SDX Energy PLC (LON:SDX) has flagged up a strong performance during its second half to date with production presently seen ahead of guidance.
The company, in an update marking the end of its third quarter, said it now intends to accelerate a significant new drill programme at the South Disouq project area in Egypt.
Production in the nine months to end September 2020 averaged between 6,488 and 6,598 barrels oil equivalent per day (boepd), which is up 85%-89% on the comparative period in 2019 and compares favourably to current guidance of 6,000 to 6,250 boepd.
SDX highlighted a strong cash position, marked at US$9.2mln at the end of September, and noted that a US$7.5mln credit facility from the European Bank for Reconstruction and Development remains undrawn and available up to November 1, 2020, after which it will amortise to US$2.5 million of availability.
The company said it is fully funded for all planned activities scheduled in the rest of 2020 and 2021.
SDX noted that South Disouq (55% owned by SDX) accounts for some 4,583 to 4,675 boepd of entitlement production over the nine-month period – with gross gas production measured at 50 to 51 mln cubic feet per day.
Two wells were completed at South Disouq during the financial year to date, including the commercial discovery in the Kafr el Sheikh (KES) Formation via the SD-12X well. Work is presently underway to bring that well into production. It is due online in Q1 2021 and is predicted to add 10 to 12 mln cubic feet of daily production.
In the wake of the SD-12X well the company has high-graded some 233bn cubic feet worth of new potential recoverable reserves that are close to existing infrastructure.
The company is now moving forward a new South Disouq well drilling campaign to Q2/Q3 2021, from the prior schedule which slated a start in ‘late 2021 or early 2022’. The plans are subject to the rubber-stamping of an extension of the South Disouq exploration, SDX noted, and its partner (which owns 45% of the project) has yet to confirm whether it will participate in the proposed extension.
"We have continued to perform strongly in the second half of 2020 despite challenging global conditions,” Mark Reid, SDX chief executive said in the update.
“Production is ahead of guidance; we have a healthy cash and liquidity position; and we now plan to accelerate an exciting and potentially transformational drilling campaign in South Disouq,”
Reid also pointed to positive findings and potential in Morocco, He said that “as a result of the recent LMS-2 well in Morocco, and further work interpreting existing 3D seismic data, we are very encouraged by a new prospective horizon that we have identified and which we believe is present throughout our acreage."
“Gas consumption from our Moroccan customers is now back to around 90% of pre-COVID-19 restriction levels and we go into the final quarter of 2020 with momentum, exciting and new prospectivity and strong cash generation," Reid added.