Last checked at 24 Aug 2016 07:00
SDX ENERGY INC
SECOND QUARTER AND HALF YEAR 2016 FINANCIAL AND OPERATING RESULTS
Further progress with Egypt focused, high margin growth opportunity
London, England - August 24, 2016, SDX Energy Inc. ("SDX" or the "Company") (TSXV, AIM: SDX) announces its 2016 Second Quarter and Half Year 2016 Financial and Operating Results (the "Quarter", "Q2 2016", "Half Year" or "6 months to June 30, 2016").
Second Quarter and Half Year 2016 Highlights:
Corporate and Financial
· Completed successful US$11.0 million ("MM") placing raising c.US$10.2MM after costs (of which US$1.0MM was received in July 2016) and obtained dual listing on AIM market of London Stock Exchange plc ("AIM");
· Key financial metrics for the 3 and 6 months ended June 30, 2016 and 2015 are:
Three months ended June 30 | Six months ended June 30 | |||
US$ million except per unit amounts | 2016 | 2015 | 2016 | 2015 |
Net Revenues | 2.5 | 2.9 | 4.6 | 5.7 |
Netback | 1.2 | 1.9 | 2.3 | 4.0 |
Net realized average oil price - US$/barrel | 31.80 | 40.72 | 28.01 | 39.10 |
Net cash (used in)/generated from operating activities | (1.0) | (4.0) | 0.8 | (2.1) |
Total comprehensive (loss)/income | (25.2) | 1.1 | (26.0) | 1.9 |
· Comprehensive loss in 3 and 6 months ended June 30, 2016 due to write down of US$(24.7) MM in the Bakassi West, Cameroon exploration asset as a result of decision to withdraw from concession;
· Invested US$6.5MM of capital expenditure into business;
· As at June 30, 2016 cash on hand of US$6.9MM and zero debt.
Operational Highlights
· During Q2 2016 average daily oil sales and production service fees equated to 1,170 barrels of oil per day ("BOP/D") and average daily natural gas and natural gas liquids production equated to 136 barrels of oil equivalent per day ("BOEP/D") (to be invoiced at a future date to optimize Concession terms);
· During the 6 months to June 30, 2016 average daily oil sales and production service fees equated to 1,211 BOP/D and average daily natural gas and natural gas liquids production equated to 145 BOEP/D (to be invoiced at a future date to optimize Concession terms);
· Completion of successful workover programs during the Quarter at North West Gemsa and Meseda resulted in exit production rate at June 30, 2016 of 1,550 BOEP/D;
· In North West Gemsa, completed successful development well, Al Amir SE-24, which tested at 1,714 BOP/D with 3.06 million standard cubic feet per day ("MMSCFD") in May 2016. In addition, completed 5 workovers in the Al Amir SE and Geyad fields which focussed on wellbore maintenance;
· In Meseda, completed an 8 well workover program which included tubing string replacements, well bore cleanouts and perforation adds. Completed strategic initiative focussed on development optimization and increasing production. Facilities optimization studies now underway;
· Completed 3D seismic acquisition in South Disouq ahead of schedule and under budget. Seismic data processing is currently underway;
· Completed technical review of prospectivity at South Ramadan development concession and an evaluation of project economics is currently underway;
Subsequent to period end:
· SDX entered into a Deed of Assignment and Termination relating to Bakassi West, Cameroon. On July 31, 2016 all rights, interests, obligations and liabilities under the PSC were assigned to SoftRock Cameroon, the only member of the original partnership that has elected to remain in the concession; and
· Completed fast-track processing cube for South Disouq 3D on July 19, 2016. Preliminary prospect locations are currently being evaluated.
2016 Guidance and Outlook:
· Continue with well workover program at North West Gemsa;
· Initiate redevelopment and waterflood program at Meseda;
· Complete 3D seismic processing and interpretation for South Disouq. Conclude well location assessment and drill carried exploration well before year end;
· Continue to minimise costs post business combination; and
· Continue to explore opportunities to expand the asset base in Egypt and in the Middle East and North Africa ("MENA").
Paul Welch, President & CEO of SDX Energy, commented:
"Having successfully raised new funds and completed our dual listing on AIM, we are now well placed to maximize the potential across our portfolio of Egyptian assets. We are set to carry out an active work program on Meseda, which we expect to result in a material increase in our net production. North West Gemsa is set to continue delivering high margin barrels and, concurrently, we are progressing our exciting exploration asset at South Disouq and look forward to completing the processing and interpretation of the 3D seismic survey ahead of a carried well later this year.
We have a solid financial position which is underpinned by high-margin production that enables us to generate positive free cash flow down to US$15 oil. This, combined with an active, and potentially transformational work program, gives us a high degree of confidence about the future."
Interim Consolidated Balance sheet (Unaudited) | ||
As At | As At | |
(thousands of United States dollars) | June 30, 2016 | December 31, 2015 |
Assets | ||
Cash and cash equivalents | 6,949 | 8,170 |
Trade and other receivables | 8,480 | 6,678 |
Inventory | 1,188 | 1,188 |
Current assets | 16,617 | 16,036 |
Investments | 2,818 | 2,106 |
Property, plant and equipment | 17,731 | 18,401 |
Intangible exploration and evaluation assets | 10,065 | 23,473 |
Non-current assets | 30,614 | 43,980 |
Total Assets | 47,231 | 60,016 |
Liabilities | ||
Trade and other payables | 7,743 | 3,556 |
Current income taxes | 642 | 928 |
Current liabilities | 8,385 | 4,484 |
Deferred income taxes | 286 | 286 |
Non-current liabilities | 286 | 286 |
Total Liabilities | 8,671 | 4,770 |
Equity | ||
Share capital | 39,315 | 30,148 |
Warrants | 99 | 99 |
Contributed surplus | 5,369 | 5,175 |
Other comprehensive loss | (1,154) | (1,154) |
Retained Earnings | (5,069) | 20,978 |
Equity | 38,560 | 55,246 |
Equity and Liabilities | 47,231 | 60,016 |
Interim Consolidated Statement of Comprehensive (Loss)/Income (Unaudited) |
| ||||
Three months ended June 30 | Six months ended June 30 | ||||
(thousands of United States dollars, except per share data) | 2016 | 2015 | 2016 | 2015 | |
Revenue, net of royalties | 2,521 | 2,900 | 4,631 | 5,715 | |
Revenue | 2,521 | 2,900 | 4,631 | 5,715 | |
Direct operating expense | 1,290 | 1,004 | 2,289 | 1,675 | |
Exploration and evaluation expense | 24,883 | - | 24,883 | - | |
Depletion, depreciation and amortization | 845 | 436 | 1,662 | 887 | |
Stock based compensation | 100 | 146 | 194 | 323 | |
Equity in income of associate | (365) | (357) | (712) | (637) | |
General and administrative expenses | 912 | 639 | 1,772 | 1,173 | |
Operating (Loss)/Income | (25,144) | 1,032 | (25,457) | 2,294 | |
Net finance expense/(income) | (267) | (227) | 97 | (436) | |
(Loss)/Income before income taxes | (24,877) | 1,259 | (25,554) | 2,730 | |
Current income tax expense | 287 | 264 | 493 | 766 | |
Deferred income tax (credit)/expense | - | (72) | - | (89) | |
Total Current and Deferred income tax expense | 287 | 192 | 493 | 677 | |
Net (Loss)/Income | (25,164) | 1,067 | (26,047) | 2,053 | |
Other comprehensive loss/(income) | |||||
Foreign exchange | - | (44) | - | 165 | |
Total comprehensive (loss)/income for the period | (25,164) | 1,111 | (26,047) | 1,888 | |
Net (loss)/income per share | |||||
Basic | $(0.455) | $0.019 | $(0.560) | $0.036 | |
Diluted | $(0.455) | $0.017 | $(0.560) | $0.032 | |
Interim Consolidated Statement of Changes In Equity (Unaudited) | ||
Six months ended June 30 | ||
(thousands of United States dollars) | 2016 | 2015 |
Share Capital | ||
Balance, beginning of period | 30,148 | 24,512 |
Private placement - secondary listing on the London Stock Exchange AIM | 9,968 | - |
Share issue costs | (801) | - |
Balance, end of period | 39,315 | 24,512 |
Warrants | ||
Balance, beginning of period | 99 | 99 |
Balance, end of period | 99 | 99 |
Contributed Surplus | ||
Balance, beginning of period | 5,175 | 4,414 |
Share based payments for the period | 194 | 323 |
Balance, end of period | 5,369 | 4,737 |
Accumulated Other Comprehensive Loss | ||
Balance, beginning of period | (1,154) | (507) |
Foreign currency translation adjustment for the period | - | (165) |
Balance, end of period | (1,154) | (672) |
Retained Earnings | ||
Balance, beginning of period | 20,978 | 10,931 |
Net (Loss)/Income for the period | (26,047) | 2,053 |
Balance, end of period | (5,069) | 12,984 |
Total Equity | 38,560 | 41,660 |
Interim Consolidated Statement of Cash Flows (Unaudited) | ||||
Three months ended June 30 | Six months ended June 30 | |||
(thousands of United States dollars) | 2016 | 2015 | 2016 | 2015 |
Cash flows (used in)/from operating activities | ||||
Income before income taxes | (24,877) | 1,259 | (25,554) | 2,730 |
Adjustments for: | ||||
Depletion, depreciation and amortization | 845 | 436 | 1,662 | 887 |
Exploration expense | 24,883 | - | 24,883 | - |
Finance costs | 7 | 18 | 83 | 67 |
Stock-based compensation | 100 | 146 | 194 | 323 |
Equity in income of associate | (365) | (357) | (712) | (637) |
Operating cash flow before working capital movements | 593 | 1,502 | 556 | 3,370 |
(Increase) / decrease in trade and other receivables | (2,762) | (928) | (1,785) | 12 |
Increase / (decrease) in trade and other payables | 1,596 | (443) | 2,449 | (1,379) |
Cash (used in)/generated from operating activities | (573) | 131 | 1,220 | 2,003 |
Income taxes paid | (383) | (4,096) | (383) | (4,096) |
Net cash (used in)/from operating activities | (956) | (3,965) | 837 | (2,093) |
Cash flows used in investing activities: | ||||
Property, plant and equipment expenditures | (15) | (821) | (15) | (959) |
Exploration and evaluation expenditures | (10,019) | (784) | (10,937) | (959) |
Dividends received | - | 966 | - | 966 |
Net cash used in investing activities | (10,034) | (639) | (10,952) | (952) |
Cash flows from/(used in) financing activities: | ||||
Repayment of debentures | - | (2,052) | - | (2,052) |
Private Placement on London Stock Exchange AIM | 9,167 | - | 9,167 | - |
Finance costs paid | (8) | (15) | (101) | (63) |
Net cash from/(used in) financing activities | 9,159 | (2,067) | 9,066 | (2,115) |
Change in cash and cash equivalents | (1,831) | (6,671) | (1,049) | (5,160) |
Effect of foreign exchange on cash and cash equivalents | 109 | 77 | (172) | (313) |
Cash and cash equivalents, beginning of period | 8,671 | 19,056 | 8,170 | 17,935 |
Cash and cash equivalents, end of period | 6,949 | 12,462 | 6,949 | 12,462 |
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim consolidated financial statements with Management's Discussion and Analysis for Q2 2016 are now available on the Company's website at www.sdxenergy.com and on SEDAR at www.sedar.com.
Unaudited Interim Financial Statements | Three months ended June 30 | Six months ended June 30 | |||||
$000s except per unit amounts | Prior Quarter (1) | 2016 | 2015 | 2016 | 2015 | ||
FINANCIAL | |||||||
Gross Revenues | 2,789 | 3,384 | 2,900 | 6,173 | 5,715 | ||
Royalties | (679) | (863) | - | (1,542) | - | ||
Net Revenues | 2,110 | 2,521 | 2,900 | 4,631 | 5,715 | ||
Operating costs | (999) | (1,290) | (1,004) | (2,289) | (1,675) | ||
Netback (2) | 1,111 | 1,231 | 1,896 | 2,342 | 4,040 | ||
Total comprehensive income / (loss) | (883) | (25,164) | 1,111 | (26,047) | 1,888 | ||
per share | (0.02) | (0.45) | 0.02 | (0.56) | 0.04 | ||
Funds from operations | (37) | 593 | 1,502 | 556 | 3,370 | ||
per share | (0.00) | 0.01 | 0.03 | 0.01 | 0.06 | ||
Cash, end of period | 8,671 | 6,949 | 12,462 | 6,949 | 12,462 | ||
Working capital (excl. cash) | (3,257) | 1,283 | 1,172 | 1,283 | 1,172 | ||
Capital expenditures | 5,819 | 6,475 | 1,605 | 12,294 | 1,918 | ||
Total assets | 64,907 | 47,231 | 44,333 | 47,231 | 44,333 | ||
Shareholders' equity | 54,457 | 38,560 | 41,660 | 38,560 | 41,660 | ||
Common shares outstanding (000's) | 37,642 | 75,934 | 56,348 | 75,934 | 56,348 | ||
OPERATIONAL | |||||||
Oil sales (bbl/d) | 606 | 554 | - | 580 | - | ||
Production Service Fee (bbl/d) | 646 | 616 | 783 | 631 | 807 | ||
Total boe/d | 1,252 | 1,170 | 783 | 1,211 | 807 | ||
Brent Oil Price ($/bbl) | 33.73 | 45.54 | 61.72 | 39.63 | 57.77 | ||
West Gharib Oil Price ($/bbl) | 25.65 | 30.38 | 49.42 | 27.96 | 47.52 | ||
Net realized price ($/bbl) | 24.46 | 31.80 | 40.72 | 28.01 | 39.10 | ||
Royalties ($/bbl) | 5.96 | 8.11 | - | 7.00 | - | ||
Operating costs ($/bbl) | 8.77 | 12.12 | 14.09 | 10.38 | 11.46 | ||
Netback ($/bbl) | 9.73 | 11.57 | 26.63 | 10.63 | 27.64 | ||
(1) Denotes the three months ended March 31, 2016. | |||||||
(2) Netback is a non-GAAP measure that represents sales net of all operating expenses and government royalties. Management believes that netback is a useful supplemental measure to analyze operating performance and provide an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses. Management considers netbacks an important measure as it demonstrates the Company's profitability relative to current commodity prices. Netback may not be comparable to similar measures used by other companies. | |||||||
Proforma Combined Business | Three months ended June 30 | Six months ended June 30 | |||||
$000s except per unit amounts | Prior Quarter (1) | 2016 | 2015 | 2016 | 2015 | ||
FINANCIAL | |||||||
Gross Revenues | 2,789 | 3,384 | 6,659 | 6,173 | 13,839 | ||
Royalties | (679) | (863) | (1,976) | (1,542) | (3,722) | ||
Net Revenues | 2,110 | 2,521 | 4,683 | 4,631 | 10,117 | ||
Operating costs | (999) | (1,290) | (668) | (2,289) | (2,090) | ||
Netback (2) | 1,111 | 1,231 | 4,015 | 2,342 | 8,027 | ||
Total comprehensive income / (loss) | (883) | (25,164) | 1,341 | (26,047) | 1,602 | ||
per share | (0.02) | (0.45) | 0.02 | (0.56) | 0.03 | ||
Funds from operations | (37) | 593 | 2,269 | 556 | 4,419 | ||
per share | (0.00) | 0.01 | 0.04 | 0.01 | 0.08 | ||
Cash, end of period | 8,671 | 6,949 | 12,957 | 6,949 | 12,957 | ||
Working capital (excl. cash) | (3,257) | 1,283 | 3,515 | 1,283 | 3,515 | ||
Capital expenditures | 5,819 | 6,475 | 1,875 | 12,294 | 2,376 | ||
Total assets | 64,907 | 47,231 | 44,333 | 47,231 | 44,333 | ||
Shareholders' equity | 54,457 | 38,560 | 41,660 | 38,560 | 41,660 | ||
Common shares outstanding (000's) | 37,642 | 75,934 | 56,348 | 75,934 | 56,348 | ||
OPERATIONAL | |||||||
Oil sales (bbl/d) | 606 | 554 | 719 | 580 | 855 | ||
Production Service Fee (bbl/d) | 646 | 616 | 783 | 631 | 807 | ||
Total boe/d | 1,252 | 1,170 | 1,502 | 1,211 | 1,662 | ||
Brent Oil Price ($/bbl) | 33.73 | 45.54 | 61.72 | 39.63 | 57.77 | ||
West Gharib Oil Price ($/bbl) | 25.65 | 30.38 | 49.42 | 27.96 | 47.52 | ||
Net realized price ($/bbl) | 24.46 | 31.80 | 48.73 | 28.01 | 45.98 | ||
Royalties ($/bbl) | 5.96 | 8.11 | 14.46 | 7.00 | 12.37 | ||
Operating costs ($/bbl) | 8.77 | 12.12 | 4.89 | 10.38 | 6.95 | ||
Netback ($/bbl) | 9.73 | 11.57 | 29.38 | 10.63 | 26.66 | ||
(1) Denotes the three months ended March 31, 2016 | |||||||
(2) Netback is a non-GAAP measure that represents sales net of all operating expenses and government royalties. Management believes that netback is a useful supplemental measure to analyze operating performance and provide an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses. Management considers netbacks an important measure as it demonstrates the Company's profitability relative to current commodity prices. Netback may not be comparable to similar measures used by other companies. | |||||||
About SDX
SDX is an international oil and gas exploration, production and development company, headquartered in London, England, UK, with a principal focus on Egypt. In Egypt, SDX has an interest in two production concessions: North West Gemsa and West Gharib (Meseda) both located in the Eastern Desert. SDX's portfolio also consists of South Ramadan, a development asset in the Gulf of Suez; South Disouq, an exploration asset in the Nile Delta. For further information, please see the website of the Company at www.sdxenergy.com or the Company's filed documents at www.sedar.com.
For further information:
SDX Energy Inc. Paul Welch President and Chief Executive Officer Tel: +44 203 219 5640
| Mark Reid Chief Financial Officer Tel: +44 203 219 5640
|
Cantor Fitzgerald Europe (Nominated Adviser & Joint Broker) Sarah Wharry/Craig Francis Tel: +44 207 7894 7000
| |
FirstEnergy Capital LLP (Joint Broker) Jonathan Wright/David van Erp Tel: +44 207 448 0200
| |
Celicourt (PR) Mark Antelme/ Joanna Boon Tel: +44 207 520 9260
|
Advisory
Forward-Looking Statements
Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as forward-looking statements. In particular, statements concerning the completion of and anticipated results from the workover programs at Meseda and North West Gemsa; the exploration plans for the Company's asset at South Disouq, including the completion of the 3D seismic processing and interpretation, well location assessment and the drilling of a carried exploration well; and the expected results of the business combination between the Company and Madison PetroGas Ltd., which was completed on October 1, 2015, should be viewed as forward-looking statements.
The forward-looking statements contained in this document are based on certain assumptions and although management considers these assumptions to be reasonable based on information currently available to them, undue reliance should not be placed on the forward-looking statements because SDX can give no assurances that they may prove to be correct. This includes, but is not limited to, assumptions related to, among other things, commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services.
By their very nature, forward-looking statements are subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward-looking statements. Such risks and other factors include, but are not limited to political, social and other risks inherent in daily operations for the Company, risks associated with the industries in which the Company operates, such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; failure to realize the anticipated benefits of the Transaction and to successfully integrate the Parties; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. Readers are cautioned that the foregoing list of risk factors is not exhaustive and are advised to reference SDX's Annual Information Form for the year ended December 31, 2015 for a description of additional risks and uncertainties associated with SDX's business, including its exploration activities, which can be found on SDX's SEDAR profile at www.sedar.com.
The forward-looking statements contained in this press release are made as of the date hereof and SDX does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, except as required by applicable law. The forward-looking statements contained herein are expressly qualified by this cautionary statement.