South Disouq spuds
SDX Energy announced this morning that it has spudded the South Disouq (SD-1X) well in Egypt, targeting gas and oil across a number of intervals. This is a high impact event for SDX Energy, as current company 2P reserves of 4.7mmboe (post acquisition) would be dwarfed by success at South Disouq (we model a 65mmboe field of which SDX holds 55% WI), which could be developed quickly due to existing pipeline infrastructure passing through the block. Our valuation for South Disouq is 6.8p/share, although on success we would expect notable de-risking. Our core NAV is 42p with a full NAV (including South Disouq) of 57p/share. The well is due to take 30-45 days, so we would expect a result in mid late April.SDX Energy is engaged in the exploration, acquisition, development and production of oil and natural gas in Africa and Egypt. As of Dec 31 2010, total gross proved reserves for light and medium oil consisted of 3,593 thousand barrels ("mbbls"), natural gas liquids consisting of 211 mbbls and natural gas consisting of 2,575 million cubic feet.
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