SDX Energy completes initial drilling phase in Morocco

(Sharecast News) - Middle East and North Africa-focussed SDX Energy announced the successful completion of the initial three-well phase of its 2021 drilling campaign in Morocco on Monday, which would comprise up to a total of five wells over the year.
The AIM-traded firm said the phase consisted of three appraisal and development wells in its operated Gharb Basin acreage in Morocco, where it holds a 75% working interest.

It said the first well, OYF-3, which spud on 30 April, reached its total depth at a measured depth of 1,183 metres on 11 May.

The main Guebbas reservoir target was thicker than expected, and encountered a 5.2 metre net gas sand.

SDX said the well also encountered a 1.7 metre net gas sand in a secondary zone that OYF-3 would also produce from.

The second well, KSR-17, was spud on 13 May and reached its total depth at a measured depth of 1,848 metres on 27 May.

In the main Hoot reservoir, the well encountered a 5.3 metre net gas sand, which was slightly thinner than expected, but with "very good" reservoir properties.

Both OYF-3 and KSR-17 had been tested, connected, and were now producing into the company's infrastructure.

Post-drill P50 reserves were estimated at a combined gross recoverable 0.81 billion cubic feet, which was in line with pre-drill estimates.

Finally, the third well of the campaign, KSR-18, was spud on 30 May and reached its total depth of a measured depth of 1,905 metres on 14 June.

Both prognosed targets were successfully encountered, with the shallower mid-Guebbas target comprising a 3.8 metre net gas sand, and the main Hoot target encountering a 13.9 metre net gas sand.

As expected, the main Hoot had been slightly depleted by production from a nearby well, but the well was still expected to contribute incremental volumes and deliverability from the "extensive" compartment.

Further to those zones, a third 5.5 metre net gas sand was encountered at the base Guebbas, which the firm said would contribute to production in the future when the Hoot was depleted.

KSR-18 would be tested in the coming weeks to refine volumetrics, but based on logging results, SDX said it expected that it would also be close to its pre-drill P50 estimate of 0.75 billion cubic feet gross.

The board said the second phase of the Moroccan drilling campaign was expected to start in September and October.

"I am pleased to announce that the company has successfully drilled the first three wells of its 2021 drilling activities which will total up to eleven wells across our portfolio of assets," said chief executive officer Mark Reid.

"The OYF-3, KSR-17 and KSR-18 wells in Morocco were all commercial successes, and OYF-3 and KSR-17 are already connected and producing into our infrastructure.

"We expect KSR-18 to be tested and connected in the next two weeks."

Reid said the gross 1.5 billion to 1.6 billion cubic feet of reserves added by the wells was in line with the firm's pre-drill P50 estimates, adding that it was expected to enable it to continue to deliver gas to customers in line with contractual requirements.

"We will now commence the preparations to drill up to two additional wells in Morocco later in the year.

"In Egypt we are expecting to commence the drilling of the IY-2 step out development well at South Disouq in the coming days, and our planning for the potentially transformational HA-1X exploration well is significantly progressed, with spud expected in Q3 2021."

That gross 139 billion cubic feet prospective target, which had a 33% chance of success, had the potential to "significantly transform" the resource profile of the company, Mark Reid said.

"Finally, with the four well campaign in West Gharib also expected to start soon, I look forward to updating the market in the coming months on what is looking to be a very busy and exciting period of activity."

At 1539 BST, shares in SDX Energy were up 4.33% at 16.28p.