SDX Energy Regulatory News (SDX)

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

1 February 2022

SDX ENERGY PLC ("SDX" or the "Company")

PROPOSED DISPOSAL OF 33% OF SOUTH DISOUQ FOR US$5.5 MILLION AND INITIATION OF BUYBACK PROGRAM OF UP TO US$3.0 MILLION IN H2 2022

SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company, is pleased to announce the proposed disposal of 33% of the shares in the entity that holds its interests across its South Disouq concession and its intention to initiate a share buyback program of up to US$3.0 million in H2 2022. All monetary values are expressed in United States dollars net to the Company unless otherwise stated.

Mark Reid, CEO of SDX, commented:

"I am very pleased to announce that we have entered into an agreement to dispose of 33% of our interests in the South Disouq concession for a consideration of US$5.5 million, which is a significant premium to the asset's value within our market capitalisation.

We intend to use the proceeds to initiate a share buyback program of up to US$3.0 million in H2 2022 with the remainder to be used for investment into innovative, portfolio growth opportunities which I look forward to updating the market on in due course.

In summary, this transaction allows us to achieve a number of our strategic objectives.

· Firstly, it permits us to return capital to our shareholders which has been a long-term goal;

· Secondly, it provides capital to support growth projects across the portfolio; and

· Thirdly, it provides a clear value read across of 6.1 pence per share for the full value of South Disouq

We will retain 67% of our pre-transaction interests in the South Disouq concession, remaining as operator, continuing to benefit from the cash-generation of the fields, while reducing our risk exposure on the two South Disouq exploration wells to be drilled this year."

Proposed disposal of 33% of the shares in the entity that holds SDX's interests in South Disouq for US$5.5 million and decision to initiate a share buyback program of up to US$3.0 million in H2 2022

· Share Purchase Agreement signed with Energy Flow Global Limited, a private company with upstream and oilfield services activities in Egypt, the Middle East and Asia, to dispose of 33% of the equity in Sea Dragon Energy (Nile) B.V. (("Nile) B.V."), the entity that holds SDX's gas producing, development and exploration assets in the South Disouq concession, located in the Nile Delta.

· Transaction effective date of 1 February 2022, with US$5.5 million cash consideration to be received throughout Q2 and Q3 2022 by way of contributions to SDX's remaining capital and operational expenditure in South Disouq.

· FY 2020 profit before tax relating to the 33% equity being disposed equated to US$0.24 million.

· Disposal proceeds allow the Company to plan for a share buyback program returning up to US$3.0 million to shareholders in H2 2022 once the consideration has been fully received, and investing the remainder into growth initiatives across the portfolio.

· Completion of the transaction is subject to the release of the share pledge held by the European Bank for Reconstruction and Development on the shares in (Nile) B.V. that are being transferred to Energy Flow Global Limited. Energy Flow Global will have the right to appoint a representative to the Board of Directors of (Nile) B.V..

About SDX

SDX is an international oil and gas exploration, production and development company, headquartered in London, United Kingdom, with a principal focus on MENA. In Egypt, SDX has a working interest in two producing assets: a 55% operated interest in the South Disouq gas field in the Nile Delta (prior to the proposed disposal referred to in this announcement) and a 50% non-operated interest in the West Gharib concession, which is located onshore in the Eastern Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75% working interest in four development/production concessions, all situated in the Gharb Basin. The producing assets in Morocco are characterised by attractive gas prices and exceptionally low operating costs. SDX has a strong weighting of fixed price gas assets in its portfolio with low operating costs and attractive margins throughout, providing resilience in a low commodity price environment. SDX's portfolio also includes high impact exploration opportunities in both Egypt and Morocco.

For further information, please see the Company's website at www.sdxenergygroup.com or the Company's filed documents at www.sedar.com.

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Forward-looking information

Certain statements contained in this press release may constitute "forward-looking information" 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 information. In particular, statements regarding: the Company's proposed disposal of 33% of its interests across its South Disouq concession and the use of proceeds of same; the Company's intention to initiate a share buyback program; should all be regarded as forward-looking information.

The forward-looking information contained in this document is 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 information 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; receipt of necessary permits; the sufficiency of budgeted capital expenditures in carrying out planned activities, and the availability and cost of labour and services.

All timing given in this announcement, unless stated otherwise, is indicative, and while the Company endeavours to provide accurate timing to the market, it cautions that, due to the nature of its operations and reliance on third parties, this is subject to change, often at little or no notice. If there is a delay or change to any of the timings indicated in this announcement, the Company shall update the market without delay.

Forward-looking information is 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; permitting risks; the 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 refer to the Principal Risks & Uncertainties section of SDX's Annual Report for the year ended 31 December 2020, which can be found on SDX's SEDAR profile at www.sedar.com, for a description of additional risks and uncertainties associated with SDX's business.

The forward-looking information contained in this press release is as of the date hereof and SDX does not undertake any obligation to update publicly or to revise any of the included forward‐looking information, except as required by applicable law. The forward‐looking information contained herein is expressly qualified by this cautionary statement.