reports
- Sanjeev Bahl
SDX Energy - Termination of coverage
Edison Investment Research is terminating coverage on EJF Investments (EJFI), ROVI Laboratorios Farmaceuticos (ROVI) and SDX Energy (SDX). Please note you should no longer rely on any previous research or estimates for these companies. All forecasts should now be considered redundant.
SDX Energy - In an enviable position in the sector
At its recent capital markets day, SDX Energy reiterated 2020 production guidance and highlighted its strong cash generation, with c 90% of post-tax operating cash flows derived from fixed-price gas contracts. Management presented its 2021/22 plan of activities, targeting three wells in Egypt with potential to add 179bcf of recoverable reserves from a 233bcf exploration portfolio under assessment, and at least four exploration wells in Morocco. With increasing FCF, capital is likely to be direct...
SDX Energy - Sobhi sole risk delivered a commercial discovery
SDX Energy recently reported its FY19 results reflecting a 14% increase in production driven by the start of production at South Disouq in Egypt, and its accelerated ramp-up ahead of expectations. The drilling campaign in Morocco resulted in seven discoveries and a tenth well is to be tested. The company ended the year with a cash balance of $11.1m and is fully funded for all 2020 activities from existing cash flows. In this note we update our valuation to reflect, among other things, FY19 resul...
SDX Energy - FY20 guidance reflecting increased production
SDX Energy provided new production guidance of 6,750–7,000boepd for 2020, representing an increase of c 70% on 2019 rates as the company expects to see the benefit of full year production from South Disouq. The field continues to deliver at a stabilised rate of c 50mmscfed. Meanwhile the Moroccan drilling campaign has added 3.3–4.4bcf of management estimated gross reserves from six successful wells, with the remaining wells including a number of higher risk/reward options. SDX will now focus...
Edison Investment Research Limited: Edison issues outlook on SDX Energ...
Edison Investment Research Limited Edison Investment Research Limited: Edison issues outlook on SDX Energy (SDX) 12-Dec-2019 / 10:32 GMT/BST Â London, UK, 12 December 2019 Edison issues outlook on SDX Energy (SDX) SDX Energy announced early in November 2019 the commencement of production of natural gas in South Disouq, in Egypt. We expect this achievement to have a material effect on SDX's cash generation in the coming years. The field has already achieved a plateau production of 50mmscfed, three months ahead of management expectations. Along with its Q319 results, SDX also outl...
SDX Energy - South Disouq delivering ahead of expectations
SDX Energy announced early in November 2019 the commencement of production of natural gas in South Disouq, in Egypt. We expect this achievement to have a material effect on SDX’s cash generation in the coming years. The field has already achieved a plateau production of 50mmscfed, three months ahead of management expectations. Along with its Q319 results, SDX also outlined its exploration and appraisal drilling programme for end-FY19 and FY20, with up to five wells to be drilled in Egypt and 1...
- Sanjeev Bahl
SDX Energy - FY19 management guidance reset
Despite our last published FY19 forecasts reflecting a more conservative production ramp-up than management guidance, SDX’s guidance revisions have resulted in a further downgrade to our short-term cash flow forecasts and NAV. We reduce FY19e production from 4.3kboed to 3.4kboed (-21%) and project more moderate growth in SDX’s Morocco gas demand with an associated RENAV impact of -42%. Key drivers of management’s downgrade include lower Sebou gas demand growth, a higher than anticipated wa...
- Sanjeev Bahl
SDX Energy - NAV and forecast update - South Disouq delays
In this note, we update our short-term forecasts and NAV to reflect delays at South Disouq, with first gas postponed from mid-2019 to the end of 2019. Management is confident that first gas will be delivered in Q419, with the pipeline infrastructure largely installed. SDX retains the option to deliver first gas ahead of Q419 through a leased early production facility (EPF), but only a short window exists for this to be commercially viable ahead of the completion of the permanent central gas proc...
- Sanjeev Bahl
SDX Energy - South Disouq first gas and H219 drilling
2019 will be an active year for SDX with H119 focused on delivery of first gas at South Disouq, ahead of a return to the drill bit in H219. An eight to nine well programme targets both oil and gas prospectivity in Egypt and appraisal/development locations in Morocco. Drilling activity is expected to be financed through cash flow, undrawn debt ($10m accessible under a reserve-based facility) and an estimated end-FY18 cash position of $15.9m. We expect first gas from South Disouq and increased gas...
- Sanjeev Bahl
SDX Energy - Strong netback; active 2019 well programme
The acquisition of Circle Oil assets, strong oil prices and cost discipline drove up group operational netbacks from US$22.5/boe in H117 to US$32.9/boe in H118, with the group generating net cash from operations of US$20.3m. Funds from operations helped SDX Energy to support an active H118 drilling programme while maintaining a strong balance sheet position, ending the half-year with US$25.2m of cash and an undrawn credit facility of US$10m. As highlighted in our recent research note, Looking ah...
- Sanjeev Bahl
SDX Energy - Looking ahead at 2019 work programme
In this note, we revisit SDX’s 2017/2018 gas discoveries in Morocco and Egypt and look ahead at the company’s plans to leverage this success to deepen its resource base. In 2019, drilling in Egypt will focus on several Ibn Yunus lookalikes with combined unrisked recoverable volume of c 70bcf and a 17bcf Abu Madi structural trap. In addition, SDX will target a 50mmbo unrisked oil prospect in 2019. In Morocco, SDX has a commendable 87% success rate of discovering gas at Sebou based on calibrat...
- Sanjeev Bahl
SDX Energy - Lalla Mimouna - de-risks demand expectations
SDX Energy has discovered gas at the LNB-1, Morocco with 300m of gas-bearing horizons discovered in an over-pressured section in the Lafkarena sequence. Heavy hydrocarbons contained in gas indicate a thermogenic hydrocarbon source rock, indicative of a new petroleum system that has previously not been encountered at Sebou. Preliminary estimates of recoverable gas at LNB-1 are un-risked mid-case volume of 10.2bcf with 55kbbls of condensate. This is significantly larger than the traps encountered ...
- Sanjeev Bahl
SDX Energy - Ibn Yunus-1 de-risking Abu Madi Baltim trend
SDX Energy has announced results from the Ibn Yunus-1 well at South Disouq, Egypt (SDX 55%). Ibn Yunus-1 is the second consecutive gas discovery at South Disouq (after SD-1X) and encountered 100.8 net meters of conventional pay in the Abu Madi horizon, with average porosity of 28.5%. The well came in on prognosis but with a reservoir thickness and quality above pre-drill expectations. We expect to de-risk Ibn Yunus on flow testing; however, indicatively moving to an 80% chance of success (equiva...
- Sanjeev Bahl
SDX Energy - Strong operational netback
SDX Energy has reported FY17 results, which reflect the positive impact of the late January 2017 acquisition of Circle Oil’s Egyptian and Moroccan business, strong netbacks and Egyptian receivable recovery. Netback, defined as sales net of operating expense and government royalties, stood at $28.9m and compares with our estimated $26.4m. Cash at year-end 2017 stood at $25.8m and has since grown to $30.6m as at 28 February 2018 after a further $6m in backdated receivables was recovered. We rece...
- Sanjeev Bahl
SDX Energy - Morocco - a simple, low-cost operation with growth
Key takeaways from SDX’s analysts’ site visit to Morocco include the asset’s operational simplicity and low operating costs. Realised gas prices averaging $10/mcf combined with a 10-year tax holiday drive unit netbacks in the $8.5-9.0/mcf range. Demand growth potential in Kenitra, the fourth largest industrial town in Morocco, was very visible with the emphasis on SDX to grow the company’s gas resource base in order to underpin contract base expansion. SDX’s 2017/18 well programme shou...
- Sanjeev Bahl
SDX Energy - Gas discovery ONZ-7
SDX Energy has announced the discovery of gas at the ONZ-7 development well on the Sebou permit in Morocco. The ONZ-7 well was drilled to a total depth of 1,167m, with 5m of net conventional gas pay in the Hoot formation. Reservoir quality exceeded initial expectations with porosity in the pay section at 35.3% – a further update on well flow rates is expected in early February. SDX has made four discoveries from five wells drilled in the current nine well campaign – an 80% E&A success rate w...
- Sanjeev Bahl
SDX Energy - KSR-16 flow exceeds expectations
SDX Energy has announced the completion of the KSR-16 well on the Sebou permit in Morocco (SDX 75%) with the well delivering a restricted flow rate of 8.43mmscfd, exceeding management expectations, and the highest flow rate to date from the three successful wells drilled to date. KSR-16 is now on production.
- Will Forbes
- Solid well results kick off the campaign
SDX Energy has announced two successful well results in recent weeks, with additional oil discovered in Egypt and more net pay found in its first Moroccan gas well than expected. The next six months are busy ones for SDX, with eight more wells to be drilled in Morocco to supply a high value gas market. Two wells will be drilled in Egypt to delineate its existing South Disouq discovery and two exploration wells will target prospects that could materially increase the gas resources. In addition, p...
- Will Forbes
- Significant work programme starting
SDX Energy has completed the $10m equity raising to fund an accelerated drilling programme in Egypt and Morocco. This means it will be drilling wells with unrisked returns generating IRRs of more than 100%, according to the company, underlining the value of the H217 drilling programme. After the fund-raise, SDX will be fully funded to take the South Disouq discovery to first gas in early 2018, and to drill two exploration wells to explore for a further 150bcf in Egypt while increasing its Morocc...
- Will Forbes
Raising accelerates growth potential
SDX has announced a £10m equity raise targeting an accelerated exploration and development well programme (in addition to its existing aggressive work programme). Two wells in Egypt will target the largest prospects close to South Disouq and aim to de-risk up to 150bcf (P50) of the prospective resources, and enable SDX to right-size the production facilities for the most economic development. In Morocco, two further wells will target around 2bcf of gas that can be quickly developed and sold at h...
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