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This is part of the reason why BP is keen to divest itself of its stake in GUPCO, so that it can concentrate on Egypt gas.
BP will begin production at two of its Egyptian gas fields as part of its West Nile Delta project by the end of 2018, a petroleum ministry statement said on Monday.
The fields, Fayoum and Giza, will initially yield around 400 million cubic feet of gas per day, by the end of 2018, the statement added.
Production would increase to 700 million cubic feet per day later next year, it said.
BP is expecting to begin production at its Giza and Fayoum gas fields by year’s end, Oil Ministry spokesperson Hamdy Abdel Aziz told Hona Al Asema. Both fields will begin by producing 400 mmcf/d and gradually ramp up output to 700 mmcf/d. BP is also looking into drilling another well at Atoll field in order to increase production, he said.

What a very interesting interview with Ed Story of Soco on why they invested in Egypt and their future growth strategy in the country. Recommended listening for all SDX investors.

Oh well, maybe not this morning.

I've almost convinced myself that there will be an RNS tomorrow.
Why?
Well, we must be close or the tweets and reference to 75Kboed would be pointless teases.
PW's attendance at Tuesday's conference is perhaps a publicity marker which will add to the hype around the announcement, otherwise he would have cancelled.
Perhaps PW's involvement in the negotiation is over now, the deal is done and the admin boys are now putting the detail and presentation in place. This weekend will see the final preparation of the announcement put in place and Monday morning, BOOM.

I cannot believe that PW would make an error or a typo on a production forecast even if it is a wish list and not a true projection.
The piece says clearly that it is a 12 month goal for production to exceed 75kboe/d. To quote, 'Become a full cycle E&P with production in excess of 75kboe/d'
This is a clear tease in the same vein as the tweets on Wednesday and alludes to the BP deal.

Interestingly, the figure closely resembles the entire GUPCO production!!

So will be hearing that SDX has acquired all 603 operational oil wells 300 pipelines?

I agree with that Jag11.
Don't forget the new CPR that is being worked on. The new report should show a marked increase in Reserves in both Morocco and South Disouq as a result of the drilling success this year. The report should be ready soon.
Then there is the results of the seismic surveys that are being conducted this quarter and the South Ramadan drill.

Plenty of news coming our way quite apart from the BP deal and all while we are resting in this protective bubble of suspension. :)

I couldn't agree more. These two tweets are a very positive message that a deal has been reached between SDX and BP and the various government approvals are being sought whilst the details are being drawn up ready for an announcement.
RNS very soon I should think.

This is an important meeting because:-

Since its formation in 1962, the Egyptian General Petroleum Corporation has been the major operator in Egypt's extractive industry.[1]
As a subsidiary of the Egyptian Ministry of Petroleum, EGPC is charged with managing the country's upstream activities and is owning and controlling much of Egypt's refining capacity. While EGPC accounts for about 20 percent of Egypt's oil production directly, it mainly works through joint ventures with International oil companies (IOCs).[2] All IOCs active in Egypt require sharing agreements with the EGPC regarding oil production

An interesting article about Egypt's oil producing record and continuing problems with payment affecting small producers. Would SDX fall into this category of 'small producer' if we take the GUPCO oil assets?
Food for thought?
Oil output
The country is a major non-Opec producer, with output averaging 627,000 barrels a day (b/d), according to the Riyadh-based Joint Organisations Data Initiative (JODI). Egypt’s heavy oil is mostly processed by domestic refiners, while lighter oil from the Western Desert is often exported.
But Egypt still faces difficulties paying its international oil company partners. Cairo has always had a reputation for payment arrears, but the problem soared in the aftermath of the 2011 revolution due to the economic and political instability. Things got even worse with the collapse of oil prices in 2015, and the problem is not going away.
While major oil companies such as Shell and Apache can cope, Egypt’s small producers are much more sensitive to oil price movements, and have slashed investments with lower oil prices, causing their oil production to fall precipitously.
Egypt now has more than $11bn-worth of refinery projects planned or underway, although most have suffered considerable delays due to financing difficulties.

One of the biggest projects is the expansion of the Midor refinery in Alexandria. The scheme will boost its crude processing capacity to 175,000 b/d from 115,000 b/d, with the addition of a hydrotreater, naphtha splitter and liquefied petroleum gas treatment units under a $1.7bn contract with TechnipFMC.
The expansion will increase the refinery’s diesel capacity by 12,300 b/d to 70,000 b/d, and gasoline capacity by 11,900 b/d to 32,600 b/d, going some way to reduce Egypt’s need to import the fuels.
The country’s ageing facilities are unable to cope with demand and it imported an average of 150,000 b/d of diesel and 90,000 b/d of gasoline in 2017, according to JODI.
The long overdue startup of the new Egyptian Refining Company hydrocracker near Cairo will add another 50,000 b/d of diesel and 12,000 b/d of gasoline.

MEED: Egypt’s supergiant Zohr gas field heralds changes
by Energy Egypt
(Source: MEED)

Genel Energy plc

Update on Tawke PSC

Genel Energy plc ('Genel') notes that DNO ASA, as operator of the Tawke PSC (Genel 25% working interest), has today issued an update on licence activity:

Production at the Peshkabir field in the Kurdistan Region of Iraq has ramped up to 50,000 bopd, meeting the end-2018 target ahead of schedule and below budget.

One of two recently completed wells, Peshkabir-7, is producing over 10,000 bopd from nine Cretaceous zones through temporary test facilities and exported. The other, Peshkabir-6, drilled as a production well, but with the additional objective of appraising deeper formations, has established a deeper Cretaceous oil/water contact level than previously estimated. Further testing is underway, including test production of multiple producing zones.

The Peshkabir-8 well, spud in late August, is drilling ahead at 2,325 meters. Once completed, the rig will move to spud Peshkabir-9 in November.

Four other wells at Peshkabir now produce at a combined rate of close to 40,000 bopd following a workover at Peshkabir-3 which boosted production from that well to 11,000 bopd from 8,000 bopd.

Peshkabir production is processed through temporary test facilities until commissioning of a central processing facility by end-2018, which will have a capacity of up to 50,000 bopd. The Company is also installing a 10-inch pipeline from Peshkabir to Fishkhabur with a capacity of 60,000 bopd. Field production is currently transported to Fishkhabur by tanker truck and a 6-inch pipeline.

At the Tawke field, the Tawke-50 shallow Jeribe well drilled to a depth of 320 meters will be brought on production within several days. The Tawke-49 Cretaceous well is drilling ahead at 2,245 meters and will be completed later this month. Two additional Tawke wells, one each in the Jeribe and the Cretaceous, will be drilled by the end of the year. Workovers are also underway at two wells. Tawke production currently stands at just over 80,000 bopd.

-ends-

Quarter 3 2017 results were published on 21st November last year.
SDX are keeping to a pretty similar timetable this year with Half Year results only 3 days different to 2017, so I don't expect any publication of Q3 2018 results for another 6 weeks.

What would be nice is an Operations and Productivity Report YTD ( last one was 21st June) but I guess that this information may be too sensitive during a sales negotiation. But how are we proceeding towards first production at South Disouq?

Back in August I wrote:-
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. :)

Surely a result soon.
This can be announced whilst the SP is suspended, or do we subscribe to the conspiracy theory that the well has already been completed and has come in big time and is being used as a negotiating tool in the BP deal?

The negotiation with BP may take some time to work through before they have a deal that can be announced.
It will be a complicated deal to negotiate requiring approval from EGPC and the Egyptian government as well as the board of BP. As well as the oil assets that are to be disposed of, there is the important matter of the transfer of staff.

As if the questions over asset and reserves valuations weren't difficult enough, sorting out how many staff, who and when will be a big complicated issue. Referring to the BP/Serica deal on this matter, I notice that the transfer of staff from BP to Serica has taken over ten months and is still not complete yet
Once a deal has been worked out and agreed between all parties, there is the issue of presentation to stakeholders in the business. A shareholders presentation and an Admission Document will take time to organise and must be right before any announcement can be made. Otherwise there will be too many questions and few well rehearsed sensible answers.

We may be waiting for some time yet. But rest assured that this deal, if it goes ahead, will be great news for SDX and its shareholders I am sure. It is a fantastic opportunity to launch SDX into a mid capitalisation company and crystallise the value that has been created through drilling success over the past year.

It is worth reminding everyone at this point how big a deal this could be for SDX.

Gulf of Suez Petroleum Company (GUPCO) is a joint venture with the Egyptian government and is 50% owned by BP.
GUPCO produces more than 70,000 barrel per day (b/d) of crude oil as well as 400 million standard cubic feet per day (mscf/d) of natural gas.
The company operates 9 offshore complexes, some 72 satellites, owns 300 pipelines covering over 3500 kms and GUPCO has 2 LPG gas plants producing 700 tons of LPG and 2200 bbls of condensate.
GUPCO operates 2 water flood plants which treat 200 mbwpd for water injection.
They operate 603 wells, 455 of which are producers, and 148 are injectors.
They also have 13 storage tanks with a capacity of 5.5million barrels.
The average age of GUPCO's infrastructure and equipment is 30 years.

All we think we know is that BP would like to sell off their mature oil wells.
We do not know which assets they want to sell and what the volume effect will be.
We also do not know what understanding BP have with the Egyptian government over their half of the business.
Will their half be included in the deal and they just get half the proceeds or will the government retain ownership of half the assets?
What will happen to the LPG plants and the gas assets?

We can only guess for now but I suspect that the entire oil volume, all 603 wells will be included in the deal if they are all on shore and we can expect a gross oil volume of about 70,000 bopd.
I suspect that the gas volume will be retained or transferred to another Egyptian Government joint venture called Pharaonic, along with the LPG plants.

This notion has great credit in my opinion and it will certainly be something that PW will be considering during the negotiation.
The Ibn Yunis and SD-1X discoveries must be of interest to BP and the Kafr el Shiek and Abu Madi plays have great potential. These leads have a potential of in excess of 1TCF I understand. This would be a good asset to swap BP as down payment or part consideration.
The real beauty in your suggestion though is the crystallization of the value that has been created by SDX due to their drilling success over the last year. That success is certainly not reflected in the current SP much to our frustration, but exchanging the SD gas assets within the BP deal at something close to the RENAV value of these assets will immediately reflect in the SP.
Good call.

Given the low cost of the work, and the resource available, in addition to follow-up prospects, this suggests a breakthrough for SDX. The Moroccan pipeline has 24 mmcf (680,000 cubic metres) per day of capacity. Currently, this is flowing at 6 mmcf (170,000 cubic metres) and it should have reached 8-10 mmcf (226,000283,000 cubic metres) by the end of this year, rising to 16 mmcf (453,000 cubic metres) by the end of 2019 and filled by the end of 2020. Part of the appeal of SDX’s Moroccan assets is that the company can drill the wells to order – as new demand lines up new contracts, it can drill the necessary holes. Demand is expected to grow in the second quarter of 2019. In July this year, the European Bank for Reconstruction and Development (EBRD) announced a loan of up to US$10 million to support SDX’s plans in Morocco, particularly through supporting infrastructure to help consumers shift from fuel oil consumption to gas. “It’s lower risk than upstream work, although a lower return, so it’s a perfect fit for debt,” Welch said. When Welch and NBI spoke earlier this year, the theme that emerged from the discussion was one of balance. SDX was working on assets in Morocco and Egypt, with these two projects balancing one another out, to provide some degree of stability. The proposed deal with BP – if it moves ahead – will throw this out. The move is a big vote of confidence in the improved outlook for Egypt and a signal that the caution driven by the downturn is no longer needed. It is a gamble, but a potentially transformative and lucrative one."
Read more at http://www.stockhouse.com/companies/bullboard/v.sdx/sdx-energy-inc#fZV3SFG0ibfZRmp0.99

The remainder of the consideration would come from cash flows over four years, a commitment to cover 30% of decommissioning costs and various contingent payments, dependent on production and pricing. SDX did not provide details on what the asset package might be. One possibility is BP’s stake in the Gulf of Suez Oil Co. (GUPCO) joint venture, which Reuters reported in March was being shopped around. The unit produces 70,000 bpd of oil and 400 mmcf (11.3 mcm) per day of gas. At the time, Reuters’ sources said the venture was worth around US$500 million. BP has made it clear its interest in GUPCO is focused on maintaining production – a business in which SDX has experience. The super-major is focused on bigger ticket plans, such as the major gas discoveries offshore.
Managing plans
SDX already has experience in managing mature production in Egypt, where its North West Gemsa licence has peaked, in terms of output. The block is “fully developed, we’re just doing routine maintenance … it throws off cash and has low capex requirements”, Welch told NBI.
SDX expects the Meseda concession to provide growth in Egypt this year, in addition to bringing on the South Disouq concession by the end of 2018. “The Disouq facility will have 60 mmcf [1.7 mcm] per day, although we’ve guided to 50 mmcf [1.42 mcm] per day, to provide a bit of space while starting up.” Work on Meseda has focused on upgrading capacity, bringing in larger submersible pumps and adding another central processing facility (CPF) – in a demonstration of the company’s ability to work on mature assets. Given these increases, and the peaking of production from NW Gemsa, “there’s a significant increase year on year”, Welch said. The company has been focused on completing drilling at South Ramadan and Meseda, he continued, while working on a CPF and pipeline at Disouq. Furthermore, the company is working on seismic in Morocco and Egypt, Welch explained.
SDX’s drilling work at South Disouq had an 80% success rate, he continued, with the disappointment of Kelvin. “Our work has focused on structural traps and this was a stratigraphic trap. We thought the seismic was well calibrated but it has become clear we need to do additional processing,” he said, while noting that the seismic calibration in Morocco was “bang on”.
Moroccan move
SDX has an attractive and growing gas business in Morocco, where it has consumers – with rising demand – a pipeline with spare capacity and a range of available wells. Speaking earlier this year to NBI , Welch said these wells could each provide around 1.5-2 bcf (42.5-56.6 mcm), with low costs. As such, a number of wells need to be drilled to meet requirements – or at least they did, until the completion of the last two wells of SDX’s campaign. These two wells were drilled on the Lalla Mimouna permit, which had previously been explored by Circle. One of these holds around 5 bcf (142 mcm), while the other contains around 10 bcf (283 mcm).

Did everyone read this?<br />"Newsbase article on SDX:<br />AfrOil<br />25 September 2018<br />SDX spins up in Egypt The junior has lined up a transformative deal in Egypt, writes Ed Reed<br />SDX Energy came out swinging for the big leagues last week when it confirmed it was in the process of working on a substantial deal in Egypt. On September 20, SDX – in response to rumours circulating in the press – said it was in talks on acquiring a “significant package of assets” in Egypt, from BP. The form of the deal would constitute a reverse takeover under AIM rules, it said, and would require shareholder approval. As such, it was suspended from trading until more clarity was available – either in the form of a new admission document or a decision that the deal was not going ahead. The announcement brings SDX back into the limelight. After a strong showing in the first half of 2018, driven by drilling successes, the company had been having a more low key time of it lately. “The second half of the year has been a bit under the radar for SDX. We’ve been working on moving assets into production and shooting seismic,” SDX’s CEO, Paul Welch, told NewsBase Intelligence (NBI) in an interview in the week before the deal was announced.<br />BP asset<br />A Bloomberg report that day, quoting people knowledgeable with the matter, said BP hoped to raise about US$1 billion from the sale of some of its Egyptian assets. This was intended to help finance a deal it was pursuing in North America, where it is buying BHP Billiton’s shale business. In order to help move the SDX sale to completion, the report said BP was offering a loan of about US$300 million, which would be secured against oil produced from the assets. Talking to NBI , Welch explained that SDX had shied away from taking on debt previously because “in a downturn it’s not easy to control one’s destiny”. The company acquired Circle Oil in January 2017. Circle had fallen prey to a squeeze stemming from low oil prices and difficulties in collecting its receivables from the Egyptian government. While Welch still sounded hesitant about taking on debt, he did seem to have warmed to the idea since his last discussion with NBI, in March of this year. The company took a first step in this direction in July, when it secured a modest facility to support infrastructure development in Morocco. The SDX official also warned that banks had been wary of lending to companies working in Egypt’s upstream, because of the receivable problem. At one point, the government is said to have owed around US$7 billion to producers. However, Cairo has made progress in paying this amount down and intends to cut it to zero by the end of 2019. A potential model for the deal is a sale made by BP in November 2017. The super-major agreed to sell some of its North Sea assets to Serica Energy. The deal was innovative in that Serica only put up GBP12.8 million (US$16.7 million) of cash. The price of the assets was set at GBP300 million (US$393 m

The August 28th 2018 presentation on the SDX website makes it clear just how undervalued PW thinks that the business is at present. Picking out the highlights assuming an 8000 boepd exit rate for 2018, as follows:-
Core NAV is $236M, adding a further $167M for South Disouq and Morocco upside, the RENAV is $404M.
Looking at the Unrisked potential in South Disouq the Unrisked RENAV is $664M.

That would be about $3.2 per share or £2.5.
The BP deal, if PW can carry it off, will add increase production considerably up to perhaps 70,000 bopd plus any gas produced. There have been many estimates and I have already given my view on what the BP deal may contain, but whatever volume it entails, the BP deal will crystallise the existing RENAV value of SDX as well as creating additional value from the new production.
IMHO I think that the SP will settle down in excess of £7.50 before the end of 2018. :)

Is there a fund raise on the horizon?
Is that why the SP is going backwards?
I thought that the business was well funded for the forthcoming drills, so why is the SP going backwards?

Any theories?