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Again, thanks Shakey.
The shareholder holdings data bases maybe unreliable, and we shouldn't give them too much importance, but it is very reassuring to note the River and Mercantile are prepared to stay with investment in SDX, in their belief that 'the market’s view of SDX Energy's performance, seemed harsh'. (paraphrased)
If R&M are convinced that SDX is in a strong position and they are prepared to wait for the outcome of the drilling program, perhaps we retail investors can take heart from that.
Many thanks for posting that Shakey.
River and Mercantile are currently at 9.22% owners of SDX equity.
Have they reduced their position recently, despite their I belief that SDX's share price performance has been treated harshly by the market, or are they sticking with their investment?
Malcy writes
I look forward to updating the market in the coming months on what is looking to be a very busy and exciting period of activity.”
'SDX has announced the commencement of the first, three well, phase of its 2021 drilling campaign in Morocco, which will comprise up to five wells over the year. This first phase of the Morocco drilling campaign will consist of three appraisal/development wells, which management estimates will target a total of 1.3 bcf of P90/1.8 bcf of P50, gross unrisked prospective recoverable resources, in its operated Gharb Basin acreage in Morocco (SDX: 75% working interest).
The first well, OYF-3, which spud on 30 April 2021, is targeting the Guebbas reservoir at approximately 1,160m. The second well, KSR-17, will target the Hoot reservoir at approximately 1,720m and the third well, KSR-18, is a dual target well, with the first in the Guebbas reservoir at 1,600m and the second in the Hoot reservoir at around 1,790m. All three wells are looking to encounter shallow, biogenic gas accumulations near to the Company’s existing infrastructure, thus enabling tie-ins to be completed quickly and at low cost. The Company will utilise the drilling rig that is already stacked in its yard in Morocco, thereby incurring minimal mobilisation cost.
The campaign is expected to complete in July 2021, at which point the Company will update the market on results. The second phase of the Moroccan drilling campaign will commence in September/October 2021.
Mark Reid, CEO of SDX, commented: “I am pleased to announce that the Company has commenced its 2021 drilling activities of up to eleven wells across our portfolio of assets with the spud of the OYF-3 appraisal/development well in Morocco. This is the first of three wells to be drilled in the coming months with a further two planned for later in the year. The objective of these wells is to add reserves to allow us to continue to deliver gas to our customers in line with their contractual requirements. The commencement of this campaign has been delayed by approximately one month due to covid-19 related travel restrictions delaying the mobilisation of equipment and personnel into Morocco. We would particularly like to thank our partner ONHYM for providing invaluable assistance in enabling us to obtain the necessary Government authorisations to mobilise the equipment and people into the country to commence the campaign last week.
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.
I look forward to updating the market in the coming months on what is looking to be a very busy and exciting period of activity.”
Dana have a problem. Having declared that the Egyptian on shore assets are non strategic and having sold them to IPR six months ago, they will have a devil of a job convincing operational management and staff that there is a future for them in Dan Egypt. I suspect that to save face, Dana will repackage the assets in smaller lumps and sell piecemeal. That way they can move operational staff on gradually and will probably get more for the assets in total anyway.
I hope that SDX are looking at it, maybe one for Mr Amr Al Menhali to broker, I should think!!!
Could this be an opportunity for SDX to negotiate taking some of Dana's gas assets.
Dana's Egyptian assets are in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases. These are all situated in the Nile Delta region, very convenient for SDX and complementing the South Disouq operation. Already producing with development potential.
Again all the loose shares were hoovered up by a late transaction for 200,000 shares.
Someone with deep pockets willing to steadily accumulate shares at sub 20p in a business that is cash positive, profitable and is sitting on a transformational drilling opportunity in Hanut which is only a few weeks away.
Probably get an RNS this coming week I guess, telling us that Ibn Yunis has been spudded.
I agree with that 34ads, I am amazed that Waha Capital's Amr Al Menhali, who is on the SDX board, hasn't exerted pressure to merge SDX with another oil and gas operator who operates in Egypt. How Waha can live with the investment loss that they must have sustained is beyond me. Maybe soon eh?
The independent technical and economic valuation of the Group’s Egyptian and Moroccan assets performed by Gaffney, Cline & Associates which has an effective date of 31 December 2020., states that Morocco proven and probable reserves are 0.55 MMboe. With a 6000 cubic feet per boe conversion ratio for reporting and comparison purposes, that equates to 3300 Mscf of gas. The production stat for 2020 was about 6.5m mscf/d. It looks like the Morocco reserves would last about 2 years at current rates of production. Please correct me if I am wrong.
I should imagine that the MM is just putting through the books the transaction which completes the order that he has been accumulating for the last few days. As you say, 'rinse and repeat'. Gradually relieving any weak holders of their shares at rock bottom prices and pushing them towards the big boys, who are mopping them up.
Fair point Shakey, but IPR obviously knew that they already had a lot on their plate taking over Dana Gas Egypt's assets, so I would guess that any exploration opportunity would need to have a very high COS to be worth the diversion. Now that IPR have digested the Dana acquisition, staying close to SDX is I should imagine, a priority for them. I just wonder how closely they are linked to existing SDX investors like Waha?
What is behind IPR's decision to participate in the Hanut drill?
After deciding not to participate in the Salah and Sobhi drills last year, they made an unexpected decision when Sobhi came in to take a 45% interest in Hanut. No doubt IPR's decisions on both issues was linked with IPR's acquisition of Dana Gas Egypt's assets. Earlier in 2020, IPR probably needed to keep their capital intact for the Dana, acquisition.
Georgina mentioned that during her meetings with IPR in October last year, IPR were 'very enthusiastic and highly engaged' with the Hanut prospect. Shortly after these meetings IPR confirmed that they would partner SDX in the Hanut drill.
Could IPR's decision have anything to do with their acquisition of Dana Gas Egypt's onshore Nile Delta assets in October last year?
I would imagine that the two issues are linked.
Dana Gas Egypt's assets in the Nile Delta complement SDX's South Disouq concession beautifully. IPR already have gas production in Egypt of over 64,000 boepd (45,500 equity) and they have over 110 million barrels of 2P oil equivalent
reserves. Chairman, Dr. M.K. Dabbous makes no secret of their aim to 'further develop their portfolio in Egypt'.
No doubt IPR are looking very, very closely at SDX and I should imagine that any success at Ibn Yunis or Hanut, will create a very clear case for the Dana Gas Egypt operation to be merged with SDX South Disouq.
Now this subject would be a very interesting one to raise on Monday's conference call.
I suggest that we all re-acquaint ourselves with the Capital Markets presentation that was broadcast in November last year.
Georgina Lorriman, the Senior Geologist gave an excellent presentation on the Ibn Yunis and Hanut drills.
https://webcasting.brrmedia.co.uk/broadcast/5fad284cbe1fd642a3ef0f4d
These drills are potentially the biggest opportunities that face SDX and if either of them is successful, we should be in for a very exciting few months indeed. If Hanut in particular is confirmed to be as big as it appears from the geological assessment, the SDX share price must rocket.
On top of the already strong cash flow and profit from existing SD resources, this opportunity make SDX a very attractive share at these prices. Little wonder that David Newland has increased his already huge shareholding and has a big bet in place that the price will rise.
Inflexion Points
South Disouq ramp-up
Drill programmes and well results
Partnering possibilities
Peel Hunt, which has a 'buy' rating and 35p target price, noted that following the integration of the Sobhi discovery in Egypt management estimates that there is an additional 100b billion cubic feet (Bcf) cf of unrisked prospective resource across the South Disouq concession (SDX operator with 55%).
This is split amongst five prospects, with 25% of this in a new ‘buried hill’ type play that is productive in a neighbouring field.
Well that is a positive!, results on time suggest no adverse surprises.
In my experience bad news is always delayed.
Now, who is up for a bit of fun predicting the main points?
We know from 5th Jan report that average entitlement production for the year was c.6,400 boe/d, and the bank balance was approx US$9.6 million as at 31 December 2020.
The West Gharib extension news was unexpected and very welcome.
What other possible news could there be?
New customers in Morocco?
A mini CNG plant to be installed in Morocco?
New CPR report?
Last year Final results were published on the 7th April but this was during the start of the Covid pandemic. The preious year they were published on 22nd March, so I agree that they should be coming out very soon.
Cairn Energy the Edinburgh-based oil and gas explorer and producer is also snapping up Shell's Western Desert assets in Egypt. It intends to buy 50 per cent of Shell's production, development and exploration upstream interests in the area for $323m net to Cairn, with additional contingent consideration of up to $140m net to Cairn if certain requirements are met. The rest of the interests will be acquired by Cairn's consortium partner Cheiron.
More oily action in Egypt.
https://energyegypt.net/united-oil-gas-announces-spudding-of-asd-1x-exploration-well-in-egypt/
https://energyegypt.net/sdx-energy-extends-egypts-west-gharib-psa-for-ten-years/