Member Info for tigris72poo

As far as I can tell, there is no Corporate Presentation on the website and nobody is updating key elements: For example under Operations / Egypt I see:
During H1 2019, SDX will complete construction of the central processing facility, the 10km export pipeline, and the tie-ins for the above three discoveries and the initial SD-1X discovery well, which was drilled in 2017. First gas is targeted for mid-2019, at a gross plateau production rate of between 50 and 60 MMscf/d, with the conventional natural gas being sold to the Egyptian National Gas Holding Company (“EGAS”) at a price of US$2.85/Mcf.

the company mgmt. has shown that are co0mpletely indifferent to shareholder interests and are acting in a purely self-serving way. An activist investor was our only hope. If hey gave up, we are in a heap of trouble (on top of what we have already suffered)

Glencore puts Chad oilfields up for sale - FT
Wednesday, June 12, 2019 05:00:11 PM (GMT)

Glencore has declined to comment but people familiar with the situation confirm the sale process
Articles notes Glencore bought Caracal Energy in 2014 ( see SA link for details)
Industries: Metal Mining
Primary Identifiers: GLEN-GB
Related Identifiers: GLEN-GB
Subjects: Articles, Reports, Conjecture, Mergers and Acquisitions, Media Summaries, M&A Other Announcements, Published Reports
Related Stories:
Glencore (GLEN.LN) completes the acquisition of Caracal Energy
Caracal Energy announces court and shareholder approval of acquistion by Glencore

That's why I said "WHEN USED PROPERLY".

I would only advocate buybacks when these conditions are met:

1. The stock is trading substantially below NAV
2. The company is debt free
3. The company is generating FCF
4. The company existing assets and reinvestment opportunities are more attractive than assets that are available for investment outside the company.

I think conditions 1 and 2 are already in place for SDX. Condition 3 should be fulfilled once SD is on line and Morocco sales are increased. Condition 4 depends on the resource potential on the SD license and the market demand in Morocco. If PW was right that the potential exists to increase gas sales in Morocco from 6 MMCF/D to 24 MMCF/D or anywhere close to that, I can't think of any other project in the world that would be more attractive so I would want to own more of it. Where else am I going to get netbacks of $9/mcf ( = $54/ BOE) untaxed ???

Of course the departure of PW and the wild misses on production targets have cast serious doubts on 4 and have created the conditions for 1. Hard to win them all....

The purpose of the Capital Reduction is to restructure the issued share capital and reserves of the Company and to create distributable reserves to facilitate the payment of future dividends, when it becomes commercially prudent to do so.



That's nice to have. In addition, I would like the Board to approve a significant stock buyback. I like stock buybacks better than dividends when used properly for the following reasons:


1. They are more flexible. You can buy stock when it is trading far below NAV and not buy but reinvest in the business when it is fairly valued or overvalued. You never want to put yourself in a position where you have to cut or eliminate a dividend.
2. They are more tax efficient. I don't like to pay withholding taxes and income taxes on dividends. I can time capital gains and offset them with losses.
3. They are more democratic. Shareholders who like the company valuation and prospects can keep their shares and automatically increase their percent ownership in the company with no transaction costs. Those who are unhappy or impatient can sell and have a bid to hit when no one else cares.
4. They send a signal to the market that the Board thinks the stock is undervalued and is prepared to step in and support it at some level. In a market that is as volatile and illiquid as we have these days, I think every company should have the authorization and hope they never have to use it (sort of like fire insurance on your home except that it costs nothing except for a Board resolution).

In any case, the ONLY priority now is to get SD on line and increase the highly profitable Morocco gas sales. After that is secured, use the CF to do additional drilling in SD and Morocco as planned. Dividends are for large, mature oil companies like Exxon and Chevron. If I can get a 4.75% yield on XOM with a dividend rising every year why would I invest in SDX for income? Small E&P companies create value by discovering and producing reserves.

What happened to Phronimos? Did they run away with their tail under their legs?

Any talk of an acquisition now would be the KISS OF DEATH. The SP is decimated and the B/S is going to be under some pressure with delays in SD and Morocco. we don't need any dilution or taking on any debt. The ONLY focus should be to get SD gas on production and increase gas sales in Morocco. After that, we have to hope for some exploration success in 2020 and a rerating as investors regain confidence and start looking forward to 2021 FCF of US$30 million +++.

so much for conspiracy theories....the price weakness is now revealed to be entirely due to :
1. gross delays in bringing SD on line
2. missed targets in increasing Morocco production
3. spending too much capex on NWG for no gain because of water influx

PW over-promised and under-delivered. Mark Reid is not the answer. Let's hope we get a competent CEO soon

http://www.sdxenergy.com/~/media/Files/S/Seadragon-Corp/press-release/press-release-2019/20190517_SDX%20Press%20Release.pdf

" I'd be interested in how many shares have been bought and sold over the last two months which I would guess will show no logic. "

I guess you failed logic in school. Exactly the same number of shares was bought and sold in the last two months (or any other period for that matter) since for every seller there has to be a buyer, no?

I continue to be amazed at the level of the discussion on this BB. Mostly inane comments about who is buying or selling and conspiracy theories about manipulation when the obvious elephant in the room is the extravagant over-promising and woeful under-delivering on production targets in both Egypt and Morocco.

I guess some people are either illiterate or too lazy to read the RNS...

Operational highlights
? The Company’s entitlement share of production from its operations for the year ended December
31, 2018 was 3,574 boe/d (gross – 9,100 boe/d) split as follows:
o North West Gemsa 2,194 boe/d (gross - 4,388 boe/d)
o Meseda 734 bbl/d (gross – 3,851 bbl/d)
o Morocco 646 boe/d (gross - 861 boe/d)
? As a result of the ongoing workover program in Meseda and the new customer connections in
Morocco, post-period end production has increased in both of these concessions. Production in
North West Gemsa is currently below budget due to three wells being offline for pump replacements
and other workovers. It is expected that these wells will come back on stream during Q2 and Q3
adding 500-750 boe/d to gross production. As at March 21, 2019, actual entitlement production for
Egypt and Morocco amounted to 3,408 boe/d (gross – 9,064 boe/d) split as follows:
o North West Gemsa 1,797 boe/d (gross – 3,598 boe/d)
o Meseda 848 bbl/d (gross – 4,449 bbl/d)
o Morocco 763 boe/d (gross – 1,017 boe/d)

"when they are supposedly producing around 9 right now" ???

What are you smoking Shakey? Per the March 22 RNS,Morocco production is now 1,017 boe/d gross = 5.9 MMCF/D gross (4.42 MMCF/D net). which, along with the SD delay, goes a long way towards explaining the depressed SP.

One must wonder if Mr Tang is either an idiot or a crook.

1. If an idiot, it would explain why he doesn't grasp the fact that the best way to increase shareholder value when your stock is selling at 28% of NAV is to sell assets and buy back your shares.
2. If a crook, one must speculate whether he is inflating the NAV by overstating the value of questionable illiquid holdings. Or alternatively, if he is using company assets for self serving purposes directly or indirectly to benefit himself at the expense of Polo shareholders.

I am not making any charges. Just speculating. Any other explanations are welcome.

Mr. Sharma, the blogger from Forbes has a pretty loose grasp on reality and facts;

1. 75,000 BOE/D production in Morocco is a pure fantasy. That would be about 94X SDX current output and would require annual production of 165 BCF
2. 87% success rate in Lalla Mimouna? SDX drilled 2 wells only and was not able to flow test either one successfully. PW counts them as a success on the basis of logs but the jury is out until they test and flow. The success rate is either 0% 50% or 100% depending on test results. The 87% rate was the overall success rate in Morocco not just Lalla Mimouna
3. Shale oil. Has nothing to do with SDX. Not interested or looking for that at all.

A Middle School student from Marrakech could have done a better job.

The best way to accomplish the objective of enhancing shareholder value would be be a Dutch Tender Offer. In such an offer, the company announces that they will buy back xxxx value of shares at prices ranging from yy to zz.
For example 5 million GBP at prices ranging from 5p to 15 p/share. Shareholders are invited to indicate how many shares they would be willing to sell at what price. So shareholder A might say I will sell 1 million of my shares at 6 p, another million at 7 p and 2 more million at 8p. Shareholder b might say I sell 500,000 at 5 p and 500,000 at 6 p. And Shareholder C might say I will sell all 5 million of my shares at 10p. The company then determines what is the lowest price they have to pay to get 5 million GBP worth of stock and that becomes the buyback price. So if that price is 7.5 p, everyone who offered to sell at 7.5 or below gets that price and everyone who was willing to sell at higher prices gets to keep their stock. This is the most democratic and efficient way to do a buyback because the company does not overpay and shareholder get to sell or keep their shares depending on their view of the real value of the stock and its future prospects.

BTW, I like the name Phronimos. It is a Greek word that is hard to translate but probably comes closest to the meaning of Prudent. And the Polo management has been anything but prudent in the handling of the company assets. It has long seemed to me that either :
(A) the NAV quoted by the mgmt. is a fiction of wishful thinking or their imagination or
(B) they are totally incompetent or self-serving if they don't stop wasting shareholder capital in other investments when they can sell assets and buy in their own stock at a 75% discount.

70c now on the TSE = 41p , eh?

My understanding is that the $2.85 /MCF price for the gas reflects the higher than average BTU content (otherwise the price would have been set at the minimum of $2.65) but DOES NOT include the liquids. I am assuming that the liquids will be about 5B per MMCF for the 3 SD wells and a little higher for Ibn Yunus. So if we assume 7 B/MM on average at $50/B , that is $350 per MMCF from liquids or about 35c/MCF. All of these are ballpark, back of the envelope calculations. But they lead me to believe that the total revenue from SD gas should be over $3/MCF and the netback (after operating expenses) over $2 /MCF.

Everyone can do their own numbers but they have to include operating expenses and taxes to come up with a realistic estimate of CF.

Small-Holding, you are right about the fixed price nature of the gas contracts but your SD contribution calculations are unrealistic. You are omitting operating expenses (ball park figure $1 / MCF ?) and Egyptian Taxes (40% ?). If you redo your math and use a sales price of $3.00 /MCF($2.85 contract price + some liquids) you should come up with something more like $12 million annualized CF from SD.

50 MMCF/D x $2 Mcf x 0.55 x365 x 0.60=$12 million ROUGH GUESS after tax annualized CF

Still, "Cheap as chips"

Morocco of course has no royalty and no tax so it is much more valuable.

" I don't think having South Disouq come online at the end of this year would have made a blind bit of difference either."

Oh Yeah? Having 27.5 to 33 MMCF/D on stream at a fixed price of $2.85/MCF + liquids would generate CF of roughly $12 million a year after taxes. Even at 3X CF that would be $36 million which is about 40% of our current market cap. To say nothing about the damage to our credibility caused by missing the exit rate by over 50%.

Based on Slide 23 of the presentation and comments from 3Q release it looks like the testing of the two LM wells will be in 4Q19 when they mobilize equipment for the drilling campaign:

Morocco (75% Working Interest and operator) ? Given the recent drilling success, 2018 gross production is targeted to increase in line with new customer
tie-ins with the Company targeting gross production of 8-10 MMscf/d of conventional natural gas during
H1 2019. ? SDX’s nine-well Moroccan drilling programme completed on May 7, 2018 with the LMS-1 discovery. The
Company is now planning for the mobilisation of equipment for a further drilling campaign in 2019, during
which the LNB-1 and LMS-1 wells in Lalla Mimouna will be re-tested, with the remainder of the
programme’s targets coming from the recently acquired Gharb Centre 3D seismic. ? The Company will complete the processing and interpretation of the 240km2 of 3D seismic in its Gharb
Centre by late 2018/early 2019. ? SDX’s share of Morocco FY 2018 capex is expected to be approximately US$18.0 million with approximately
US$1.8 million relating to the completion of the 240km2 Gharb Centre 3D seismic to be incurred in Q4 2018.