Commercial discovery at Sobhi well in Egypt
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.
8 April 2020
SDX ENERGY PLC ("SDX" or the "Company")
Commercial discovery at Sobhi well in Egypt
SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company, is pleased to provide an update on drilling operations at the SD-12X ("Sobhi"; SDX 100% working interest) well in the South Disouq Exploration Permit onshore Nile Delta, Egypt (SDX 55% working interest).
The well has been drilled to a measured depth of 7,245 feet, encountering 108 feet net of high-quality gas-bearing sands, with an average porosity of 20%, near the base of the Kafr El Sheikh (KES) formation. The top of the KES sand was encountered at a measured depth of 6,506 feet. Management's best estimate is that the well has encountered approximately 24 bcfe of recoverable gas and condensate resources which is significantly in excess of the minimum commercial volume of approximately 8 bcfe.
The drilling rig is now completing the well and preparing for testing in the coming weeks. An announcement concerning the results of the testing of SD-12X will be made in due course.
Management expect that the Sobhi well will be tied in during 2021 via a 5.8 kilometre tie-in to the Ibn Yunus-1X location where an existing flow-line connects to the South Disouq Central Processing Facility. On a gross basis, the tie-in cost is estimated at US$3.5 million. The discovered 24 bcfe of gross recoverable gas and condensate resources will potentially only require one further development well to be drilled, albeit this will not be necessary for another 2-3 years. SDX drilled the Sobhi well at a 100% working interest and the total cost of the well, including the cost to complete, is estimated at US$3.7 million. Under Clause 8.5 of the Joint Operating Agreement, 'Premium to Participate in Exclusive Operations', if the Company's partner elects to participate in the well now that a discovery has been made, it is required to pay its full 45% share of the well cost, plus a premium of a further 300% of this amount.
Mark Reid, CEO of SDX, commented:
"This is an excellent result for SDX and fully justifies our confidence to drill this well on a sole risk basis. South Disouq represents our flagship asset and in the current economic climate this fixed price, low cost gas development is highly cash generative for the Group. The Sobhi discovery has the potential to extend the current South Disouq plateau production of 50 MMscfe/d through to 2023/24 with a low-cost tie in, utilising the existing gas processing plant. We look forwarding to updating the market further following the testing of the well"
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).
The discovered resources estimates disclosed or referenced 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. There is uncertainty that it will be commercially viable to produce any portion of the resources.
For further information:
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SDX Energy Plc Mark Reid Chief Executive Officer Tel: +44 203 219 5640
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Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker) Callum Stewart Simon Mensley Ashton Clanfield Tel: +44 (0) 20 7710 7600
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Peel Hunt LLP (Joint Broker) Richard Crichton David McKeown
Cantor Fitzgerald Europe (Joint Broker) David Porter Tel: +44 207 7894 7000
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Camarco (PR) Billy Clegg/Owen Roberts/Violet Wilson Tel: +44 203 757 4980 |
Glossary
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"bcfe" |
billion cubic feet equivalent |
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 planned testing, tie-in and total cost of the Sobhi well 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; 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 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.
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.
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