Member Info for Southmead

https://cube.investments/sdx-energy-misunderstood-and-undervalued/

I particularly like the piece,

'I conservatively estimate that SDX should have at least $35m (£26m) of cash on the balance sheet at the end of 2018. Stripping that out from the market cap leaves an enterprise value of £80m. Given that the company could be generating net cash flows in the region of £67m in 2019, I view the company as hilariously cheap. This price doesn’t take into account the high quality management, successful drill record or its gas utility cash flows. Also of note is that unlike my largest holding RockRose Energy (RRE), SDX production is onshore which means there are not the same type of expensive decommissioning costs incurred. I eagerly await Q3 results'.

Thanks for flagging that interview Darola.

Two things of interest to me,
1. He says that the TSX Energy Index is down by 22% over the year from Nov 2017 when SDX is down 13%.

2. His 5800 boe number was taken from the SDX website presentation following the London Oil and Gas presentation, but I can't find any updated presentation. Can anyone point me to the right place?

Thanks

I have just noticed that the date stamp on the Schachter interview is Fri, Sep 07, 2018 1:04 PM EDT.
I assumed that the interview was yesterday afternoon, so maybe it didn't explain the late lift in the SP on TSX.

Thanks Darola, a very good find indeed, thanks for flagging it.
It may certainly explain the late interest in SDX on the TSX market. Lets hope that it raises interest here and promotes a bit of positive volume.
What Schachter has to say is good positive stuff and he ranks SDX as his top pick.

This SP movement is extremely painful to all SDX investors, I can assure you.
The continuous downward movement makes us question our trust and confidence that all is as it seems with the business. As a sanity check, we challenge our assumptions and question our judgement, we look for reassurance from research and reports, we look at this blog and we worry.

This is all very healthy and natural and if you are able to come through all of that and still maintain your faith that you have made the right decision and that you are in the right share, then you become a stronger investor. All in my opinion of course.

I am with Angelaon this one.
I too am very optimistic for SDX and its immediate future.
There is absolutely no point in a shareholder and substantial investor taking any other view.
In fact I would go far as to say that if you find yourself entertaining negative thoughts then get out of the share.
But investing success belongs to the optimists....
Quote' The second lesson is that, as one of today’s most successful investors, Nick Train, said at a recent event we hosted: “You have to be in it to win it.” Missing out on performance that accompanies the Phoenix rising from the ashes is devastating to long-term returns. If you only invest when it feels like the sensible thing to do, your experience will be massively worse than the long-run data suggests. The long-term history of the stock market is truly the “Triumph of the Optimists” as a book by the creators of the data in this column (Dimson, Staunton and Marsh) puts it.'

So more strength to your elbow, Angela.!!!!!

Hi Chris1032,
Personally, the debt would not have worried me as cash flow from the deal and loan help from BP would have been structured I am sure, to very do-able. The real issues I believe were as you suggest in the operational control and management of staff and work practices.
Back in October, shortly after the BP negotiation was terminated I blogged,
'Interesting posts Silverfinn and Workover, Thank you both.
I too am really disappointed but at the same time relieved, that the BP deal has been terminated.
Disappointed, because its the end of a dream scenario full of possibilities and potential value that would have thrown up all sorts of interesting possibilities for SDX management for months or years. Disappointed because the BP deal would have propelled SDX into a mid size E and P business in one go and raised all sorts of merger or sale possibilities in the near future.
Relieved, because the deal would have been a monster of a task for the management of SDX to take on and may have stretched them to breaking point. Not least, the BP deal would have detracted management attention away from the great opportunities that we already have in South Disouq and Morocco.
You make a good point Silverfinn about the possible bureaucratic nature of the GUPCO management and hierarchy and it may well have been this issue that stopped SDX doing a deal with BP. Presumably you have some knowledge or experience of the GUPCO structure as you are referring to management positions in your piece? There is no doubt though that inflexibility of work practices and top heavy management would be a huge burden to a small flexible outfit like SDX. They would spend many hours bogged down in resource hungry internal negotiation and discussion just trying to make changes to the way that things are done.

We will probably never know why negotiations failed because no doubt PW is bound by a confidentiality agreement and of course, BP want to start talks with other parties to sell GUPCO.

Good email Jag11 and thanks for sending it off and publishing.
You echo everyone's concerns about the lack of news from the company.

There are so many loose ends of operational matters that need to be addressed and it is really frustrating that the company see fit to keep us in the dark. I can only hope that the forthcoming Interim Announcement is a barnstormer worth waiting for.

Hi Ohsee
I can appreciate why you suggest the payment of a modest dividend.
It would increase the share price deffinately.
However, the payment of dividends doesn't really fit in with the Company strategy that is being pursued by SDX.
SDX want to increase Capitalisation to over $1Billion and then sell to realise value for shareholders.
I wouldn't hold your breath for dividends.

I agree Jag11 this is a very strange situation. No news for such a long time with so much supposedly in the pipeline. Incomplete well testing, pipeline construction, gas sales, Seismic testing results, all of these things should be worthy of a little shareholder update. What is going on here? Why the news blackout?

Today there has apparently been no trading at all in SDX shares, how could that be? I feel like putting through a transaction just to see if anyone is awake out there. Or is it just me?

What do we know about SRM-3.
The spud was played down big time. This is a 'commitment well', it completes our obligation on the South Ramadan license. In other words, don't expect anything to come of it as we are just going through the motions with this one as it has very little chance of success.
But what do we know?
Very little it seems. But I have found the following info.
SDX Energy has completed a technical review of prospectivity at its South Ramadan development concession in the Gulf of Suez offshore Egypt.
Drilling, started on early 2018.
The 26.2-sq km (10.1-sq mi) concession is in 27 m (88.6 ft) of water, between the 550-MMbbl Ramadan field, 5 km (3.1 mi) to the northwest, and the 1.5-Bbbl Morgan field, 6 km (3.7 mi) to the southeast. Both produce light oil from Lower Cretaceous Nubia sandstones.
South Ramadan contains two proven productive horizons in Eocene Thebes and Senonian Matulla carbonates.
SDX Energy is a 12.75% equity owner, with Pico holding 37.5% as operator and GPC the remaining 50%.This will be up-dip from one of the previous producing wells in the field.
Total cost of the work program this year will be around $23.5 million, including some platform remediation work and a well workover, both dependent on the success of the appraisal well.
PICO Cheiron owns a 37.25% stake in the South Ramadan Concession which is located in the southern province of the Gulf of Suez,
15 km northeast of the Ras Shukeir Field Base. The site includes two platforms and two production lines, with a terminal at Ras Gharib used to store crude oil.
Contingent resources at the South Ramadan concession are estimated at a total of 13.56 mmbbls.
The concession’s production sharing agreement stipulates a cost oil of 30% and a profit oil of 22%.

So it seems that there is quite a bit to shoot for in this well. 13.56 mmbbls estimated resources with no estimated COS but enough of a chance to warrant PICO paying out $23.5 million. SDX must be spending $3 million on this well. I think that we might be pleasantly surprised by the result here. :)

I just cannot reconcile these numbers to the Shareholders register on the SDX website.

MEA Energy Investments Limited 19.50% Ingalls and Snyder 18.36% Highclere Investors 5.28%
Mr Nikolaos D Monoyios 4.38% Dr Valerie A Brackett 3.86% River and Mercantile 3.42%
Board 2.87% AXA Investment Mgrs 2.53% BMO Global Asset Mgt 2.11% Janus Henderson Investors 1.32%
Sandbourne Asset Mgt 1.15% CIBC World Markets 1.15% Retail/Small Investor s 34.07%

The Morning Star register also states that R&M are a new investor, I don't understand that!
Can anyone offer an explanation?

That's 75Kboe/d within 12 months

Good Morning
Well PW kept to his original script at the 121 Energy Conference, with the following question and answer :-
'What are your key goals for the next 3, 6 and 12 months?
3 Months:
Double corporate production in 2018
Targeting increase in gas sales volumes to 8-10 MMscfd in Morocco
Complete construction of SD-1X processing facility, targeting first gas by end of 2018
6 Months:
Planning for the mobilisation of equipment for a further drilling campaigns in 2019 in Morocco & Egypt
12 Months:
Continue to review and explore opportunities to expand the asset base in the North Africa region, including through new licencing rounds and acquisitions
Become a full cycle E&P with production in excess of 75kboe/d'

So there it is still, 75lboe/d within 12 months!
Surely not a tease?
Surely not a mistake in such a high profile presentation?

I agree with you Harts, my evaluation indicates that SDX is banging away over £4M a month and will have a positive cash balance of around £60Million by end of June 2019.
That is after allowing for capital expenditure on the 2019 drilling program.
At todays SP, SDX is capitalised at about £100M which is a ridiculous value when 60% is underwritten by cash.

Patience is needed here and the SP will catch up.

My frustration is the absence of any positive news from SDX in the face of the constant selling. Surely there is something that management could throw us, a scrap of comfort to keep our spirits up and reassure us that all is well.

Interesting posts Silverfinn and Workover, Thank you both.
I too am really disappointed but at the same time relieved, that the BP deal has been terminated.
Disappointed, because its the end of a dream scenario full of possibilities and potential value that would have thrown up all sorts of interesting possibilities for SDX management for months or years. Disappointed because the BP deal would have propelled SDX into a mid size E and P business in one go and raised all sorts of merger or sale possibilities in the near future.
Relieved, because the deal would have been a monster of a task for the management of SDX to take on and may have stretched them to breaking point. Not least, the BP deal would have detracted management attention away from the great opportunities that we already have in South Disouq and Morocco.
You make a good point Silverfinn about the possible bureaucratic nature of the GUPCO management and hierarchy and it may well have been this issue that stopped SDX doing a deal with BP. Presumably you have some knowledge or experience of the GUPCO structure as you are referring to management positions in your piece? There is no doubt though that inflexibility of work practices and top heavy management would be a huge burden to a small flexible outfit like SDX. They would spend many hours bogged down in resource hungry internal negotiation and discussion just trying to make changes to the way that things are done.

We will probably never know why negotiations failed because no doubt PW is bound by a confidentiality agreement and of course, BP want to start talks with other parties to sell GUPCO.

So back to SDX as it is today, full of possibilities and potential and unrecognized value, how should PW react?
He must of course dust himself off and get over his disappointment. He and his Team would have put a huge effort into the BP negotiation and they will be deflated and frustrated that it has not gone ahead.
My advice would be to turn the 'No Deal scenario' into a positive for the business. Look for the positives that would have come out of the negotiation and evaluation process. Build on these positives, and there will be many, and launch a new series of initiatives that will make the most of SDX's existing opportunities.

SDX Energy and BP mutually agree to end discussions which could have see SDX buy a package of assets.
SDX Energy, the North Africa focused oil and gas company, has announced that, further to the announcement made on 20 September 2018, discussions regarding its proposed acquisition of a significant package of assets in Egypt from BP have been terminated by mutual agreement.
As the Acquisition is no longer proceeding, the suspension of the Company's shares from trading on AIM will be lifted from 7.30am on 18 October 2018. The Company has also requested for the restoration of trading on the TSX Venture Exchange.
SDX continues, in line with its stated strategy, to review and pursue inorganic growth opportunities across its areas of operations in North Africa.
Paul Welch, CEO of SDX Energy, said on the company's Twitter account: "Clearly it’s disappointing that this transaction has not materialised. It was an exciting opportunity but we are always screening potential deals and we know that there will be others that will serve to fast track our goal to be a North Africa focused E&P of scale. We continue to have a very active work programme for the rest of 2018 and throughout 2019 and will continue to build value from our existing business."
(Source: SDX Energy)

What a timely presentation to remind us just how solid a business we have in SDX.

Regardless of the BP deal, which has dominated our thinking for the last few weeks, this presentation reminds us just how strong a position we are in.

While the SP has been suspended production has grown in excess of 6000 boepd from the end of August and is on track to achieve production in excess of 8000 boepd by the end of 2018.

While we have been suspended Net Cash has grown, the 3D surveys have progressed and the CPR has been commissioned.

A really good presentation.

Can anyone produce a summary of the points that PW made in his presentation please?
We should have a video of proceedings available tomorrow I understand but it would be very useful if someone could summarise the points.
Thanks in anticipation

Of course its BP.
Read the RNS please!!!

Recent press speculation

SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, notes the recent press speculation relating to the Company.

The Board confirms that it is in discussions for the acquisition of a significant package of assets in Egypt from BP (the "Acquisition"). The Acquisition would constitute a reverse take-over under Rule 14 of the AIM Rules for Companies and would be subject to Shareholder approval.

In accordance with the AIM Rules the Company's shares have been suspended from trading on AIM with immediate effect and will remain suspended until an AIM admission document has been published or until the Company confirms that the Acquisition is not proceeding. Trading in the shares of the Company on the TSX Venture Exchange will also be halted during such time.

A further announcement will be made as and when appropriate.