SDX Energy Share News (SDX)

(Sharecast News) - Middle East and North Africa-focussed oil and gas company SDX Energy announced on Tuesday that the OYF-2 well in Morocco, where it has a 75% working interest, has been drilled to a measured depth of 1,210 meters, and had encountered commercial quantities of gas in excess of pre-drill estimates.
The AIM-traded firm said the discovery also confirmed that its core productive area now extended to the north.

Both the Upper and Lower Guebbas targets in OYF-2 were encountered, and reservoir thickness and quality were better than pre-drill expectations, the board reported.

It said the Upper Guebbas was encountered at a measured depth of 1,001 meters, while the Lower Guebbas was penetrated at a measured depth of 1,120 meters.

Management estimated that around 1.3 billion to 1.9 billion cubic feet of gas was recoverable from the horizons encountered by the OYF-2 well, which would be tested in February.

The discovery would be tied into the company's infrastructure when required, at an estimated cost of around $2m net to SDX.

Additionally, the firm said the discovery had de-risked a further 0.5 billion to one billion cubic feet of prospective resources in the western compartment of the Lower Guebbas target, which SDX said it expected to recover with a single development well in the future.

The rig had now moved to the BMK-1 location, which is about 11 kilometres to the north of OYF-2.

BMK-1 would again test the extent of the northern expansion of the company's core productive area and, if successful, could de-risk a number of similar close-by prospects.

After BMK-1, one more close-to-infrastructure well and two other potentially play-opening wells in Lalla Mimouna would be drilled to complete the campaign in March.

In Egypt, at South Disouq where the company has a working Interest of 55%, SDX said preparations were continuing for two exploration wells targeting gross unrisked P50 volumes of up to 104 billion cubic feet from the same horizons encountered in its four discoveries to date.

The first well, Salah, which was expected to spud in mid-to-late February and complete in April, was targeting a gross unrisked P50 prospect of 71 billion cubic feet equivalent.

SDX said the second well, Sobhi, which was expected to spud in late April or early May and complete in early June, was targeting a gross unrisked P50 prospect of 33 billion cubic feet equivalent.

If successful, those two wells would require short, eight kilometre and 5.8 kilometre tie-ins to the South Disouq Central Processing Facility, with SDX's share of the tie-in cost estimated at $2.5m and $1.9m, respectively.

Finally, at West Gharib where SDX has a working interest of 50%, it said that in early February it was planning to spud an appraisal and development well in the Rabul area of the concession.

If successful, that well could add approximately 200 to 300 barrels per day of production.

"We have a particularly busy year ahead with the drill bit, giving us the opportunity to increase significantly the company's reserves life," said chief executive officer Mark Reid.

"OYF-2 in Morocco is a very positive start, a discovery which is larger than pre drill expectations, and confirmation that our core productive area extends to the north.

"With the planned follow on development well, we now have the potential to increase our total reserves in Morocco to approximately three to four years of customer demand with our gas being sold under five and ten year fixed priced contracts at an average gas price of circa $11 per million cubic feet."

Reid said that, with the imminent commencement of drilling campaigns in South Disouq and West Gharib in Egypt, together with the ongoing drilling campaign in Morocco, SDX had a "very busy period" of activity ahead of it, with three rigs drilling simultaneously.

"I look forward to providing further updates on these campaigns in due course."

At 1229 GMT, shares in SDX Energy were down 0.48% at 25.88p.