Adam Davidson, CEO of Trident Royalties, discusses offtake milestones and catalysts to boost FY24. Watch the video here.
(Sharecast News) - Exploration and production firm SDX Group has achieved first gas from its South Disouq SD-12X well in Egypt six weeks ahead of schedule.
SDX stated its 100% owned well had unearthed a commercial discovery in mid-2020, before coming online on 21 December, and was now estimated to host to roughly 24.0bn cubic feet of recoverable resources and be capable of producing at 10-12.0m cubic feet per day.
The AIM-listed group also reported group production of 6,400 barrels of oil for 2020, topping guidance of 6,000-6,250 barrels of oil per day, a 58% year-on-year improvement, with SDX's performance driven by new wells coming online at South Disouq.
SDX also noted its strong cash position of $9.6m at the end of December, leaving the firm fully-funded for planned activities in 2021.
Chief executive Mark Reid said: "When viewed in light of a year which was full of operational challenges and volatile commodity prices, I see our robust cash generation as a hallmark of our business and is testament to the commitment of the team at SDX.
"We have started 2021 in a very positive position with an exciting programme of nine wells to be drilled in the year and I expect us to build on the successes of 2020 by discovering more resource and continuing our resilient cash generation."
As of 0945 GMT, SDX shares were up 5.92% at 19.07p.
Yes, Shakey, I too am slightly concerned about Edison's cash forecast. As I said, inaccuracy in a figure so fundamental to a forecast as the opening cash position, when only a week away from the start date, is unforgivable and ruddy poor.
Edison's researcher should be roundly chastised.
There could be a few reasonable explanations.
Maybe Nick Box wasn't consulted. Maybe an expected receipt didn't arrive before the Year End. Maybe a big payment was made before the Year End which had to be made early, like the SD-12X pipeline payment for instance.
In any event, $16.5M was not Nick's forecast for year end cash and therefore there was no requirement for him to comment.
I have started a new thread to side step the negative slant of earlier comments.
This RNS is for me very good news.
I am invested, I have confidence in my research and my decision and I am supportive of SDX management.
These are especially difficult times and SDX is coming through them better than most.
SDX has increasing production far in excess of last year, a new producing well in SD-12X, is fully funded for its 2021 drill programm, has cash in the bank, has fixed price contracts for all in can produce, recovered from Covid Moroccan gas incomes, disposed of non-core assets in South Ramadan and NW Gemsa, and has an exciting Hanut drill prospect ready to go.
Give them a break!
In my
In December, Morocco announced it acquired 65 million doses of COVID-19 vaccines from AstraZeneca and Sinopharm.
Yesterday, Minister of Health Khalid Ait Taleb said vaccinations will start in “the coming days,” without giving a specific day.
Hopefully, SDX should be able to enter Morocco and test LMS-2 soon.
I agree with you Shakey, Edison have forecast a year end cash balance of $16.578M for the end of 2020.
They published that forecast on December 21st, only one week before the year end.
Surely the forecaster is 100% confident that the cash balance is correct. It would be ridiculous for that figure to be wrong. The entire forecast would be called into question.
Happy New Year
The Edison Report makes for a very good read.
I particularly like the following section :-
With a healthy balance sheet, we expect SDX to direct its FCF to exploration drilling and/or acquisitions. However, its healthy balance sheet and the nature of its business also provides the opportunity to return capital to shareholders. In this note, we test SDX’s ability to distribute dividends. We estimate unrisked FCF yields post FY22 of more than 50% based on present plans. SDX has yet to establish a dividend policy, however the company has indicated that a dividend could be distributed from 2022. At the current share price and assuming 40% of FCF distribution, we estimate dividends could yield up to 20% from 2022.
Yes, I agree this is an excellent presentation. It is good to hear from the team, especially Goergina Lorriman, the Senior Geologist. Great to hear about the very exciting Hanut prospect.
Hanut is a Basal Kafr El Sheik (KES) prospect where SDX have already had so much drilling success.
She conservatively calculates the chance of success at 33%. If they had seismic data for the whole of the prospect, the chance could be a lot higher!!!
She calculates Hanut at 139 P50 bcf, which if correct would treble SDX's reserves at a stroke.
There has been a huge increase in SDX share transactions over the last two weeks and a 20% increase in the SP.
Part of a general re-rate of all oil and gas shares or something more specific to SDX?
There are no planned events for SDX until well into the New year, so my money is on an acquisition, not a buy out approach. An acquisition is difficult to keep under wraps with all those advisors hanging around and the finance to sort out. News leaks out and people cannot stop themselves from taking advantage. All in my very humble opinion, of course.
Yes, an approach from another hungry energy company is very likely at this low SP capitalisation.
An NPV of circa £78M and an SP cap of only £38M.
I should imagine that SDX and its major shareholders get approaches all the time.
Our protection should be that we have the majority of SDX shares owned by only 4 institutions.
The disposal of North West Gemsa and no South Ramadan will focus resources and management attention.
South Disouq is fast becoming a major producing asset for SDX and a source of considerable future potential value.
It follows, in my opinion, that SDX should seriously consider disposing of the cash hungry Moroccan operation, infrastructure, production and concessions during 2021 and concentrate on SD.
Straight from the SDX website, upcoming Value Catalysts are :-
• Q1’21 Sobhi well comes on stream.
• Q2/Q3’21 potentially transformational drilling campaign in South Disouq, targeting total 165 bcf2
• H1’21 LMS-2 well test in Morocco at the start of the H1’21 drilling campaign.
• H1’21 Morocco drilling to develop and confirm the potential of the northern extension to the core area.
• H1’21 West Gharib drilling campaign commences comprising of 8-10 development wells over three
years to convert 2.3 MMbbls (W.I.) of contingent resources to 2P reserves and increase production.
Yes, I see that David Newland bought an initial 2million or so shares in 2017.
He would have paid between 45-60p per share for those and presumably is sitting on a big book loss at the moment.
The good thing is that he sees upside potential in SDX and now is the moment to average down.
He has bought steadily over the last few months at sub 20p and doubled his holding.
He must now have an average price paid of around 35p I should imagine.
David Newlands also has a stake in Independent Oil and Gas who own the Thames Gas Pipeline.
It is good news that he obviously sees potential in SDX.
The question in my mind is where has he bought these from.
Clearly not the open market as such a big holding would take many months to accumulate.