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Could this mean SDX getting a higher price for their gas from the Egyptian government.
Egypt considers liberalizing natural gas prices for factories
by Energy Egypt
Factories could see the prices they pay for natural gas change every 3-4 months if the government follows through on proposals to liberalize the market announced by Oil Minister Tarek El Molla yesterday. Policymakers are considering extending the automatic pricing mechanism currently in place for petroleum products to gas supplied to the industrial sector, the minister told Asharq Business.
The announcement comes on the heels of a price hike that from this month will see factories pay up to 28% more for natural gas. Cement, iron and steel, and petrochemicals and fertilizers producers will now pay USD 5.75 / mmBtu, up from USD 4.50 / mmBtu, while other industries will see a 21% rise to USD 4.75 / mmBtu.
The fuel pricing mechanism: The government currently reviews local prices of petroleum products every quarter and raises or lowers them by up to 10% according to price fluctuations in the international market.
The pricing committee has hiked fuel prices three times this year as international oil and gas prices have risen. Car owners are now paying up to 12% more for fuel than they were at the beginning of the year after the government hiked the prices of all fuel grades by 0.75.
Gas prices have surged worldwide this year, creating something of a global energy crisis that’s being driven by rising post-lockdown demand in Asia, tightening supply, and the near-suspension of exploration and development work in 2020 at the height of the pandemic. Natural gas to heat homes now costs European consumers, for example, about 5x what it did a year ago, and the crunch could get worse as fall gives way to winter.
I find it difficult to describe how gut-renchingly painfull I find this SDX situation. A constant day after day deterioration in the share price and almost daily declarations of 'I'm Out' from LTH on this board and others.
The market says that it has no confidence in SDX management, Waha is voting with it's feet and reducing their holding. On top of that Waha removed their representative on the SDX Board some weeks ago and hasn't replaced him. Why?
Surely, this scenarion only comes about when Waha has lost confidence in SDX management too. They have tried to influence and persuade from their seat on the SDX Board but they have failed. Conclusion, nothing for it but to remove our representative and abandon ship. Could it be that Waha have tried to get one of the other large holders to take their stake and failed? What a hopeless mess SDX have got themselves in and it all comes down to leadership or lack of it.
New Chairman required here and pretty damn soon, I'd say.
One cannot help but feel that a shadowy hand is manipulating these share transactions. They are, as you say, very strange on their own and collectively. Manipulated trading margin so that Buys are shown as Sells, a large Sell transaction that is reversed after the market is closed, so that the effect is lost. What is going on? Why would anyone want to creat this situation and sustain a low SP? Beats me.
We are all holding our breath and hoping that Hanut will be a success.
The market in SDX shares is very disappointing. I was hoping that the Hanut drill would generate interest and share activity. But there has been very little share activity at all, and what little there has been over the last few days has been classified as sells by the very tight margin. All very disappointing and so I just wait and hope.
An interesting positive discussion on how a succesful Hanut might change the business strategy could be worthwhile.
Would you care to start that one off Meastro1?
Hanut, IY-1X and SD-12X and Mohsen share many similarities. They are all are basal KES Fm turbidite sand
deposits defined by high amplitude seismic response.
Hanut CoS is estimated at 33% which reflects the fact the eastern closure is not fully imaged.
Mohsen CoS is estimated to be 51% which reflects the similarities to the basal KES Fm field discovery wells IY-1X and SD-12X and that it is fully imaged.
If Hanut was fully imaged, would it not also have a 50% CoS?
The HA-1X exploration well on the Hanut prospect spudded on 4 August. HA-1X is targeting a Basal Kafr El Sheikh prospect at approximately 5,200 feet TVDSS. The Hanut prospect is estimated to contain gross unrisked mean recoverable volume of 139bcf (23.2 million boe) with a 33% chance of success. SDX has a 55% working interest in the well and the Company's audited working interest 2P reserves as at 31 December 2020 equated to 11.1 million boe. The well is expected to take approximately one month to drill, and the Company will update the market on completion of drilling (and if successful, testing) operations.
Again, the bread and butter practical drill first to maximise production from Ibn Yunis. That is good and it will take approximately one month to drill. 'The well can be easily tied into the existing infrastructure at the nearby IY-1X well with production anticipated to start in late Q3 2021'. Great.
Another great RNS.
Wow!
Another RNS , a second in as many days.
The second well in the campaign, the HA-1X exploration well on the Hanut prospect, is expected to spud after the completion of IY-2 in early August.
From today's RNS.
"In Egypt we are expecting to commence the drilling of the IY-2 step out development well at South Disouq in the coming days, and our planning for the potentially transformational HA-1X exploration well is significantly progressed, with spud expected in Q3 2021. This gross 139bcf prospective target, which has a 33% chance of success, has the potential to significantly transform the resource profile of the Company."
Waha will not give up on their investment in SDX. They may well have given up on Mr. Amr Al Menhali, he has been in place for 2 years on the board of SDX and from what I can see, he has achieved absolutely nothing. With Waha's connection, Mr. Amr Al Menhali had the chance to make connections with other MENA focused operators and engineer some pretty good merger or acquisition growth opportunities.
Waha acquired their investment in SDX several years ago. Waha's Annual Report last year showed that the carrying value of their investment in SDX was AED34.3million, that converts to 6.5m pounds sterling and 16p per share. Any acquisition loss has long ago been written off in their accounts, Waha are in it for the long haul and my belief is that they have lost patience with Mr. Amr Al Menhali and want to shake things up a bit by putting someone new on the SDX Board.
Watch this space, as alongside the exciting drilling program, this intriguing situation is making for an interesting few months ahead for SDX.
Thanks for that Tigris
So now we have Exane BNP Paribas on 41p, Peel Hunt on 35p, Auctus on 35p and now Stifel on 52p.
A full set of analysts all valuing SDX at substantially more that current SP.
Time to see some UPWARD SP movement here please
The Company's Egyptian drilling activities are expected to commence in June with the first of four development wells in West Gharib and the start of our very exciting two well campaign in South Disouq where the second well, the Hanut-1X exploration well planned for mid-Q3, will be targeting gross unrisked mean recoverable volumes of 139bcf with a 33% chance of success.
The numbers looked good in-line with operational and demand strength. A netback of US$10.8 million, 5% higher than the same period in 2020 of US$10.3 million, was primarily driven by strong demand in Morocco, which at the end of Q1 2020 was impacted by COVID-19 shutdowns at three customers. West Gharib netback increased due to higher service fee realisations, which outweighed the impact of lower production due to natural decline. These factors were partly offset by a lower netback at South Disouq as a result of lower production due to natural decline and well management activity, and a well workover.
EBITDAX of US$9.8 million was 4% higher than the same period in 2020 of US$9.4 million due to the netback factors described above. Depletion, depreciation and amortisation (“DD&A”) charge of US$7.4 million was higher than the US$6.7 million for the same period in 2021 due to higher production and lower 2P reserves in Morocco, partly offset by lower production at South Disouq and West Gharib.
There were no non-cash E&E write offs in Q1 2021. In Q1 2020 US$4.4 million was written off following the drilling of two sub-commercial wells, SD-6X in South Disouq and SAH-5 in Morocco. Operating cash flow (before capex, excluding discontinued operations) of US$6.1 million, was higher than the same period in 2020, US$4.9 million, primarily due to the netback drivers discussed above, as well as lower spend on inventory, finally Capex was US$4.0 million.
Liquidity: Closing cash as at 31 March 2021 was US$9.7 million. The Company has now satisfied the conditions precedent on the new, five-year EBRD credit facility, which is undrawn and has US$10 million availability. Together with cash generated from operations, management believes the Company is fully funded for all planned activities in 2021 – 2022.
Mark Reid, CEO of SDX, commented:
“The first quarter of 2021 has been a positive start to the year as we have continued our strong production and cash generation from our assets in Egypt and Morocco with all our key financial metrics improving from the same period last year and our current production and capex either beating or being in line with guidance. Consumption from our customers in Morocco was notably stronger this quarter compared to last year as demand has now fully recovered from the effects of the pandemic seen in the same period of 2020. We saw slightly reduced production at South Disouq due to natural decline, well workovers and expected sand and water production in two out of the five wells, however this was mostly offset by the new SD-12X well which came onstream in December, and we remain on track to meet our guidance.
As a business we remain in a financially strong position, fully funded for our 2021/2022 work programme with robust cashflows and now with the full US$10 million available in our credit facility to draw upon. In this regard, I would like to reiterate my thanks to the EBRD for their continued support in renewing the
A very nice summary from Malcy today. He makes it sound positive.
SDX Energy
Q1 results from SDX today and it was a busy quarter, Q1 2021 entitlement production of 5,862 boe/d was 2% higher than 2021 mid point market guidance of 5,770 boe/d and 10% lower than Q1 2020 mainly due to natural decline, well workovers and expected sand and water production in two of the five wells at South Disouq.
Capex of US$4.0 million was within guidance, with the majority of activity scheduled for the remaining nine months of the year. 2021 guidance for capex is US$25.0-US$26.5 million. The Company’s operated assets recorded a carbon intensity of 2.7kg CO2e/boe in Q1 2021 which is one of the lowest rates in the industry.
Planning for the two-well South Disouq drilling campaign continued, and subject to receipt of final Ministerial and Parliamentary approval for a two-year exploration concession extension, the Company plans to drill the Hanut prospect targeting 139bcf of P50, unrisked prospective resources with a chance of success of 33% in Q3 2021.
Hanut will be preceded by the IY-2X well, a development well in the eastern part of the Ibn Yunus field, seeking to bring forward production and cash flow. The Company’s partner has confirmed that it will participate in both wells.
In March 2021, SDX obtained approval for a ten-year extension to the West Gharib Production Services Agreement increasing audited 2P reserves in this core oil asset as at 31 December 2020, by 60% year on year, or 119% taking account of 2020 production, to 3.52 million barrels.
Preparations were completed for the first three wells of a four to five-well programme in Morocco, with the first well, the OYF-3, spud at the end of April.
It wasn’t all plain sailing for the company though as post-period end, the Company received the COVID-19 delayed laboratory analysis of the cuttings and side wall cores from the LMS-2 well. This information confirmed that LMS-2 had successfully encountered the targeted thermogenically-sourced gas in the Top Nappe horizon but that the reservoir in the Lalla Mimouna Nord concession has low permeability and the well is unlikely to flow conventionally. As such, the Company will not risk US$0.5 million testing this well, nor will it commit to further investment in the Lalla Mimouna Nord concession post the end of the concession date in July 2021 as a result of the low permeability in this concession and limited likelihood of it being commercially developed. Accordingly, the Company expects to recognise a US$10.2 million non-cash impairment charge in Q2 ahead of relinquishment, of which US$2.8 million relates to LMS-2.
As the analysis of LMS-2 has confirmed that a working thermogenic petroleum system exists and feeds the Top Nappe horizon, which exists throughout the Company’s acreage, work will continue to identify drillable prospects at this horizon, with the objective of potentially testing the Top Nappe in drilling planned for 2022/22
Overall, a steady performance report as far as I am concerned.
SDX have added a million to the bank balance since the start of the year, they have confirmed that there is a working thermogenic petroleum system feeding the Top Nappe horizon in Morocco, and they are on course to start Hanut and IY-2X wells in a couple of months time.