SDX Energy Share News (SDX)

(Sharecast News) - Middle East and North Africa-focussed oil and gas company SDX Energy updated the market on its drilling operations at the SD-12X, or Sobhi, well, where it has a 100% working interest, in the South Disouq Exploration Permit, onshore Nile Delta in Egypt, on which it has a 55% working interest.
The AIM-traded firm said the well had been drilled to a measured depth of 7,245 feet, encountering 108 feet net of high-quality gas-bearing sands, with an average porosity of 20%, near the base of the Kafr El Sheikh (KES) formation.

It said the top of the KES sand was encountered at a measured depth of 6,506 feet.

Management's best estimate was that the well had encountered about 24 billion cubic feet equivalent of recoverable gas and condensate resources, which was "significantly in excess" of the minimum commercial volume of around eight billion cubic feet equivalent.

The drilling rig was now completing the well and preparing for testing in the coming weeks., with an announcement concerning the results of the testing to be made in due course.

SDX's management expected that the Sobhi well would be tied-in during 2021 via a 5.8 kilometre tie-in to the Ibn Yunus-1X location, where an existing flow-line connects to the South Disouq Central Processing Facility.

On a gross basis, the tie-in cost was estimated at $3.5m.

The discovered 24 billion cubic feet equivalent of gross recoverable gas and condensate resources would potentially only require one further development well to be drilled, although that would not be necessary for another two to three years.

SDX drilled the Sobhi well at a 100% working interest, and the total cost of the well, including the cost to complete, was estimated at $3.7m.

Under clause 8.5 of the joint operating agreement,, if the firm's partner chose to participate in the well now that a discovery has been made, it would be required to pay its full 45% share of the well cost, as well as a premium of a further 300% of that amount.

"This is an excellent result for SDX and fully justifies our confidence to drill this well on a sole risk basis," said chief executive officer Mark Reid.

"South Disouq represents our flagship asset and in the current economic climate this fixed price, low cost gas development is highly cash generative for the group.

"The Sobhi discovery has the potential to extend the current South Disouq plateau production of 50 million standard cubic feet per day through to 2023-2024 with a low-cost tie in, utilising the existing gas processing plant."

At 1608 BST, shares in SDX Energy were up 8.46% at 14.1p.