SDX Energy upbeat on drilling progress at South Disouq

(Sharecast News) - Middle East and North Africa-focussed oil and gas company SDX Energy announced on Friday that the SD-6X Salah well at South Disouq in Egypt, where it has a 55% working interest, has begun drilling operations.

The AIM-traded firm said Salah was expected to reach its targeted depth of around 9,000 feet in late March or early April, and was targeting gross P50 unrisked prospective resources of around 71 billion cubic feet equivalent, as estimated by management.

Salah's primary targets were in the same Kafr el Sheikh and Abu Madi formations that the company's existing four wells were already producing from.

On completion of Salah, SDX said the rig would move to the location of the SD-12X Sobhi well, about six kilometres to the west, which was targeting gross P50 unrisked prospective resources of around 33 billion cubic feet equivalent, as estimated by management.

Sobhi's primary target was also in the Kafr el Sheikh formation at a depth of approximately 7,000 feet.

If successful, the company said the Salah and Sobhi 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 to be $2.5m and $1.9m, respectively.

The company said it was reviewing a number of development concepts depending on the size of any discovery that was made.

To fully produce the 71 billion cubic feet equivalent gross P50 unrisked resource targeted in the Salah well, two further development wells would likely be required.

The 33 billion cubic feet equivalent gross P50 unrisked resource targeted in the Sobhi well would potentially only require one further development well, the board said.

"Salah and Sohbi are very exciting wells for the company with the potential to more than double the reserves to be processed through the South Disouq gas processing facilities," said chief executive officer Mark Reid.

"We now have three rigs drilling simultaneously in Egypt and Morocco and I look forward to providing further updates on these campaigns in due course."

At 1557 GMT, shares in SDX Energy were up 0.09% at 22.02p.