SDX suffers $24m loss on Egyptian impairments
SDX Energy said March 18 it had suffered a total comprehensive loss of $24mn in the 2021 calendar year as it was forced to write off costs at failed projects in Egypt and Morocco, and after a $2mn loss in 2020.
The company is selling off 33% of its wholly-owned South Disouq gas project for $5.5mn. In August, it failed to strike oil or gas at an exploration probe targeting the concession's Hanut prospect. SDX Energy is retaining 66% to continue generating revenue while reducing risk exposure on another two exploratory probes due to be drilled this year.
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Failure at Hanut led to a $1.3mn write-down at SDX's Egyptian subsidiary. A further $9.5mn non-cash impairment, comprised of property, plant and equipment, was booked on the South Disouq cash generating unit, after a downward revision in the recoverable reserves held in SDX's producing fields. The 2022 production guidance for South Disouq has been slashed to 2,280 barrels of oil equivalent/day to reflect the divestment, planned maintenance at the asset and well workovers.
Recoverable reserves was also downgraded at the SD-12X borehole. SD-12X had launched in December 2021, when SDX reported it would host 24bn ft3 of recoverable resources and ramp up to 10 to 12mn/ft3 production, from an initial flow rate of 5 to 7mn ft3.
In Morocco, SDX said there were three "commercial successes" at its operated Gharb Basin acreage: at the OYF-3, KSR-17 and KSR-18 wells. Development will fire up a second phase comprising two appraisal and development wells in the second quarter. SDX owns a 75% stake in the Gharb Basin licence, a prolific basin that yields 99% dry gas and has produced output since the 1940s. There was a $10.3mn non-cash charge ahead of SDX relinquishing the Lalla Mimouna Nord concession in Morocco.