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I think things will firm up by the end of the year especially if they get to production levels. Hopefully they will put forward plans to double the production of SD as the infrastructure can take it which would be a cheap win for a good increase in profitable cash flow.
Give it time my pretties, give it time.
That said it won't go up in a straight line though.
They tried the big delay tact - didn't work!!
They tried the massive price drop - didn't work!!
They tried the bugger all news & bore the life out tact - didn't work!!
They are now trying the no gain on news tact - ???????
Maybe they believe the average Joe have too many shares so they are in the process of sucking out our soul's through our eyes until we sell up and thus maximise their profits?????
At least someone is buying up the sells with 50k chunks! Looks like one big player selling to another. Any other thoughts apart from this and manipulation as to why we have such a pathetic rise on extremely good news?
Absolutely stunning price rise to be sure!!
Announcement of the delay to SD resulted in an immediate 25% drop in the share price. Announcement of start, 3.5% rise.
Maybe Edision are summing a slightly higher plateau rate or understand the value of the condensate better than I do. Perhaps they are also including cost recovery too.
@Shakeypremis No argument from me I assure you, I am happy to take on knowledge and learning as it comes along.
I have always worked on the premise that SDX are 55% working interest operators at South Disouq.
In the Sept 2019 presentation, the company states "First gas in Q4’19, with gross plateau production of 50MMscfe/d/8,333 boed (27.5 MMscfe/d/4,583 boed net to SDX) in Q1’20."
The same slide however states ; "Gas price US$2.85/mcf, Opex estimated at < US$0.30/mcf, Government take c.51%." The 51% was not at that time, attached to the gross production figure.
Today's RNS stated ;
"All gas production will be sold to the Egyptian national gas company, EGAS, at a fixed price of US$2.85/Mcf, with the Government of Egypt's entitlement share of gross production equating to approximately 51%."
I appreciate it all essentially adds up to the same thing, but the wording is a tad misleading. I assume this is done this way to allow SDX to recover capex costs for the plant, which they are paying out upfront. So technically, the gross production figure is correct, its just that SDX would never see it.
It looks very much like I have failed to understand the entitlement properly, but this appears to have been compounded by Edison.
At full production of 50mmscf/d, the now better understood ownership, would have SDX entitlement at 13.75mmscf/d, which equates to circa $12.3m per annum gross net entitlement. I therefore wonder where Edison have derived their near $16m figure from, given they have used the same base case figures.
That aside, whilst I still very much like the now $12.3m in added income, I have certainly missed something here, which I will now need to review. So thank you for your help on that.
Having said that, production costs per mcf will be higher at this lower production rate. 40c/mcf?
Even at current rates only (6.7mmscf/d) we are looking at around US$6m/year net entitlement revenue after production costs (20c/mcf), not including anything for condensate sales. There will also be cost recovery which will increase revenue.
Hopefully NW Gemsa can stay online a little longer if oil goes up a bit.
BBN, I am not trying to get in to an argument I just want everything to be concise and accurate. This is what you said;
"At what is stated in today's RNS as being, a circa 25mmscf/d net interest, Edison are reporting a pre-tax net entitlement income of circa $16m, post opex, capex, bonuses and royalties."
Current gross production is ~24mmscfe/d. The government take 51% of gross and then SDX's partner IPR take a further 45%. That comes to 6.7mmscf/d currently.
Regarding NW Gemsa, just refer to their latest presentation on their website. Think it's in one of the latest RNS's too.
Unfortunately Shakey is right it is gross 25 atm, I missed that in BBNs post. SD does have the ability to go higher than 50 in the future though with many lookalikes to discover and hook up to the CPF. The hard bit has been done getting into production.
NW Gemsa will decline but with SD now online, lots of cash and more exploration and high margin gas in Morocco, this is undervalued atm. My opinion of course do your own research. Good luck all.
@shakeypremis I have more than happy to be corrected if I have missed something, but my post did not state that it was "25mmscf/d net to SDX at the moment."
I said "a circa 25mmscf/d net interest" at full production, hence why I employed Edisons figures.
Current production is "an average gross production rate of 23 MMscf/d of gas and 120 bbls/d of condensate, equivalent to approximately 24 MMscfe/d."
So its running at around "circa 50% of South Disouq production." That being the anticipated gross production figures expected in Q1 2020.
The "the Government of Egypt's entitlement share of gross production equating to approximately 51%." So SDX should therefore achieve 49% of gross production, which is "circa 50%."
So how can SDXs entitlement only be 6.7mmscfe/d?
I take on board your comment regarding North Gemsa, and will look further into that. I have not previously picked up in the various reports, that North Gemsa would become uneconomic in 2020. If you have a link to this I would gladly read through it.
Thanks BBN good to see you are still invested. I can’t believe the SP is at 23p post SD start up. I think 2020 will be a good year for both BMN and SDX. Alas I feel both currently have big sellers in the background/manipulation, need Alfa to come and do an analysis of the SDX trades. All I know is if I hold onto both their true value will be realised by the market.
It's not 25mmscf/d net to SDX at the moment. It's ~24mmscfe/d gross (including condensates - although condensates are worth more than gas). Entitlement production is currently therefore around 6.7mmscfe/d.
Also simply adding SDX's entitlement share of SD's full production (once ramped up) to current figures is misleading. NW Gemsa is due to become uneconomic next year and that will reduce SDX's profitability and production substantially, although I expect SD to cover that loss as the barrels produced from NW Gemsa are producing a smaller and smaller netback as time goes by due to water cut etc.
Edison broker note for reference for those that have not seen it.
Note they stated a more reserved position on South Disouq ;
"We assume start-up in January 2020, with production ramping over the course of the year reaching a 50mmscfd plateau."
So their anticipated 2020 net entitlement figures could well improve, along with their target price, be it that I don't tend to read broker notes for their target prices.
Good morning everyone,
For my sins, i am a relatively long term holder, having taken my main position back in 2018 but have been fortunate to added further during the low points.
Despite being under water, I have held onto my shares because of the change of leadership through the elevation of Mark Reid to CEO:
Market trust has clearly been tested to its limits with SDX, but to date, Mr Reid has delivered exactly what has been asked of him.
In the 2019 Half Year results dated 22nd Aug 2019, SDX stated ;
"Construction of the South Disouq central processing facility ("CPF"), pipeline, and well tie-ins continued in H1 2019 with first gas expected in Q4 2019."
"Planning for the drilling of 12 wells in Morocco is at an advanced stage, with the campaign targeted to begin in Q4 2019 and complete in H1 2020."
Edison in their June 2019 note, went as far as stating mid November 2019, and that is exactly what has been achieved, if not a tad bit better.
Furthermore, the anticipated Morrocan drilling campaign, has also kicked off on 25th Oct, thus delivering it a good 9 weeks before the end of Q4.
It is early days but these achievements will start to repair the trust that has been lost and further support the grounds for appointing Mr Reid as CEO, an announcement I see was also released today.
According to that same Edison June note ;
"Gas prices remain fixed at US$2.85/mcf, but netbacks are expected to remain high based on unit operational costs of less than US$0.2/mcf at plateau production."
That's a really strong netback even in Egypt.
At what is stated in today's RNS as being, a circa 25mmscf/d net interest, Edison are reporting a pre-tax net entitlement income of circa $16m, post opex, capex, bonuses and royalties.
Post tax its around $9m. I do not see how that can possibly be priced in right now, given that SDX can deliver upto $26m in net cash from operating activities (based on H1 figures), even before South Disouq came on line.
So now we are talking potentially (on paper) over $35m in net cash generation per annum, and the company is already adding circa 50% of South Disouq production for the remaining 6 weeks of 2019, which is not to be sniffed at.
If this build up of trust can be continued and the first gas date hit or even bettered, then 2020 could be a very good year for SDX and its share price, which is why I am staying.