SDX Energy PLC (LON:SDX) (TSE:SDX) has told investors that its operations in Egypt presently remain unaffected by the coronavirus (COVID-19) pandemic, and it expects its Moroccan business will be resilient amidst containment restrictions.
The company, in its financial results statement, noted a temporary impact to its customer consumption in Morocco during the second half of March and said it could drop to 50% below levels recorded in the first quarter.
Nonetheless, it described the Moroccan business as “extremely resilient” whilst commenting that it could achieve “breakeven” even if consumption dropped to as low as 20% of prior volumes.
READ: SDX Energy confirms gas in LMS-2 well
Significantly it informed investors that it expects consumption will return to the same level as in Q1 once the COVID-19 restrictions are lifted.
All group assets produced “at or above upper end of 2020 guidance”, which at group level is pitched at 6,750 to 7,000 barrels oil equivalent per day. For further context, that guidance was 66% to 72% higher than the output achieved in 2019.
“SDX is in an extremely robust position to face the challenges ahead, and with our fixed priced gas weighting and our healthy liquidity position, we remain committed to realising value for our shareholders by capitalising on a strong year and growing the company further in 2020," Mark Reid, SDX's chief executive said in the results statement.
Reid added that SDX's management believes the company will be insulated from low crude prices.
“We see significant challenges in the industry, not least in the downward revision in both oil prices and equity valuations and the uncertainty caused by COVID-19. However, we feel it important to note that, after the restart of operations at our three Moroccan customers that are temporarily closed due to COVID-19 issues, we expect that, with a Brent planning price of US$35 per barrel, approximately 90% of 2020 and over 95% of 2021 forecast cash flows will come from our fixed price gas businesses,” he added.
Financial results show significant progress in 2019
Reflecting on last year, Reid said: "2019 was a year of significant operational progress for SDX. Production increased by 14% in the year, and on an individual asset basis it either exceeded or was at the upper end of our 2019 guidance.
“In the period, we announced first gas on time and on budget from South Disouq in Egypt and a subsequent accelerated ramp-up to full production three months ahead of internal expectations.
“This was a significant milestone for the group and as well as increasing production in a meaningful way, it also showed the competencies of our company in being able to bring a project of this scale online in such an efficient manner.”
Production stats for 2019 marked some 4,062 of barrels oil equivalent, including a 24% rise in out within the Moroccan business.
In Egypt, the main growth driver was South Disouq, which came online in Q4. The performance of the project’s central processing facility and the project’s wells exceeded expectation, and has been sustained in 2020 to date.
SDX reported some US$53.2mln of net revenue for 2019, compared to US$53.7mln in 2018, as netback prices were lower (US$39.3mln versus US$41.7mln) and the realised price reduced (US$55.93 versus US$62.43mln).
Earnings (EBITDAX) amounted to US$34.2mln, in line with the year before which was marked at US$34.3mln. Cash generation totalled US$25.1mln, down from US$36.2mln.
The company reported a US$18.2mln loss for the twelve months. SDX ended December with US$11.1mln of cash and equivalents.