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Peggy you said
“I also dont see what the relevance of copper prices have to do with this, its still in the ground and waiting for results, we might not have any.”

At CASA the gold is in the ground, none is yet being mined. Yet a higher gold price has enabled Nick to go back and try to negotiate a better deal, if the gold price was depressed he couldn’t do that.

Increased demand puts up the copper price and that in turn has an effect on the sale value of copper assets worldwide.
I don’t think there is any doubt now that we have copper; the question is just how much.

Copper Dec 20 price US$3.037

A 12.5% spread as well, not much incentive to buy

Two months on Saturday since drilling commenced, they are certainly making us wait for the first results

We are all suffering at the moment but even though the share price is ridiculously low, SDX are not going to go bust.
They have profitable businesses, reserves to last a few years and no debt.
Any PI selling now is probably frustrated, bored and they think bigger returns can be made elsewhere.
To anyone in for the long term the current share price is irrelevant if you have no intention of selling.

What I would like to hear from MR is him confirming the company strategy of building the company up until it's eventual sale. That strategy was clear under PW but I have yet to hear MR repeat that.

Whilst all shareholders are suffering the Directors aren't as they continue to draw good salaries, pension contributions and performance rewards.
For them the journey to an eventual sale is relatively painless, so if it takes a couple more years to get there, are they that bothered.

If the current downward trend continues we might not need to worry about our next takeover target, SDX may become a takeover target itself.
With around a £34m market cap maybe someone is running a slide rule over our figures.
That might not actually be a bad thing because even a failed takeover would at least give the share price a kick up the backside and raise awareness.

That is a question that investors here have asked for years. SDX doesn’t pay dividends but there are hundreds of other companies that don’t but still attract investors.
If investors aren’t looking for income they look for growth and the more impressive the potential growth the more attractive the share.

From the latest SDX presentation “With the sale of NW Gemsa having completed in July, full year 2020 guidance is now 6,000–6,250 boe/d.”

My question to SDX investors is when will production reach 8,000 boe/d?

The answer is it won’t for the foreseeable future (unless it makes an acquisition of a company that is already producing).

With no growth in the customer base in Morocco of 8 customers the potential increase in demand there is limited.
The production at South Disouq is limited by the capacity of the CPF at around 9,000 boe/d, SDX get 55% of that. With Sobhi online SDX will get approximately another 8% taking their share to about 63% (IPR getting the other 37%)

Meseda can increase production and revenue but not by huge amounts

With 2020 top guidance at 6,250 boe/d and with Sobhi online that takes SDX to about 7,000 boe/d.
At that point growth in production/revenue stops, South Disouq can’t produce anymore as the CPF is at capacity and customer demand in Morocco is fixed once the 8 customers are at capacity.

SDX is generating good revenue from profitable businesses in Morocco and Egypt but they are spending all that revenue drilling for gas that they can’t currently sell. All they are doing by increasing reserves is extending the current revenue stream for more and more years.

That is admirable and reduces the risk in investing here but where is the growth in sales and revenue coming from?

(To declare my position, I am currently underwater by about 60%. You could say sell and move on but it goes against the grain to sell shares in a profitable business, with no debt and increasing reserves. With the benefit of hindsight I should have got out around 20p but I thought that was ridiculously cheap. I totally agree with furey's position and I think there is an army of PI's who would love to get out of SDX, myself included, if we could see a bit of a spike)

eimaj616 don't dwell on the number of shares, it is the market cap currently around £40m that matters.

When Mark Reid took over as CEO on 17th May 2019 the share price was 23.75p, fifteen months later it is now 17.25p a drop of 27%.
Covid has affected companies across the board with some doing better than others. SDX has fared better than many with limited shutdowns in Morocco and production in Egypt almost unaffected. You could argue that during the Covid pandemic SDX should have been seen as a safer share to own.
MR definitely needs to do something to convince the market that SDX is cheap and worth buying, he certainly hasn't convinced anyone yet.
Q3 will be better but we will have to wait until November to get those figures. By Q4 all the capex for 2020 will have been invested so that will be the best quarter but again it will be probably April 2021 before the full figures will be released (07/04/20 this year).
Unless investors are happy to write off yet another year of underperformance, we need MR to deliver something to put SDX in the spotlight and I think that has to be an acquisition. I hope we see one in the next couple of months because I can't see anything else that is going to change market sentiment towards SDX in the short term.
SDX is something of an enigma, it probably has the best fundamentals of any AIM share I have ever owned, yet it is also one of the worst performing AIM shares I have ever owned.

Eloro, thanks for your comments.
Part of the reason I asked the question was down to Nick's positive attitude during the investor call. I know many of the posters on this BB believe a price has already been agreed with AA in principal, AA are doing their due diligence and at some point before the exclusivity agreement ends, that deal will be put to a shareholder vote.

I don’t think a price has already been agreed, I think AA have approached ARC and said they are interested in buying the assets back, they want to have a closer look and they want an exclusivity agreement. From Nick’s point of view that is great news AA have gone public, declared that they want it back and by doing so have effectively placed a “For Sale” sign outside ARC’s office.

During the investor call Nick said we are on the slip-road of something very very big. He might say that if an acceptable provisional offer has already been tabled.

However, other language used by Nick on the investor call that leads me to believe that a concrete offer has not yet been made.

“the opportunities are massive”
“we are very much in play”
“puts us on the map with other majors”
and
“we have had subsequent approaches”

All those quotes suggest to me it is still up in the air, you could say he is trying to talk the price up but if a price has already been agreed there is no point.
I think he genuinely believes that AA will put forward a transaction before the deadline but I think whether they actually succeed in buying ARC is still very much in play.

The good thing is I think everyone here expects to get several multiples of the current market cap for the assets. Everyone has there own idea of how it will play out and we shall see what happens.
In any sale what tends to get the seller excited is when there are two or three parties interested in buying, that is what pushes the price up. Nick was certainly hyper and I suppose I am hoping more than one buyer enters the auction to guarantee a good final sale price.
My wife's new kitchen extension is riding on ARC, so no pressure!

I should have put quotation marks after - point?"

As I have said previously I haven't had a reply to this but the email I sent asked

"Could you clarify something for me please.

If within the exclusivity period ARC receive an offer to buy the company at an agreed price, assuming you and the Board recommend acceptance of that offer and it is put to a shareholder vote. Given that the vote will take time to go through, is there anything to stop a third party putting in a counter bid at that point?

My view is that, as the exclusivity agreement is still extant at that point, ARC could not enter into a negotiating discussion with the prospective buyer and the prospective buyer would not have had access to information that AA are now privy to but there is nothing to stop them bidding if they thought the AA price was too low.
In addition, it may not be gentlemanly but surely as no money has changed hands when agreeing the exclusivity period, either party can walk away from the agreement at any time.

As it is the weekend, any thoughts?

GD don't take it personally, I didn't get a reply to mine either.
To be fair previously he has been very good when I have written to him.

Apologies if already mentioned
https://www.brrmedia.co.uk/broadcasts/5f3e3d49b14d87262643a15a/sdx-energy-interim-results

You may well be right but then perhaps funds should be diverted from Morocco to exploration at SD. Unless of course MR has a cunning plan in Morocco he hasn't told anyone about.
Looks like it has to be an acquisition then.

The revenue that South Disouq can produce is limited by it's capacity, around 50MMscfe/d. The gas price is fixed at US$2.85.

The revenue that Morocco can produce is effectively capped because we only have 8 customers.

SDX can drill endlessly and build up reserves to maintain that revenue for years to come but that revenue will not increase until they either upgrade the CPF at South Disouq or increase their customer base in Morocco, neither look likely at the moment.

I thought the plan was to get South Disouq up and running at 50MM then upgrade it as more discoveries were made. They used to talk about filling up the pipe to about 120MM I believe. MR seems quite happy to continue at current levels.
It seems to me they would be better off trying to increase capacity at SD rather than spend a fortune in Morocco drilling for gas they haven't got customers for.

Investing US$19.4 million or 74% of 2020 capex guidance in H1 was always going to make this set of figures look worse than they are. With only US$6.8 million to find in H2 the next two sets of figures will start to show an actual profit.
I hope in the Corporate Presentation later he makes a lot of Sobhi, he should do.
With IPR not taking part Sobhi is effectively the same as two discoveries under the shared agreement.
Unfortunately today though a US4 million loss is not going to set the share price alight.

The 4p barrier is proving to be very difficult to break. On the plus side more time to add.
On the delay in getting drill results, if you remember last year the same happened, quite a few times the results took longer than expected and that was before Covid

Just looking at the website there are 8 presentations on there.
Every one says we have 8 customers in Morocco.
When SDX talk to analysts I am pretty sure the analysts have noticed that since March 2019 they have spent a fortune drilling in Morocco but whilst reserves may have grown they still only have 8 customers on the Atlantic Free Zone.
It is obvious that at this moment in time the AFZ has no further potential, the existing companies there have been canvassed and only 8 want to buy gas. Either SDX wait indefinitely for new companies to move to the AFZ or they do something radical and look elsewhere.

If the cash builds and the share price does not respond surely SDX will become even more of a takeover target than it is now.
Some will say the the institutional investors won't sell but a 30p offer gives them a breakeven price and they get out of this nightmare. Neither of the big two have added and they certainly have had the opportunity to do so.