as the "chance of
discovery" as defined by the management of the Company.
There is no certainty that it will be commercially viable to
produce any portion of the resources discussed herein; though any
discovery that is commercially viable would be tied back to the
Company's pipeline in Morocco and then connected to customers'
facilities within 9 to 12 months of discovery. Based upon the
economic analysis undertaken on any discovery, management has
attributed an associated chance of development of 100%.
There are uncertainties associated with the volume estimates of
the prospective resources disclosed herein, due to the level of
information available on prospective resources, but ranges are
defined based on data from the Company's nearby existing analogous
wells. Some of the risks and uncertainties are outlined below:
-- Petrophysical parameters of the sand/reservoir;
-- Fluid composition, especially heavy end hydrocarbons;
-- Accurate estimation of reservoir conditions (pressure and temperature);
-- Reservoir drive mechanism;
-- Potential well deliverability; and
-- The thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
"P50" means that there is at least a 50% probability that the
quantities actually recovered will equal or exceed the best
estimate.
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END
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