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SDX Energy set for busy drilling programme in 2021

Snapshot

SDX has set its 2021 production guidance at 5,620 to 5,920 barrels oil equivalent

Egypt

Quick facts: SDX Energy Inc

Price: 17.5 GBX

AIM:SDX
Market: AIM
Market Cap: £35.94 m
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  • North Africa-focused, exploration and production company
  • Development and exploration assets across Egypt and Morocco
  • Plenty of upside on its acreage says brokers

How it's doing:

SDX has set its 2021 production guidance at 5,620 to 5,920 barrels oil equivalent and said it plans to spend some US$25mln to US$26.5mln on capex.

The Egpyt and Morocco focused firm noted that the production guidance range is slightly lower than the like-for-like run-rate last year.

“I am pleased to provide our production and capex guidance for 2021, where after a very solid year of production in 2020, we continue on a similar profile, albeit with some contingency worked in for maintenance in Egypt,” said Mark Reid, SDX chief executive in a statement.

“Partially offsetting this, I am very pleased to report that Moroccan production has returned to the levels seen before last year's COVID-19 closedown.”

The capex is due to cover one exploration well and one development well at the South Disouq field and up to four wells at West Garib, in Egypt, along with as many as five new wells in Morocco. A programme of well workovers also feature in the schedule for 2021.

What the boss says: Mark Reid, chief executive 

This year's expected operating cashflows, together with our existing cash of approximately US$10mln, will provide ample liquidity to carry out a busy drilling campaign of nine to eleven wells targeting exploration and development opportunities in Egypt and Morocco, including the potentially transformational gross 139bcf Hanut-1X well in South Disouq in Egypt and the testing of our newly discovered Top Nappe play in Morocco.

“Furthermore, we expect that our EBRD credit facility will soon return to US$10 million of availability and thus provide us with additional liquidity if required."

Inflexion points

  • South Disouq ramp-up 
  • Drill programmes and well results 
  • Partnering possibilities

What the brokers say

Peel Hunt, which has a 'buy' rating and 35p target price, noted that following the integration of the Sobhi discovery in Egypt management estimates that there is an additional 100b billion cubic feet (Bcf) cf of unrisked prospective resource across the South Disouq concession (SDX operator with 55%).

This is split amongst five prospects, with 25% of this in a new ‘buried hill’ type play that is productive in a neighbouring field.

In Morocco, a successful test in LMS-2 could create 1.5 billion cubic feet (Bcf) of 2P reserves and simultaneously de-risk 6.0Bcf of potential reserves in the same structure plus a further 3.4Bcf nearby, added SP Angel.

 

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