SDX Says Circle Deal Pays Off
Canada and UK-listed North Africa explorer SDX Energy said it is pleased at how it has benefited from the Circle Oil assets acquisition through improving netbacks and a strong cash and capital position.
“We are ready to undertake an exciting drilling campaign in Morocco,” said SDX CEO Paul Welch August 25; it will comprise five development/appraisal wells in the Sebou permit and two exploration wells in the Lalla Mimouna permit; both permits have recently been extended.
SDX announced August 25 a US$29.4mn gain in 1H 2017 from its $30mn takeover completed January 2017 of Circle Oil’s Moroccan and Egyptian upstream assets. That helped SDX make a net profit of $26.5mn, versus a $26mn loss in the year ago period; in 2Q it made a $0.4mn loss (year-before $25.2mn loss) as it vowed to continue minimising costs and crystallising synergies from the Circle Oil acquisition.
SDX first-half production was 3,351 barrels of oil equivalent/d, of which North West Gemsa 2,170 boe/d and Meseda 635 boe/d (both Egypt) and Morocco 546 boe/d.
Gas sales accounted for 1,004 boe/d, so just under one-third of the 3,351 boe/d, while liquid sales were 1,712 b/d and production service fee 635 b/d. SDX's average realised price in 2Q 2017 was $5.60/’000 ft3, of which a handsome $9.18 in Morocco but only $1 in Egypt.
At South Disouq in Egypt, the company’s SD-1X discovery well test-flowed 25.8mn ft3/d during 2Q 2017. Given the proximity of the well to gas pipelines, first commercial production could start as early as the first quarter of next year, said Cantor Fitztgerald in a note recommending buying shares, "although we remain of the view that this is contingent on the characteristics of the gas and whether any treatment facilities will be needed."
Mark Smedley