THE INFORMATION CONTAINED WITHIN THIS
ANNOUNCEMENT IS DEEMED BY SDX TO CONSTITUTE INSIDE INFORMATION AS
STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014
("MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY
INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW
CONSIDERED TO BE IN THE PUBLIC DOMAIN.
LONDON,
Aug. 28, 2018
/CNW/ - SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, is
pleased to announce its financial and operating results for the
three and six months ended June 30,
2018. All dollar values are expressed in United States dollars net to the Company
unless otherwise stated.
Highlights – three and six months ended June 30, 2018
Corporate and Financial
- SDX's key financial metrics for the three
and six months ended June
30, 2018 and 2017 are as follows:
|
Three months ended June
30
|
Six months ended June
30
|
US$ millions except per unit
amounts
|
2018
|
2017
|
2018
|
2017
|
Net Revenues
|
13.5
|
9.9
|
24.4
|
18.0
|
Netback(1)
|
10.3
|
6.9
|
19.3
|
13.0
|
Net realized average oil/service fees -
US$/barrel
|
64.23
|
42.62
|
61.97
|
43.44
|
Net realized average Morocco gas price -
US$/mcf
|
10.51
|
9.44
|
10.27
|
9.38
|
Netback – US$/boe
|
33.00
|
21.64
|
32.91
|
22.51
|
EBITDAX(1)
(2)
|
8.6
|
5.2
|
16.2
|
7.2
|
Exploration & eval'n
expense
|
(2.1)
|
(0.1)
|
(5.3)
|
(0.2)
|
Depletion, depreciation and
amortization
|
(3.7)
|
(4.9)
|
(6.2)
|
(8.4)
|
(Loss)/gain on acquisition
|
-
|
(0.1)
|
(0.2)
|
29.4
|
Total comprehensive
income/(loss)
|
0.6
|
(0.4)
|
1.0
|
26.5
|
Net cash generated from operating
activities
|
9.4
|
8.1
|
20.3
|
11.1
|
Cash and cash equivalents
|
25.2
|
27.6
|
25.2
|
27.6
|
|
|
Note:
|
|
(1)
|
Refer to "Non-IFRS
Measures" section of this release below for details of Netback and
EBITDAX
|
(2)
|
EBITDAX for Q2 2018
and 2017 and H2 2018 and 2017 includes US$1.2 million and US$0.9
million and US$2.2 million and US$1.6 million
respectively of non-cash revenue relating to the grossing up of
Egyptian Corporate Tax on the North West Gemsa PSC which is paid by
the
Egyptian State on behalf of the Company
|
- The above financial metrics for the three and six months
ended June 30, 2018 and 2017 reflect
the impact of the acquisition of the Egyptian and Moroccan
businesses of Circle Oil plc (the "Circle Acquisition") from
January 27, 2017 for consideration of
US$28.1 million.
- The main components of SDX's comprehensive income of
US$1.0 million for the six months
ended June 30, 2018 are:
-
- US$19.3 million
netback/gross profit for the period;
- US$5.3 million of E&E
write down predominantly relating to two sub-commercial exploration
wells in Morocco and one
sub-commercial exploration well in Egypt;
- US$6.2 million of
DD&A;
- US$2.8 million of G&A;
and
- US$3.1 million of Corporate
Income Tax expense.
- Netback for the six months to June
30, 2018 was US$19.3 million,
up from US$13.0 million for the six
months to June 30, 2017. The
increase in netback was due to;
-
- The Circle Acquisition completing on January 27, 2017, therefore H1 2017 results only
included five months of 'Circle' activity whereas the H2 2018
results included six months; and
- H1 2018 also benefited from improved oil prices impacting
SDX's Egyptian producing assets and higher realised gas pricing in
Morocco due to a contract price
increase and favourable currency movement.
- Cash position of US$25.2
million as at June 30, 2018
was US$0.6 million lower than the
US$25.8 million at December 31, 2017 and US$2.4 million lower than the US$27.6 million reported at June 30, 2017. However the Company's strong
Netback, improving Receivables position and US$10 million equity placing in September 2017 have enabled it to invest
approximately US$45 million of
capital expenditure in the 12 months to June
30, 2018. This expenditure included 14 wells in Egypt and 9 wells in Morocco, which did not materially reduce SDX's
cash balance over this period.
- The Company further improved its available liquidity when
it announced on July 18, 2018 that it
had secured a three year, US$10
million Credit Facility (the "Facility") with the European
Bank for Reconstruction and Development. This Facility, which
also has an additional US$10 million
accordion feature, will be used for drilling costs and customer
connections in Morocco.
Interest on drawings from the Facility will be charged at US$
Libor plus 4.0% for drawings up to US$5
million and US$ Libor plus 4.5% on all drawings if drawings
are greater than US$5 million.
- US$24.7 million of capital
expenditure has been invested into the business during the six
months ended June 30, 2018. The
main elements of this were;
-
- US$11.2 million in
Morocco, US$10.4 million of which relates to the now
completed nine well drilling programme and customer connection
projects and US$0.8 million of which
relates to the mobilisation cost for the upcoming 240km2
3D seismic programme in Gharb Centre;
- US$5.7 million on the South
Disouq drilling programme, which includes the costs for the Ibn
Yunus-1X and SD-4X discovery wells, the costs of the sub-commercial
Kelvin-1X well and the site preparation cost for the SD-3X
discovery well which reached total depth ("TD") in
July;
- US$6.3 million in North
West Gemsa for the costs of the AASE-25, AASE-27 infill wells and
the commencement of the Al-Ola 4 well, all of which were
discoveries;
- US$0.8 million in Meseda
for the costs of the Rabul-4 and MSD-16 discovery wells and the
ongoing electric submersible pump ("ESP") replacement
programme;
- US$0.3 million in South
Ramadan relating to pre-spud costs of the SRM-3 well;
and
- US$0.4 million relating to
new office equipment in Cairo and
additional technical software.
Operational Highlights
- The Company's entitlement share of production from its
operations for the six months ended June 30,
2018 was 3,234 BOE/D and is analysed as
follows;
-
- North West Gemsa 1,941 BOE/D
- Meseda 633 BBL/D
- Morocco 660 BOE/D
- As a result of the ongoing development drilling and
workover programme in North West Gemsa and the commencement of
production from the successful Rabul-4, Rabul-5 and MSD-16 wells in
Meseda production has increased with actual entitlement production
on August 23, for Egypt and August
14 for Morocco (last day
before the Eid Holiday maintenance shutdown) amounting to 4,444
BOE/D (Gross – 11,257 BOE/D) analysed as follows;
-
- North West Gemsa 2,777 BOE/D (Gross - 5,553
BOE/D)
- Meseda 917 BBL/D (Gross – 4,704 BOE/D)
- Morocco 750 BOE/D (Gross – 1,000 BOE/D)
Egypt
- In North West Gemsa (SDX 50% working interest and
non-operator), a seven well workover programme is underway and two
new infill wells, AASE-25 and AASE-27, were successfully completed.
A third well, Al Ola-4, was spud towards the end of the
period. AASE-25 was targeting an un-swept area
of the field in the Rahmi sand and encountered 32 feet of net light
crude oil bearing pay in this section. The well was
subsequently completed as a producer and flowed on test at 549
BOE/D of light crude oil with 1% water cut prior to being connected
to the local infrastructure and placed on production. AASE-27
was also targeting an un-swept area of the field in the Rahmi and
encountered 13.5 feet of net light crude oil bearing pay. The
well was completed as a producer and flowed on test at 537 BOE/D of
light crude oil with a 5% water cut. This well is currently
being connected to the infrastructure prior to being placed on
production. Al Ola-4, was drilled as a replacement well in
the Rahmi after the original well failed due to a mechanical
problem. Al Ola-4 was spud during the period but completed
post-period. The well encountered 14 feet of net light crude
oil bearing Rahmi section and, on test, flowed 1,011 BOE/D of dry
light crude oil with 0% water cut and was subsequently completed as
a producer. The results of these wells and the ongoing
workover programme are expected to allow the field production rate
for the year to average approximately 4,400 BOE/D of light crude
oil (SDX net: 2,200 BOE/D) which means that the gross field 2018
production rate guidance provided by the Company in January is
unchanged.
- In Meseda (SDX 50% working interest and non-operator), an
ESP replacement programme is underway and three wells have been
successfully completed; Rabul-5, Rabul-4 during the period, and
MSD-16 post period end. Rabul-5 encountered 151
feet of net heavy crude oil pay, with an average porosity of 18%
across the Yusr and Bakr formations.
Rabul-4 encountered 43 feet of net heavy crude oil pay also
across the Yusr and Bakr, with an average porosity of 16%.
Both wells were completed as producers and placed on
production. MSD-16 was drilled as a crestal infill producer
in a newly available area of the field 100 meters from the
concession boundary after an agreement was reached with the offset
operator to reduce the boundary stand-off limits. The well
encountered 176 feet of net heavy crude oil pay in the ASL
reservoir section with an average porosity of 22%. The well was
completed as a producer in the ASL using an ESP pump to provide
artificial lift and is currently producing approximately 1,200
BBL/D of heavy crude oil. Post-period end, a second lease
line development well, MSD-15, was spud, and subsequently reached
TD. The MSD-15 well encountered 226 feet of net of heavy
crude oil pay in the ASL section and is currently being completed
as a producer in this section. Upon production start-up, it
is expected to flow at similar rates to the MSD-16, again using an
ESP to provide artificial lift. Production at MSD-15 is
anticipated to start up between late August and early September
2018. The results of these wells and the ongoing workover
programme are expected to allow the field production rate for the
year to average approximately 3,800 BBL/D of heavy crude oil (SDX
net: 732 BBL/D) which means that the gross field 2018 production
rate guidance provided by the Company in January is
unchanged.
- In South Disouq (SDX 55% working interest and operator),
the Company announced on April 12,
2018 that a gas discovery had been made at its Ibn Yunus-1X
exploration well. The well was drilled to a TD of 9,068 feet
and encountered 101 feet of net conventional natural gas pay in the
Abu Madi horizon, with average porosity in the pay section of
28.5%. The well came in on prognosis but with a reservoir
section that was of better quality and thicker than pre-drill
expectations. On May 18,
2018 the well successfully flow tested conventional natural
gas at a stabilised rate of 39.3 MMSCF/D on a 32/64" choke.
This flow rate exceeded initial expectations and was limited
by the surface facilities in place. The well was subsequently
completed in the Kafr El Sheik section and then suspended until it
can be connected to the surface facilities that are being developed
at the SD-1X location.
The Kelvin-1X exploration well was spud on May 8, 2018 and drilled to a total depth of 8,075
feet, encountering 606 net feet of high quality reservoir interval
in the Abu‐Madi formation with an average porosity of 21%.
However, the sands had low gas saturation and were not deemed
to be commercial. The well was subsequently plugged and
abandoned.
The SD-4X appraisal well was spud on June 4, 2018 and drilled to a total depth of
7,806 feet and encountered 89 feet of net conventional natural gas
pay in the Abu Madi horizon, with an average porosity in the pay
section of 24%. The well came in on prognosis with a
reservoir section of similar quality but thicker than the original
SD-1X discovery well. The well was completed in the Abu Madi
section and tested at a maximum rate of 30.4 MMSCF/D during an
eight hour clean up period. The well was then shut in for
eight hours, during which time no pressure decline was observed.
Following this the well was flowed at varying choke sizes for two
successive 12-hour periods at average rates of 5.4 MMSCF/D, 8.6
MMSCF/D respectively and then one extended flow period of 24-hours
at an average rate of 10.5 MMSCF/D. The well was then
suspended until it can be connected to the surface facilities that
are being developed at the SD-1X location.
Post-period end, the SD-3X appraisal well was spud on
July 5, 2018, drilled to a total
depth of 7,842 feet and encountered 32.6 feet of net conventional
natural gas pay in the Abu Madi and Kafr el Sheik horizons, with an
average porosity in the pay sections of 21.7%. The well was
completed as a producer in the Abu Madi horizon and tested post
period end at flow rate of 16.6MM SCF/D of conventional natural
gas. In order to optimise the potential recovery from the SD-3X
well, the Abu Madi horizon will be completed and produced initially
before re-entering the well to complete and produce the Kafr el
Sheik horizon. The well will be connected to the
infrastructure located adjacent to the original SD-1X
discovery.
Given the above, and assuming all necessary regulatory
approvals are obtained at South Disouq, first gas is targeted by
the end of 2018, at an initial gross plateau production rate of
conventional natural gas at between 50-60 MMSCF/D from the Ibn
Yunus discovery and the three development wells in the SD-1X
discovery structure.
- At South Ramadan (SDX 12.75% working interest and
non-operator), the SRM-3 appraisal well was spud on
June 14, 2018. The well is targeting
undrained light oil volumes up-dip of one of the previous producing
wells in the field. The well is anticipated to take up to 90 days
to drill and complete. The SRM-3 well is the last
remaining commitment well on the South Ramadan concession and based
upon the results of this well the Company will decide how best to
optimise its position in the licence.
Morocco
- The Company's Moroccan acreage consists of three
concessions; Sebou, Lalla Mimouna and Gharb Centre, all of which
are located in the Gharb Basin in northern Morocco (SDX 75% working interest
and operator). Sebou and
Lalla Mimouna were obtained as part of the Circle
Acquisition and Gharb Centre was acquired directly from the
Moroccan State on June 1, 2017.
- In September 2017, the
Company commenced a nine well drilling programme covering six
appraisal/development wells in Sebou, one appraisal/development
well in Gharb Centre and two exploration wells in Lalla
Mimouna.
- The results of the well programme to date are as follows
with the Company achieving seven successful wells from the nine
that have been drilled, a 78% success rate;
Permit
|
Name
|
Result
|
Net Pay
|
Rate
|
|
|
|
|
|
Sebou
|
KSR-14
|
Conventional
Natural
Gas Discovery
|
20.0m
|
6.40
MMSCF/D
|
Sebou
|
KSR-15
|
Conventional
Natural
Gas Discovery
|
17.2m
|
7.52
MMSCF/D
|
Sebou
|
KSR-16
|
Conventional
Natural
Gas Discovery
|
14.2m
|
8.43
MMSCF/D
|
Gharb
Centre
|
ELQ-1
|
Uncommercial
Discovery
|
2.0m
|
Not Tested
|
Sebou
|
ONZ-7
|
Conventional
Natural
Gas Discovery
|
5.0m
|
15.34
MMSCF/D
|
Sebou
|
KSS-2
|
Dry Hole
|
Nil
|
Not Tested
|
Sebou
|
SAH-2
|
Conventional
Natural
Gas Discovery
|
5.2m
|
13.45
MMSCF/D
|
Lalla
Mimouna
|
LNB-1*
|
Conventional
Natural
Gas Discovery
|
Primary target of
300m of gas
bearing section encountered.
Secondary target
encountered net pay of 2.6m
|
Not Yet
Tested
|
Lalla
Mimouna
|
LMS-1**
|
Conventional
Natural
Gas Discovery
|
16.4m
|
Not Yet
Tested
|
|
Well results
announced *April 20, 2018, **May 7, 2018
|
- During Q1 2018, the results of the ELQ-1, ONZ-7, KSS-2 and
SAH-2 wells were announced. ONZ-7 and SAH-2 were successfully
tested in the quarter and have been tied to existing infrastructure
as producers. The ELQ-1 and KSS-2 wells were plugged and
abandoned.
On April 20, 2018 and
May 7, 2018, respectively, the
Company announced the successes of the LNB-1 and LMS-1 exploration
wells in the Lalla Mimouna concession.
-
- The primary target of the LNB-1 well was in the Lafkerena
sequence, where 300 meters of gas bearing horizons were encountered
in a significantly over-pressured section. This section could not
be logged using conventional methods due to hole conditions,
however, the gas shows in this section contained heavier
hydrocarbon components throughout, which is indicative of a
thermogenic hydrocarbon source rock and indicates that a new
petroleum system has been encountered in this area. Based on
the mud log shows, reservoir quality information from the formation
cuttings, analogue fields (outside the Gharb basin), and the size
of the feature as currently mapped, a preliminary un-risked
mid-case recoverable gas volume of 10.2 BCF of conventional natural
gas and 55 thousand barrels of condensate has been estimated by
management. This is significantly larger than the traps typically
encountered in Sebou and would exceed the size required to justify
development and connection to the existing infrastructure in the
Sebou area. Additionally in the secondary target, the Upper
Dlalha, 2.6 meters of net conventional natural gas pay sands were
encountered with average porosity in the pay section of 33%. This
pay section is similar to the Guebbas targets, from which SDX
successfully produces on the Sebou permit. The LNB-1 well has been
completed as a conventional gas producer in the Upper Dlalha with
the deeper Lafkerena section being suspended until the appropriate
equipment can be mobilized, to test and produce from this
over-pressured section. The timetable to test this section has not
been finalized and will be the subject of a future
update.
- The primary target of the LMS-1 well was in the H-9
sequence, which is a Miocene aged shallow marine deposit that had
not been previously tested in the area. The well encountered
16.4 meters of net conventional gas pay sands which had an average
porosity of 32% in an over-pressured section. Similar to the LNB-1
well, heavier gas shows were encountered indicating the presence of
a deeper thermogenic source rock charging the structure. In
addition, the cuttings showed evidence of fluorescence indicating
the potential presence of liquid hydrocarbons within the section
encountered. The well was completed as a conventional
natural gas producer in the H-9 interval. Upon test the well
flowed at sub-commercial rates which the Company believes are
temporary and due to damage created by the fluids used to control
the elevated pressures encountered in the well whilst drilling. The
damage is thought to result from the formation clays reacting to
certain components used to increase the mud weight in the drilling
fluid. The reservoir section, beyond this zone of damage, is
thought to be of excellent quality based upon the well log response
and is not expected to have been damaged by the drilling fluids.
Once the fluid interaction study is complete, a stimulation
programme will be designed and implemented and the well test will
be repeated.
- As a result of the success seen in the LNB-1 and LMS-1
wells, a two year extension to the LM Nord permit was submitted and
granted post-period end. This extends the permit validity from
July 2018 to July 2020.
- The Company continued its land permitting and other
associated activities necessary to conduct its 240 km2
3D seismic acquisition in the Gharb Centre permit. The acquisition
started up post-period end during the first week of August and is
anticipated to be completed early in Q3 2018.
- Gross production in H1 2018 of approximately 5.3 MMSCF/D
of conventional natural gas (660 BOE/D net to SDX) is expected to
increase in H2 2018 when gas sales to the recently contracted
customers, Peugeot, Setexam and Extralait, will commence. These
contracts are expected to add incremental production of
approximately 1.33 MMSCF/D of conventional natural gas during H2
2018.
- The achievement of the Company's guidance for the
year-end 2018 production rate of 8-10 MMSCF/D of conventional
natural gas from its Morocco
operations is dependent upon the number of new customer connections
made and the subsequent commencement/increase of manufacturing
activity at these new customers. The Company will provide a further
update towards achieving its stated guidance when its Q3 2018
results are issued in November.
Outlook:
Egypt
- North West Gemsa (50% Working Interest and
non-operator)
-
- Targeting FY 2018 gross production of approximately 4,400
BOE/D of light crude oil, in line with
Company guidance provided at start of year.
- Workover programme to continue in H2 2018, however no
further drilling is planned.
- SDX's share of North West Gemsa FY 2018 capex is expected
to be US$7.9million with
approximately US$1.6 million of this
to be incurred in H2 2018.
- Meseda (50% Working Interest and
non-operator)
-
- Targeting FY 2018 gross
production of 3,800 BBL/D of heavy crude
oil, approximately 700 BBL/D higher than 2017's level,
and in line with Company guidance provided at start of
year.
- Workover programme to continue in H2 2018 however no
further drilling planned.
- SDX's share of Meseda FY 2018 capex is expected to be
US$1.4million with approximately
US$0.6 million of this to be incurred
in H2 2018.
- South Disouq (55% Working Interest and
operator)
-
- Complete construction of SD-1X processing facility, well
tie-ins and 10 kilometer pipeline connecting the processing
facilities to the main export line.
- Given the above, and assuming all necessary approvals are
obtained, first gas is targeted before the end of 2018, at an
initial gross plateau production rate of approximately 50-60
MMSCF/D of conventional natural gas. The
gas price is still under negotiation.
- SDX's share of South Disouq FY 2018 capex
is expected to be approximately US$22million with approximately US$16 million to be incurred in H2 2018 for the
SD-3X and SD-4X well completions and testing, the
processing facility, well tie-ins and 10 kilometer pipeline
to the main export line.
- South Ramadan (12.75% Working Interest and
non-operator)
-
- The SRM-3 well is the last remaining commitment well on
the South Ramadan concession and based upon the results of this
well the Company will decide how best to optimise its position in
the licence.
- Gross South Ramadan capex FY 2018 is expected to be
approximately US$23.5 million (SDX
net: US$3.0 million). All of
this capex is still to be incurred in H2 2018.
Morocco (75% Working
Interest and operator)
- Given the recent drilling success, 2018 gross production
is targeted to increase in line with new customer tie-ins.
Depending on the timing of new customer tie-ins
and the subsequent commencement/increase of
manufacturing activity at these new customers, SDX is
still targeting gross production of 8-10 MMSCF/D of conventional
natural gas by the end of 2018.
- SDX's nine well Moroccan drilling programme completed on
May 7, 2018 with the LMS-1
discovery. The Company will now commence planning for the
mobilisation of equipment for a further drilling campaign in 2019
during which the LNB-1 and LMS-1 wells in Lalla Mimouna will be
re-tested.
- The Company will acquire 240km2 of 3D seismic
in its Gharb Centre concession at an estimated cost of US$6.5 million.
Corporate
- Continue to minimise costs and crystallise synergies from
the Circle Oil Acquisition; and
- As part of the Company's strategy it continues to review
and explore opportunities to expand the asset base in the
North Africa region, including
through new licencing rounds and acquisitions.
Paul Welch, President
& CEO of SDX Energy, commented:
"The first half of 2018 was a busy period for SDX
and one which saw the Company significantly increase its net
revenue and overall production year on year.
We also made significant operational progress
across our portfolio with discoveries from 20 of the 23 wells
drilled in the recent Moroccan and Egyptian drilling campaigns,
representing a success rate of 87%.
In Egypt, at
Meseda, we enjoyed success at our Rabul-5, Rabul-4, MSD-16 and
MSD-15 (post-period end) appraisal wells. This was matched in
North West Gemsa with successful wells at AASE-25, AASE-27 and
Al-Ola-4 (post-period end), and at South Disouq, with discoveries
at our Ibn Yunus-1X, SD-4X and SD-3X wells (post-period end).
Due to this drilling success, the Company is able to reconfirm its
FY 2018 gross production guidance for North West Gemsa and Meseda
at 4,400 BOE/D and 3,800 BBL/D respectively. We also remain on
target to commence production at South Disouq at gross 50-60
MMSCF/D by the end of the year.
In Morocco, the
Company completed its nine well drilling programme with seven gas
discoveries, a 78% success rate throughout the campaign. The last
two exploration wells appear to be very significant successes and
upon completion of testing it is hoped that they will have opened
up new producing areas for the Company. The Company has signed
Gas Sales Agreements with three new customers: Peugeot, Setexam and
Extralait, and is still targeting gross
production of 8-10 MMSCF/D of conventional natural gas by the end
of 2018.
Throughout the period, we remained focused on
strict capital discipline and continued to monitor opportunities
that would enable us to increase our asset base in North Africa. As at June 30, 2018, we are well funded for our
remaining work commitments with US$25.2
million of cash and an undrawn Credit Facility of
US$10.0 million and we continue to
target doubling our production by
the end of 2018."
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim consolidated financial statements with
Management's Discussion and Analysis for Q2 2018 are now available
on the Company's website at
www.sdxenergy.com and on SEDAR
at www.sedar.com.
Financial Statements
|
|
Prior
Quarter
|
Three months ended
June 30
|
Six months ended
June 30
|
US$000s except per unit amounts
|
|
2018
|
2017
|
2018
|
2017
|
FINANCIAL
|
|
|
|
|
|
Gross
Revenues
|
14,763
|
18,123
|
13,420
|
32,887
|
24,544
|
Royalties
|
(3,803)
|
(4,651)
|
(3,519)
|
(8,455)
|
(6,507)
|
Net Revenues
|
10,960
|
13,472
|
9,901
|
24,432
|
18,037
|
Operating
costs
|
(1,994)
|
(3,168)
|
(2,958)
|
(5,162)
|
(5,006)
|
Netback
|
8,966
|
10,304
|
6,943
|
19,270
|
13,031
|
EBITDAX
|
7,623
|
8,585
|
5,187
|
16,208
|
7,207
|
Total comprehensive
income/(loss)
|
331
|
640
|
(427)
|
971
|
26,520
|
|
per share –
basic
|
(0.002)
|
0.003
|
(0.002)
|
0.005
|
0.155
|
Cash, end of
period
|
29,277
|
25,234
|
27,627
|
25,234
|
27,627
|
Working capital
(excluding cash)
|
13,814
|
11,121
|
15,421
|
11,121
|
15,421
|
Capital
expenditures
|
9,948
|
14,742
|
1,504
|
24,690
|
2,315
|
Total
assets
|
140,497
|
143,176
|
132,766
|
143,176
|
132,766
|
Shareholders'
equity
|
115,282
|
116,246
|
102,559
|
116,246
|
102,559
|
Common shares
outstanding (000's)
|
204,493
|
204,493
|
186,900
|
204,493
|
186,900
|
|
|
|
|
|
|
OPERATIONAL
|
|
|
|
|
|
NW Gemsa oil sales
(bbl/d)
|
1,507
|
1,665
|
1,832
|
1,586
|
1,654
|
Block-H Meseda
production service fee (bbl/d)
|
558
|
706
|
623
|
633
|
631
|
Morocco gas sales
(boe/d)
|
664
|
656
|
651
|
660
|
543
|
Other products sales
(boe/d)
|
307
|
403
|
419
|
355
|
352
|
Total oil sales and production service fee
boe/d
|
3,036
|
3,430
|
3,525
|
3,234
|
3,180
|
Realized oil price
(US$/bbl)
|
62.81
|
68.41
|
45.56
|
65.77
|
46.97
|
Realized service fee
(US$/bbl)
|
50.00
|
54.37
|
33.98
|
52.45
|
34.16
|
Realized oil sales and production service fees
($/bbl)
|
59.34
|
64.23
|
42.62
|
61.97
|
43.44
|
Realized Morocco gas
price (US$/mcf)
|
10.03
|
10.51
|
9.44
|
10.27
|
9.38
|
Royalties
($/bbl)
|
13.92
|
14.90
|
10.97
|
14.44
|
11.24
|
Operating costs
($/bbl)
|
7.30
|
10.15
|
9.22
|
8.82
|
8.65
|
Netback ($/bbl)
|
32.80
|
33.00
|
21.64
|
32.91
|
22.51
|
|
|
|
|
|
|
Consolidated Balance Sheet
|
|
US$'000s
|
As at June 30, 2018
|
As at December 31, 2017
|
|
|
|
Assets
|
|
|
Cash and cash
equivalents
|
25,234
|
25,844
|
Trade and other
receivables
|
29,141
|
37,656
|
Inventory
|
3,176
|
5,157
|
Current
assets
|
57,551
|
68,657
|
|
|
|
Investments
|
2,725
|
2,724
|
Property, plant and
equipment
|
58,752
|
54,445
|
Intangible
exploration and evaluation assets
|
24,391
|
15,231
|
Non-current
assets
|
85,868
|
72,400
|
|
|
|
Total assets
|
143,419
|
141,057
|
|
|
|
Liabilities
|
|
|
Trade and other
payables
|
20,096
|
19,459
|
Deferred
income
|
495
|
495
|
Decommissioning
liability
|
-
|
1,063
|
Current income
taxes
|
605
|
915
|
Current
liabilities
|
21,196
|
21,932
|
|
|
|
Deferred
income
|
488
|
737
|
Decommissioning
liability
|
5,198
|
3,479
|
Deferred income
taxes
|
290
|
290
|
Non-current
liabilities
|
5,977
|
4,506
|
|
|
|
Total liabilities
|
27,173
|
26,438
|
|
|
|
Equity
|
|
|
Share
capital
|
88,785
|
88,785
|
Contributed
surplus
|
6,322
|
5,666
|
Accumulated other
comprehensive loss
|
(917)
|
(917)
|
Retained
earnings
|
22,056
|
21,085
|
|
|
|
Total equity
|
116,246
|
114,619
|
|
|
|
Equity and liabilities
|
143,419
|
141,057
|
Consolidated Statement of Comprehensive
Income
|
|
|
Three months ended
June 30
|
Six months ended June
30
|
US$'000s
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Revenue, net of
royalties
|
13,472
|
9,901
|
24,432
|
18,037
|
Revenue
|
|
|
|
|
|
|
|
|
|
Direct operating
expense
|
(3,168)
|
(2,958)
|
(5,162)
|
(5,006)
|
|
|
|
|
|
Gross
profit
|
10,304
|
6,943
|
19,270
|
13,031
|
|
|
|
|
|
Exploration and
evaluation expense
|
(2,064)
|
(87)
|
(5,314)
|
(160)
|
Depletion,
depreciation and amortisation
|
(3,657)
|
(4,892)
|
(6,190)
|
(8,414)
|
Stock-based
compensation
|
(324)
|
(42)
|
(656)
|
(85)
|
Share of profit from
joint venture
|
292
|
337
|
526
|
711
|
Release of historic
operational tax provision
|
300
|
-
|
300
|
-
|
Inventory
write-off
|
(490)
|
-
|
(490)
|
-
|
Gain on sale of
office asset
|
23
|
-
|
23
|
-
|
General and
administrative expenses
|
|
|
|
|
- Ongoing general and
administrative expenses
|
(1,520)
|
(1,896)
|
(2,765)
|
(4,077)
|
- Transaction
costs
|
-
|
(155)
|
-
|
(2,373)
|
|
|
|
|
|
Operating
income/(loss)
|
2,864
|
208
|
4,704
|
(1,367)
|
|
|
|
|
|
Net finance
expense
|
(33)
|
(40)
|
(54)
|
(77)
|
Foreign exchange
(loss)/gain
|
(452)
|
529
|
(438)
|
608
|
(Loss)/gain on
acquisition
|
-
|
(63)
|
(174)
|
29,401
|
|
|
|
|
|
Income before income
taxes
|
2,379
|
634
|
4,038
|
28,565
|
|
|
|
|
|
Current income tax
expense
|
(1,739)
|
(1,061)
|
(3,067)
|
(2,045)
|
Deferred income tax
expense
|
-
|
-
|
-
|
-
|
Total current and
deferred income tax expense
|
(1,739)
|
(1,061)
|
(3,067)
|
(2,045)
|
|
|
|
|
|
Total comprehensive income for the
period
|
640
|
(426)
|
971
|
26,520
|
|
|
|
|
|
Net income per
share
|
|
|
|
|
Basic
|
$0.003
|
$(0.002)
|
$0.005
|
$0.155
|
Diluted
|
$0.003
|
$(0.002)
|
$0.005
|
$0.153
|
Consolidated Statement of Changes in
Equity
|
|
|
Six months ended June
30
|
US$'000s
|
2018
|
2017
|
|
|
|
Share capital
|
|
|
Balance, beginning of
period
|
88,785
|
40,275
|
Issuance of common
shares
|
-
|
39,491
|
Share issue
costs
|
-
|
(781)
|
Balance, end of
period
|
88,785
|
78,985
|
|
|
|
Contributed surplus
|
|
|
Balance, beginning of
period
|
5,666
|
5,128
|
Stock-based
compensation for the period
|
656
|
85
|
Balance, end of
period
|
6,322
|
5,213
|
|
|
|
Accumulated other comprehensive
loss
|
|
|
Balance, beginning of
period
|
(917)
|
(917)
|
Balance, end of
period
|
(917)
|
(917)
|
|
|
|
Retained earnings/(accumulated
loss)
|
|
|
Balance, beginning of
period
|
21,085
|
(7,222)
|
Total comprehensive
income for the period
|
971
|
26,520
|
Balance, end of
period
|
22,056
|
19,298
|
|
|
|
Total equity
|
116,246
|
102,579
|
Consolidated Statement of Cash
Flows
|
|
Three months ended
June 30
|
Six months ended June
30
|
US$'000s
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
Cash flows generated from/(used in) operating
activities
|
|
|
|
|
Income before income
taxes
|
2,379
|
634
|
4,038
|
28,565
|
Adjustments
for:
|
|
|
|
|
Depletion,
depreciation and amortization
|
3,657
|
4,892
|
6,190
|
8,414
|
Exploration and
evaluation expense
|
1,783
|
-
|
5,033
|
53
|
Finance
expense
|
33
|
40
|
54
|
77
|
Stock based
compensation
|
324
|
42
|
656
|
85
|
Loss/(gain) on
acquisition
|
-
|
63
|
174
|
(29,401)
|
Foreign exchange
(gain)/loss
|
269
|
35
|
(58)
|
87
|
Gain on sale of
office asset
|
(23)
|
-
|
(23)
|
-
|
Release of historic
operational tax provision
|
(300)
|
-
|
(300)
|
-
|
Inventory
write-off
|
490
|
-
|
490
|
-
|
Tax paid by
State
|
(1,192)
|
(884)
|
(2,167)
|
(1,638)
|
Share of profit from
joint venture
|
(292)
|
(337)
|
(526)
|
(711)
|
Operating cash flow
before working capital movements
|
7,128
|
4,485
|
13,561
|
5,531
|
Decrease in trade and
other receivables
|
1,070
|
3,928
|
8,342
|
5,611
|
Increase/(decrease)
in trade and other payables
|
2,454
|
(94)
|
289
|
240
|
Increase in
inventory
|
(180)
|
-
|
(769)
|
-
|
Cash generated from
operating activities
|
10,472
|
8,319
|
21,423
|
11,382
|
Income taxes
paid
|
(1,091)
|
(229)
|
(1,091)
|
(237)
|
Net cash generated from operating
activities
|
9,381
|
8,090
|
20,332
|
11,145
|
|
|
|
|
|
Cash flows (used in)/generated from investing
activities:
|
|
|
|
|
Property, plant and
equipment expenditures
|
(7,726)
|
(129)
|
(13,203)
|
(242)
|
Exploration and
evaluation expenditures
|
(5,946)
|
(1,291)
|
(8,311)
|
(1,579)
|
Dividends
received
|
525
|
-
|
525
|
-
|
Acquisition of subsidiaries
|
-
|
-
|
-
|
(28,056)
|
Cash balance acquired
during the period
|
-
|
-
|
-
|
3,108
|
Net cash used in investing
activities
|
(13,147)
|
(1,420)
|
(20,989)
|
(26,769)
|
|
|
|
|
|
Cash flows generated from/(used in) financing
activities:
|
|
|
|
|
Issuance of common
shares
|
-
|
(20)
|
-
|
38,690
|
Finance costs
paid
|
(8)
|
(40)
|
(11)
|
(77)
|
Net cash (used in)/generated from financing
activities
|
(8)
|
(60)
|
(11)
|
38,613
|
|
|
|
|
|
(Decrease)/increase in cash and cash
equivalents
|
(3,774)
|
6,610
|
(668)
|
22,989
|
Effect of foreign exchange on cash and cash
equivalents
|
(269)
|
(35)
|
58
|
(87)
|
Cash and cash equivalents, beginning of
period
|
29,277
|
21,052
|
25,844
|
4,725
|
Cash and cash equivalents, end of
period
|
25,234
|
27,627
|
25,234
|
27,627
|
About SDX
SDX is an international oil and gas exploration,
production and development company, headquartered in London, England, UK, with a principal focus on
North Africa. In Egypt, SDX has a working interest in two
producing assets (50% North West Gemsa & 50% Meseda) located
onshore in the Eastern Desert, adjacent to the Gulf of Suez. In
Morocco, SDX has a 75% working
interest in the Sebou concession situated in the Rharb Basin. These
producing assets are characterised by exceptionally low operating
costs making them particularly resilient in a low oil price
environment. SDX's portfolio also includes high impact exploration
opportunities in both Egypt and
Morocco.
For further information, please see the website of the
Company at www.sdxenergy.com
or the Company's filed documents at
www.sedar.com.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the
London Stock Exchange the technical information contained in the
announcement has been reviewed and approved by Paul Welch, Chief Executive Officer of SDX. Mr.
Welch, who has over 30 years of experience, is the qualified person
as defined in the London Stock Exchange's Guidance Note for Mining
and Oil and Gas companies. Mr. Welch holds a BS and MS in Petroleum
Engineering from the Colorado School of
Mines in Golden, CO. USA
and an MBA in Finance from SMU in
Dallas, TX USA and is a member of
the Society of Petroleum Engineers (SPE).
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as such term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Glossary
"BBL"
|
stock tank
barrel
|
"BOEPD" &
"BOE/D"
|
barrels of oil
equivalent per day
|
"BOPD" &
"BBL/D"
|
barrels of oil per
day
|
"BCF"
|
billion standard
cubic feet
|
"DD&A"
|
depreciation,
depletion and amortisation
|
"E&E"
|
exploration and
evaluation
|
"ESP"
|
electrical
submersible pump
|
"G&A"
|
general and
administrative
|
"MCF"
|
thousands of cubic
feet
|
"MMSCF/D"
|
million standard
cubic feet per day
|
"LIBOR"
|
London interbank
offer rate
|
"TD"
|
total
depth
|
Forward‐Looking Information
Certain statements contained in this press release may
constitute "forward‐looking information" as such term is used in
applicable Canadian securities laws. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or are not statements of historical fact should be viewed as
forward-looking information. In particular, statements regarding;
the Company's use of proceeds from the Facility; the timing of
first gas at South Disouq; the Company's plans, production targets,
volume targets, drilling, production start-up dates, seismic work
and the timing and costs thereof; capital expenditures; operational
expenditures; and the Company's 2018 outlook and corporate
strategy, should all be regarded as forward-looking
information.
The forward-looking information contained in this document
is based on certain assumptions and although management considers
these assumptions to be reasonable based on information currently
available to them, undue reliance should not be placed on the
forward-looking information because SDX can give no assurances that
they may prove to be correct. This includes, but is not limited to,
assumptions related to, among other things, commodity prices and
interest and foreign exchange rates; planned synergies, capital
efficiencies and cost‐savings; applicable tax laws; future
production rates; receipt of necessary permits; the sufficiency of
budgeted capital expenditures in carrying out planned activities;
and the availability and cost of labor and services.
All timing given in this announcement, unless stated
otherwise is indicative and while the Company endeavors to provide
accurate timing to the market, it cautions that due to the nature
of its operations and reliance on third parties this is subject to
change often at little or no notice. If there is a delay or change
to any of the timings indicated in this announcement, the Company
shall update the market without delay.
Forward-looking information is subject to certain risks
and uncertainties (both general and specific) that could cause
actual events or outcomes to differ materially from those
anticipated or implied by such forward‐looking statements. Such
risks and other factors include, but are not limited to political,
social and other risks inherent in daily operations for the
Company, risks associated with the industries in which the Company
operates, such as: operational risks; delays or changes in plans
with respect to growth projects or capital expenditures; costs and
expenses; health, safety and environmental risks; commodity price,
interest rate and exchange rate fluctuations; environmental risks;
competition; permitting risks; ability to access sufficient capital
from internal and external sources; and changes in legislation,
including but not limited to tax laws and environmental
regulations. Readers are cautioned that the foregoing list of risk
factors is not exhaustive and are advised to reference SDX's
Management's Discussion & Analysis for the three and six months
ended June 30, 2018, which can be
found on SDX's SEDAR profile at
www.sedar.com, for a description of
additional risks and uncertainties associated with SDX's business,
including its exploration activities.
The forward‐looking information contained in this press
release is as of the date hereof and SDX does not undertake any
obligation to update publicly or to revise any of the included
forward‐looking information, except as required by applicable law.
The forward‐looking information contained herein is expressly
qualified by this cautionary statement.
Non-IFRS Measures
This news release contains the terms "Netback," and
"EBITDAX" which are not recognized measures under IFRS and may not
be comparable to similar measures presented by other issuers. The
Company uses these measures to help evaluate its
performance.
Netback is a non-IFRS measure that represents sales net of
all operating expenses and government royalties. Management
believes that netback is a useful supplemental measure to analyze
operating performance and provide an indication of the results
generated by the Company's principal business activities prior to
the consideration of other income and expenses. Management
considers netback an important measure as it demonstrates the
Company's profitability relative to current commodity prices.
Netback may not be comparable to similar measures used by other
companies. See Netback reconciliation to operating income/(loss) in
note 20 to the Interim Consolidated Financial
Statements.
EBITDAX is a non-IFRS measure that represents earnings
before interest, tax, depreciation, amortization, exploration
expense and impairment. EBITDAX is calculated by taking operating
income/(loss) and adjusted for the add back of depreciation and
amortization, exploration expense and impairment of property, plant
and equipment (if applicable). EBITDAX is presented in order
for the users of the financial statements to understand the cash
profitability of the Company, which excludes the impact of costs
attributable to exploration activity, which tend to be one-off in
nature, and the non-cash costs relating to depreciation,
amortization and impairments. EBITDAX may not be comparable to
similar measures used by other companies. See EBITDAX
reconciliation to operating income/(loss) in note 20 to the Interim
Consolidated Financial Statements.
Oil and Gas Advisory
Certain disclosure in this news release constitute
"anticipated results" for the purposes of National Instrument
51-101 of the Canadian Securities Administrators because the
disclosure in question may, in the opinion of a reasonable person,
indicate the potential value or quantities of resources in respect
of the Company's resources or a portion of its resources. Without
limitation, the anticipated results disclosed in this news release
include estimates of volume, flow rate and pay thickness
attributable to the resources of the Company. Such estimates have
been prepared by management of the Company and have not been
prepared or reviewed by an independent qualified reserves evaluator
or auditor. Anticipated results are subject to certain risks and
uncertainties, including those described above and various
geological, technical, operational, engineering, commercial and
technical risks. In addition, the geotechnical analysis and
engineering to be conducted in respect of such resources is not
complete. Such risks and uncertainties may cause the anticipated
results disclosed herein to be inaccurate. Actual results may vary,
perhaps materially.
In addition to the uncertainties listed above, due to the
level of information available, there is still uncertainty
associated with the volume estimates prepared by management for the
LNB-1 discovery in Morocco. Some of the risks and
uncertainties are outlined below:
- Petrophysical parameters and quality estimates of the
reservoir section.
- Fluid composition, especially heavy end hydrocarbons and
the potential presence of associated liquids.
- Accurate estimation of reservoir conditions (pressure and
temperature), currently unknown but roughly estimated based on mud
weight range while drilling of 1.6-1.65 Specific
Gravity.
- Reservoir drive mechanism.
- Potential well deliverability and long-term
sustainability.
- The thickness and quality of the reservoir section away
from the well penetration location.
Use of the term "BOE" may be misleading, particularly if used in
isolation. A "BOE" conversion ratio of 6 Mcf: 1 bbl is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead.
SOURCE SDX Energy Inc.