TIDMSDX
RNS Number : 0716B
SDX Energy PLC
28 January 2020
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 2020
SDX ENERGY PLC ("SDX" or the "Company")
Update on drilling operations in Morocco and Egypt
Morocco
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company,
is pleased to announce that the OYF-2 well in Morocco (SDX 75%
working interest) has been drilled to a measured depth of 1,210
meters and has encountered commercial quantities of gas in excess
of pre-drill estimates. The discovery also confirms that the
Company's core productive area extends to the north.
Both the Upper and Lower Guebbas targets in OYF-2 were
encountered and reservoir thickness and quality were better than
pre-drill expectations. The Upper Guebbas was encountered at a
measured depth of 1,001 meters, while the Lower Guebbas was
penetrated at a measured depth of 1,120 meters.
Management estimates that approximately 1.3 to 1.9 bcf(1) of gas
is recoverable from the horizons encountered by the OYF-2 well,
which will be tested in February. The discovery will be tied into
the Company's infrastructure when required, at an estimated cost of
approximately US$2 million net to SDX. Furthermore, the discovery
has de-risked a further 0.5 to 1.0 bcf of Prospective Resources(2)
in the western compartment of the Lower Guebbas target which the
Company expects to recover with a single development well in the
future.
The rig has now moved to the BMK-1 location, which is
approximately 11 kilometres to the north of OYF-2. BMK-1 will again
test the extent of the northern expansion of the Company's core
productive area and, if successful, could de-risk a number of
similar close-by prospects. After BMK-1, one more close to
infrastructure well and two other potentially play-opening wells in
Lalla Mimouna will be drilled to complete the campaign in
March.
Egypt
South Disouq (SDX Working Interest 55%)
Preparations continue at South Disouq for two exploration wells
targeting gross unrisked P50 volumes of up to 104 bcf from the same
horizons encountered in the Company's four discoveries to date. The
first well, Salah, which is expected to spud in mid/late February
and complete in April 2020, is targeting a gross unrisked P50
prospect of 71 bcfe (Company estimate)(1) . The second well, Sobhi,
which is expected to spud in late April/early May and complete in
early June, is targeting a gross unrisked P50 prospect of 33 bcfe
(Company estimate) (1) . If successful, these two wells would
require short, 8.0 kilometre and 5.8 kilometre, tie-ins to the
South Disouq Central Processing Facility with SDX's share of the
tie-in cost estimated at US$2.5 million and US$1.9 million
respectively.
West Gharib (SDX Working Interest 50%)
In early February the Company is planning to spud an
appraisal/development well in the Rabul area of its West Gharib
concession. If successful, this well could add approximately gross
200-300 bbl/d of production.
Mark Reid, CEO of SDX, commented:
"We have a particularly busy year ahead with the drill bit,
giving us the opportunity to increase significantly the Company's
reserves life. OYF-2 in Morocco is a very positive start, a
discovery which is larger than pre drill expectations, and
confirmation that our core productive area extends to the north.
With the planned follow on development well, we now have the
potential to increase our total reserves in Morocco to
approximately three to four years of customer demand with our gas
being sold under five and ten year fixed priced contracts at an
average gas price of circa US$11/mcf.
With the imminent commencement of drilling campaigns in South
Disouq and West Gharib in Egypt, together with the ongoing drilling
campaign in Morocco, we have a very busy period of activity ahead
of us with three rigs drilling simultaneously. I look forward to
providing further updates on these campaigns in due course."
About SDX
SDX is an international oil and gas exploration, production and
development company, headquartered in London, United Kingdom, with
a principal focus on MENA. In Egypt, SDX has a working interest in
three producing assets. In the South Disouq gas field in the Nile
Delta, the Company is operator and has a 55% working interest. In
the Eastern Desert, adjacent to the Gulf of Suez, the Company has
two non-operated oil interests; 50% in North West Gemsa and 50% in
Meseda. In Morocco, SDX has a 75% working interest in the Sebou
concession, situated in the Gharb Basin. These producing gas assets
in Morocco are characterised by exceptionally low operating costs
and fixed price gas contracts 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 Company's website at
www.sdxenergy.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 Rob Cook, VP
Subsurface of SDX. Dr. Cook has over 25 years of oil and gas
industry experience, 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 Joint Broker)
Callum Stewart
Nicholas Rhodes
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
Cantor Fitzgerald Europe (Joint Broker)
David Porter
Tel: +44 207 7894 7000
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 203 757 4980
Glossary
"bbl" stock tank barrel
"bbl/d" barrels of oil per day
------------------------------
"bcf" billion cubic feet
------------------------------
"bcfe" billion cubic feet equivalent
------------------------------
"mcf" thousands of cubic feet
------------------------------
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 Company's future drilling campaigns and results in Morocco and
at South Disouq and West Gharib in Egypt and the sufficiency of
reserves to fulfill existing customer contracts, should all 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; 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
SDX's Management's Discussion & Analysis for the three and nine
months ended 30 September 2019, 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 disclosures in this news release constitute "anticipated
results" for the purposes of National Instrument 51-101 - Standards
of Disclosure for Oil and Gas Activities 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 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.
1. Management Estimates
The management disclosed or referenced herein have been prepared
in accordance with the Canadian Oil and Gas Evaluation
Handbook.
2. Prospective Resources
The prospective resource estimates disclosed or referenced
herein have been prepared by an independent qualified reserves
evaluator, ERC Equipoise Limited, in accordance with the Canadian
Oil and Gas Evaluation Handbook. The prospective resources
disclosed herein have an effective date of 1 January 2019.
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%. Anticipated results are subject to certain
risks and uncertainties, including 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.
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.
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
UPDFLFLTLLIDFII
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January 28, 2020 02:00 ET (07:00 GMT)
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