TIDMSDX
RNS Number : 9145E
SDX Energy PLC
04 March 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.
4 March 2020
SDX ENERGY PLC ("SDX" or the "Company")
Update on drilling operations in Morocco and Egypt
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company,
is pleased to provide an update on drilling operations in Morocco
and Egypt.
Highlights
-- Play-opening BMK-1 well in Morocco reached depth of 1,551
meters, encountering commercial quantities of gas in both target
horizons.
-- Confirms Morocco core productive area extends north,
de-risking c.20 bcf of P50 prospective resources.
-- Expected to significantly extend reserve life and support
lower CO(2) emissions at our customers.
-- Rig now moves to Lalla Mimouna concession to drill potentially play-opening LMS-2 well.
-- SD-6X in Egypt not found to be commercially viable; results being analysed.
-- SD-12X in Egypt expected to spud in the next two to three
weeks, targeting 33 bcfe and not anticipated to have any technical
read across from SD-6X.
Morocco
The BMK-1 well in Morocco has been drilled to a measured depth
of 1,551 meters and has encountered commercial quantities of gas in
both target horizons. The Upper Guebbas was encountered at a
measured depth of 1,190 meters, while the Lower Guebbas was
penetrated at a measured depth of 1,475 meters.
Following the OYF-2 discovery which was announced on 28 January
2020 and successfully tested last week, and this BMK-1 discovery,
the Company can confirm that the prospectivity in its existing core
production and development area extends to the north. As a result,
management estimates that, based upon these well results and the
existing 3D seismic over the area, the Company has opened a new
play fairway and de-risked up to 20bcf of P50 close-by prospective
resources for future drilling of which approximately 10 bcf is
located in and around BMK-1. See below a link to a map of the
area.
http://www.rns-pdf.londonstockexchange.com/rns/9145E_1-2020-3-3.pdf
Using Measurement While Drilling ('MWD') tools, management
estimates that BMK-1 encountered a total of approximately 0.9 bcf
of gas in the Upper and Lower Guebbas targets, in line with
pre-drill estimates. However, due to down-hole issues, only the
Upper target was wireline logged and will be completed. Management
estimate that the Upper target has approximately 0.4 bcf of
recoverable gas and that the gas in the Lower target will be
recoverable during the development of the new play fairway
de-risked by the OYF-2 and BMK-1 wells.
T he rig will now move to the Lalla Mimouna concession to drill
the potentially play-opening LMS-2 well. With the drilling of this
tenth well, the Company will have fulfilled the three objectives of
the campaign which were; (i) to add reserves in and around its
existing infrastructure; (ii) to determine if its existing
producing area extends to the north; and (iii) to test the
prospectivity within the Lalla Mimouna concession. Furthermore,
given that the last two planned wells would not have been
immediately tied into the Company's infrastructure or contributed
cash flows in the near term, the Company has decided to preserve
its capital and postpone these last two wells, at no incremental
cost, for a future campaign. Given all of this, the campaign will
conclude after LMS-2.
Egypt
South Disouq (SDX Working Interest 55% and operator)
The SD-6X (Salah) exploration well at South Disouq, Egypt has
been drilled to a total depth of 3,167 meters. The well encountered
1.7 meters of net gas bearing sand in the Kafr El Sheikh Formation
(average porosity 34%), 1.0 meter of net gas bearing sand in the
Abu -- Madi Formation which has 143 meters of high quality net
reservoir (average porosity 24%) and 258 meters of high quality net
reservoir in the Qawasim Formation (average porosity 20%). The gas
sands in both the Kafr El Sheikh and Abu Madi were deemed to be
sub-economic and the Qawasim has low gas saturation. The thinner
than expected gas columns in SD-6X encountered is attributable to
the absence of a sealing mechanism in the stratigraphic traps being
targeted by the well. The well results are currently being
analysed.
The rig will now move to the site of the next drilling location
on the South Disouq licence, the SD-12X (Sobhi) exploration well,
which is to the north and structurally updip of the Ibn Yunus
discovery and the SD-6X well.
The result of SD-6X is not anticipated to have any technical
read across to SD-12X which is targeting a management estimate of
33 bcfe and which is expected to spud in the next two to three
weeks.
Mark Reid, CEO of SDX, commented:
"The BMK-1 result in Morocco is excellent news, confirming that
together with the OYF-2 discovery in January, we can now plan to
develop a material and valuable new prospective area to the north
of our existing infrastructure in a market where we are the only
gas producer and where we receive gas prices of between $10-12 per
mmcf. An additional 20 bcf of P50 prospective resources has the
potential to significantly extend reserve life and support lower
CO(2) emissions at our customers.
After the SD-6X well in Egypt, we can look forward to spudding
the SD-12X well in the weeks ahead, where there is no expected
technical read across from SD-6X."
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
Peel Hunt LLP (Joint Broker)
Richard Crichton
David McKeown
Tel: +44 207 418 8900
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 203 757 4980
Glossary
"bcf" billion cubic feet
"bcfe" billion cubic feet equivalent
------------------------------
"mmcf" million 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 in Egypt including estimates of recoverable gas and
plans to drill at LMS-2 and SD-12X, the preservation of the
Company's capital, the extension of reserve life, the sufficiency
of reserves to fulfill existing customer contracts and impact on
customer CO(2) emissions, 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 including disclosures
in the map titled "New Play Fairway covered by existing 3D and
de-risked by OYF-2 and BMK-1" that is incorporated herein
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 and production rates 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.
Prospective Resources
The prospective resource estimates disclosed or referenced
herein or contained in the map titled "New Play Fairway de-risked
by OYF-2 and BMK-1" that is incorporated herein have been prepared
by Dr. Rob Cook, a qualified reserves evaluator, in accordance with
the Canadian Oil and Gas Evaluation Handbook and in accordance with
National Instrument 51-101 - Standards of Disclosure for Oil and
Gas Activities. The prospective resources estimates disclosed
herein have an effective date of 1 January 2020. 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.
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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