REG - SDX Energy PLC - Final Results
01/07/2024 07:00
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RNS Number : 4780U SDX Energy PLC 01 July 2024
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.
01 July 2024
SDX ENERGY PLC ("SDX" or the "Company")
FINAL RESULTS
SDX Energy plc announces its audited final results for the year ended 31
December 2023.
The Annual Report & Accounts of the Group for the year ended 31 December
2023, containing full financial statements that comply with IFRS, is now
available on the Company's website and has been sent to shareholders.
Chairman's Review
2023 marked a period of transformation for SDX. We welcomed new cornerstone
investors, forged innovative gas pre-payment agreements, and reinforced our
board and senior management team.
Our strategic focus and the evolution of SDX away from a pure oil and gas
business into an integrated, hybrid energy provider in Morocco gained momentum
throughout the year. We laid the groundwork to deliver on this strategy well
into 2024 and beyond.
Sale of Egyptian Assets
In March 2023, the Company announced the reconstitution of the South Disouq
disposal transaction where Sea Dragon Energy (Nile) B.V. ("Nile B.V.")
assigned a direct 18.15% interest in the South Disouq concession to EFGL by
way of a Deed of Assignment. EFGL simultaneously returned its 33% stake in
Nile B.V. to SDX for a nominal fee. There was no change to the economic
substance of the original transaction.
The divestment of the Egyptian assets has been a focal point and has occupied
much of the board's time, particularly during the last quarter of 2023 and
into early 2024. The West Gharib asset sale terms were agreed in January 2024
and the binding sale and purchase agreement was executed in April 2024.
Following completion adjustments, the total sales proceeds received was
$7.2 million. The first instalment of $3.5 million was received in
April 2024 and part of it was used to fully repay the outstanding secured
EBRD reserves-based lending facility, amounting to $2.7 million.
The remaining $3.7 million was received, following the deposit of
EGP 100 million (c. $2.1 million) into an escrow account to be used to
settle any potential tax liabilities. The Company continues to negotiate the
sale of its remaining Egyptian asset, South Disouq.
Morocco
With increasing energy demand from its offtakers, the Company directed its
efforts towards expanding its base of production assets. In May 2023, the
Company renegotiated its gas sales agreement with one of its key customers,
which allowed it to move forward with a summer drilling campaign. In September
2023, the KSR-21 well was drilled and, earlier this year, was tied in and
ready to supply offtakers. After receiving the necessary government approvals
in April 2024, KSR-21 was brought into production to supply existing offtakers
in the Atlantic Free Zone, near Kenitra. In April 2024, we drilled the BMK-2
well, encountering a 9-metre interval with strong gas shows up to c.100 times
background readings. The well was drilled to its total depth of 1,412 metres,
with a plug set to allow the well to be sidetracked to the target formation,
once the required equipment has been mobilised.
Our partnership with CITIC Dicastal continued to strengthen through 2023 and
early 2024 and 3-month gas prepayments were concluded for the three quarters,
Q4-2023, Q1-2024 and Q2-2024, for approximately $2.0 million per quarter. We
continue to work with CITIC Dicastal (a subsidiary of CITIC Group - a Chinese
holding company with a corporate portfolio approaching $1 trillion) on a
long-term prepayment agreement for future Moroccan gas deliveries as well as
other longer-term projects aimed at increasing available energy resources to
feed growing industrial demand.
Corporate and Funding
During 2023, we appointed William McAvock as CFO and member of the board and
Daniel Gould as Managing Director and subsequently CEO with a board seat.
Following these appointments, I reverted back from my role as Interim
Executive Chairman to Non-Executive Chairman effective 1 January 2024.
In addition to the two gas prepayment agreements, the Company worked
tirelessly through the year to reduce costs and fund itself efficiently. This
included successful balance sheet optimisation replacing a cash-backed bank
guarantee with a parent company guarantee and releasing $1 million of
restricted cash.
As announced in July 2023, the Company entered into a syndicated unsecured
convertible loan agreement with Aleph Finance Ltd for up to $3.25 million.
Pursuant to this agreement, the company drew down $2.50 million during 2023.
The period to draw the remainder expired, but the original agreement was
amended in April 2024 to extend the draw-down period. This granted the
Company access to further cash of $0.75 million, which was drawn down in
April 2024 to pay service providers in relation to Moroccan drilling
activities and general corporate purposes.
Looking ahead
As outlined in our strategy update in November 2023, SDX is committed to
continuing its upstream activity while embracing new opportunities for growth.
Our dedication to delivering a diverse energy portfolio aligns with our vision
of serving Morocco and beyond with reliable and sustainable energy solutions.
Thank you to all our stakeholders for their support in 2023 and look forward
on delivering on our milestones in 2024.
Review of operations
MOROCCO
The Company's Moroccan acreage (SDX 75% working interest and operator)
consists of four petroleum agreements in the Rharb Basin in northern Morocco:
Sebou Central, Rharb Occidental, Lalla Mimouna Sud, and Moulay Bouchta Ouest.
The Sebou Central petroleum agreement is a 105 km(2) exploration permit with
several exploitation concessions contained within it. The exploitation
concessions that remain active under the Sebou Central petroleum agreement
are:
• Ksiri Central, expiry January 2025
• Sidi Al Harati Ouest, expiry October 2024
• Sidi Al Harati Nord, expiry September 2025
• Gaddari Nord, expiry October 2025
• Oulad N'Zala Central, expiry May 2025
In September 2021, according to the regulations governing petroleum
agreements, SDX relinquished 25% of the original Sebou Central acreage and
entered into a 2.5 year extension period of the exploration permit. In March
2024, SDX relinquished an additional 10% of the permit area and entered into a
Second Extension Period of 1.5 years with expiry in September 2025.
The Rharb Occidental petroleum agreement is an 806 km(2) exploration permit
with numerous prospects and leads already identified on the existing 3D
seismic. The exploitation concessions that remain active under the Rharb
Occidental petroleum agreement are:
• Beni Malek Sud-Est, expiry August 2026
• Oulad Youssef Central, expiry August 2025
• Gueddari Sud Ouest, expiry December 2024
• Sidi Al Harati Sud, expiry December 2024
The Company has held the Lalla Mimouna Sud permit since February 2019. A one
year force majeure extension to the "Initial Period" of 2.5 years was granted
by the Ministry of Energy, which expired in September 2022. SDX has entered
into the "First Extension Period" of 2.5 years, expiring in March 2025. The
Lalla Mimouna Sud concession is now a 629.9 km(2) permit.
All of the Petroleum Agreements remain valid until expiration of the last
exploitation concession granted under the relevant Petroleum Agreement.
The Company was awarded the Moulay Bouchta Ouest exploration permit in
February 2019 for a total period of eight years. A one-year force majeure
extension to the "Initial Period" of the permit was granted by the Ministry of
Energy, which expired in September 2023. An extension of 6 months to this
period was granted by the Ministry of Energy, which expired in March 2024. We
have not sought a further extension and therefore the concession is in process
of being relinquished.
2023 Activity
In Q3 2023, the DOB-1 well was brought into production, and we completed our
economic feasibility studies on the completed SAK-1 well and applied to ONHYM
for the exploitation concession on it.
In September 2023, a new well was drilled (KSR-21). In October 2023, testing
and completion was completed on this well, and it was successfully connected
to our existing infrastructure.
No workovers were conducted in 2023.
Morocco gross production averaged 2.6 MMscf/d for 2023.
2024 Outlook
Testing and completion was concluded on the new BMK-1 well in January 2024,
combined with the successful connection of the ONHYM pipeline which is
connecting this well and the surrounding area to our existing infrastructure.
We are currently working with ONHYM to obtain approval to commence production
on SAK-1 and KSR-21.
The plan for 2024 is to drill two new wells. In April 2024, BMK-2 well was
drilled to its total depth of 1,412 metres, and has been left temporarily
suspended with a plug set to allow the well to be sidetracked, to the target
formation at 1,265 metres, once the required equipment has been mobilised. The
second well drilling is planned to commence in 2H 2024. These wells have
shallow targets. Gas from these wells will supply our existing customers to
serve their expanding needs.
We are currently in discussion with ONHYM in relation to agreeing future
permit requirements, which include undertaking new 3D seismic work either in
late 2024 or early 2025. SDX is also reviewing proposals on how best to extend
its infrastructure to reach other potential new prospects (beyond what has
already been mentioned above) within our permit acreages.
EGYPT (HELD FOR SALE)
South Disouq
South Disouq is a 115km(2) concession located 65km north of Cairo in the Nile
Delta region. It is on trend with several other prolific gas fields in the Abu
Madi Formation.
Development leases have been granted for South Disouq (18 km(2)), Ibn Yunus
(24 km(2)), and Ibn Yunus North (32 km(2)), and all development leases are
operated by SDX. Production is currently from the Messinian-aged Abu Madi and
Pliocene-aged Kafr El Sheikh formations. In addition, SDX operates the
Amendment Concession Agreement Area, which is an exploration permit of
41km(2).
At the beginning of 2022, SDX held a 55% interest in the South Disouq and Ibn
Yunus development leases and a 100% interest in the Ibn Yunus North
development lease. Its partner, IPR, holds a 45% interest in the South Disouq
and Ibn Yunus development leases. In February 2022, it was announced that SDX
sold 33% of the shares in the entity that holds its interests across its South
Disouq concession to Energy Flow Global ("EFG"), a private company with
upstream and oilfield services activities in Egypt, the Middle East and Asia.
In February 2023, SDX re-acquired these shares in exchange for a 33% direct
share of the leases. After this transaction, SDX Energy still has an effective
36.9% working interest in the South Disouq and Ibn Yunus development leases
and a 67.0% working interest in the Ibn Yunus North development lease.
2023 Activity
Analysis of the exploration MA-1X well on Mohsen has been completed, but
future development has been paused in the light of our plans to sell our
interest in South Disouq.
West Gharib
West Gharib is 22 km(2) in area and is producing from the Meseda and Rabul
fields, both of which are included in the Block-H development lease. The
concession is covered by a production service agreement, which allows for
lower cost operations than the traditional joint venture structure. SDX had a
50% working interest in the operation, with Dublin International Petroleum,
the operator, holding the remaining 50% working interest.
The Meseda field produces 18(o) API oil from the high-quality Miocene-aged Asl
sands of the Rudeis formation. The Rabul field produces 16(o) API oil from the
Miocene-aged Yusr and Bakr sands, which are also part of the Rudeis formation.
In 2021, a 10-year extension for both Meseda and Rabul was agreed with GPC,
extending the licence to 9 November 2031. As part of the agreement, the
contractors have a minimum commitment to drill six infill development wells
(four in Meseda and two in Rabul) and one water-injection well in Rabul by 31
December 2022, and up to another six wells across the concession depending on
the prevailing oil price. To take advantage of low drilling costs and the
current oil price environment, however, the partnership planned to drill 13
infill development wells from 2022 onwards.
2023 Activity
The infill campaign has continued in 2023, with two infill development wells
in the Rabul Field (Rabul-8 and 9) and an exploration well in the area to the
south-east of Rabul (Rabul SE-1) drilled. The Rabul SE-1 was a dry-hole, but
could potentially be converted to a water-injector for the Rabul Field.
Workovers of the existing wells have continued throughout 2023 to maximise
production and recovery from the Meseda and Rabul Fields.
2024 Outlook (EGYPT)
Due to issues in relation to currency controls and ongoing devaluations of the
Egyptian Pound, it was determined during 2023 that it would be better to focus
our resources on our Morocco operations. Therefore, offers for our interests
in South Disouq and West Gharib were entertained, and by 31 December 2023 we
had entered into advanced negotiations on both assets.
On 19 April 2024, the sale of our interest in West Gharib had been finalised,
and we expect the sale of our interest in South Disouq to be completed by the
end of 2024. As part of the West Gharib sale, our investment in Brentford Oil
Tools has also been sold. All revenues and costs in relation to these
operations have been treated as discontinuing activities in the 2023 accounts
- the impact will be a 65-70% reduction in Revenue and Group losses 1 , the
Balance Sheet impact is that 20% of Group Assets and 4% of Group liabilities
have been reclassified as being Held for Sale.
Financial Statements
The financial information set out in this announcement does not constitute the
Company's statutory financial statements and is derived from the financial
statements for the year ended 31 December 2023. The auditors have reported on
those accounts; their report was unqualified and did include a material
uncertainty relating to going concern Whilst the financial statements from
which this announcement has been derived are prepared in accordance with
International Financial Reporting Standards ("IFRS") and applicable law, this
announcement does not itself contain sufficient information to comply with
IFRS.
Accounting standards in the UK require the directors to assess the Group's
ability to continue to operate as a going concern for the foreseeable future,
which covers a period of at least 12 months from the date of approval of the
Consolidated Financial Statements.
The directors reviewed the cash flow projections prepared by management for
the period ending 31 December 2025. The capital expenditure and operating
costs used in these forecasted cash flows are based on the board's best
estimate.
The principal assumptions underlying the cash flow forecast and the
availability of finance to the Group are as follows:
· The Group expects to be able to meet its licence commitments in
Morocco and Egypt. This includes drilling several wells in Morocco to ensure
continued gas supply to offtakers. The Group may need to negotiate with the
Moroccan and Egyptian authorities to revise work programmes or licence
commitments. Based on previous successful renegotiations of licence
commitments, the directors believe that this is likely to be achieved, but it
is not guaranteed.
· CITIC Dicastal renews the 3-months prepayment for gas to be supplied
in Morocco during Q3-2024 (amounting to approximately $2.0 million).
· The Group completes the land reclamation work on three wells on a
licence in Morocco that has been relinquished and thereby secures the release
of $0.4 million of restricted cash held as security for a cash-backed
guarantee.
· The Group sells its remaining asset in Egypt (South Disouq) for sales
proceeds of at least $3.0 million.
· The Group agrees a farm-in deal over its assets in Morocco whereby a
joint venture partner pays a contribution towards past costs and funds future
capital expenditure in order to earn an interest in the assets.
· The Group will continue to negotiate and reach agreements with
creditors to spread the payment of liabilities over time.
· The Group will continue to make payments to creditors in line with
agreed payment plans.
· The holders of the Convertible Loan will exercise their right to
convert the loan amount into Ordinary Shares in the Company or the Convertible
Loan will be restructured instead of the loan amount being repaid in cash when
it matures in late July 2024.
In reviewing the cash flow forecast and the principal assumptions above, the
Directors have also considered other alternative measures available to the
Group, including the deferral of planned expenditure, the reduction of
overhead costs and an alternative method of raising capital or debt. These
alterative measures give the Directors a reasonable expectation that the Group
will have sufficient funds to enable it to discharge its liabilities when they
fall due.
However there exists a material uncertainty that may cast significant doubt
over the ability of the Group to continue as a going concern. The Board
believes it has options to raise external capital, but cannot guarantee the
amount and timing of any proposed financing. The Board would also note that
there are no guarantees that current discussions with the potential buyers of
the South Disouq asset in Egypt and potential farm-in partners in Morocco will
be favourably concluded and that arrangement with creditors will remain
negotiable.
Notwithstanding the material uncertainty identified, the Directors have
concluded that the Group will have sufficient resources to continue as a going
concern for the period of assessment, that is for a period of not less than 12
months from the date of approval of the consolidated financial statements.
Accordingly, the consolidated financial statements have been prepared in a
going concern basis and do not reflect any adjustments that would be necessary
if this basis were inappropriate.
Consolidated Balance Sheet
$'000s As at 31 December 2023 As at 31 December 2022
Assets
Cash and cash equivalents 4,476 10,613
Trade and other receivables 15,458 18,549
Inventory 7,426 7,988
Assets held for sale 10,194
Current assets 37,554 37,150
Investments - 3,390
Property, plant and equipment 3,174 25,205
Exploration and evaluation assets 9,688 11,618
Right-of-use assets 649 1,147
Non-current assets 13,511 41,360
Total assets 51,065 78,510
Liabilities
Trade and other payables 23,288 22,787
Current income taxes 913 854
Borrowings 5,273 5,658
Lease liability 364 441
Liabilities held for sale 1,501
Current liabilities 31,339 29,740
Decommissioning liability 4,640 6,349
Current income taxes 1,202 -
Deferred income taxes - 290
Lease liability 266 723
Non-current liabilities 6,108 7,362
Total liabilities 37,448 37,102
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment reserve 22 7,174
Accumulated other comprehensive loss (917) (917)
Merger reserve 37,034 37,034
(Accumulated loss)/retained earnings (25,253) (10,872)
Non-controlling interest - 6,258
Total equity 13,617 41,408
Equity and liabilities 51,065 78,510
Consolidated Statement of Comprehensive Income
Year ended 31 December
$'000s 2023 2022
Revenue, net of royalties 8,806 13,734
Direct operating expense (1,493) (3,293)
Gross profit 7,313 10,441
Exploration and evaluation expense (5,657) (22,564)
Depletion, depreciation and amortisation (5,006) (10,083)
Impairment expense - (4,810)
Share-based compensation 220 (322)
General and administrative expenses
- Ongoing general and administrative expenses (1,919) (2,874)
- Transaction costs (189) (3,649)
Operating loss (5,238) (33,861)
Finance costs (1,424) (354)
Foreign exchange gain/(loss) 775 (1,404)
Loss before income taxes (5,887) (35,619)
Current income tax expense (1,456) (68)
Profit from discontinuing operations (13,862) (490)
Loss and total comprehensive loss for the period (21,205) (36,177)
Attributable to
SDX shareholders (21,343) (35,090)
Non-controlling interests 138 (1,087)
Net profit/(loss), attributable to SDX shareholders, per share:
Basic and diluted - Continuing $(0.037) $(0.174)
Basic and diluted - Discontinuing $(0.068) $0.003
Basic and diluted - Total $(0.104) $(0.171)
Consolidated Statement of Changes in Equity
Year ended 31 December
$'000s 2023 2022
Share capital
Balance, beginning of period 2,601 2,601
Balance, end of period 2,601 2,601
Share premium
Balance, beginning of period 130 130
Balance, end of period 130 130
Share-based payment reserve
Balance, beginning of period 7,174 7,536
Share-based compensation for the period (220) 322
Share-based options expired (6,932) (684)
Balance, end of period 22 7,174
Accumulated other comprehensive loss
Balance, beginning of period (917) (917)
Balance, end of period (917) (917)
Merger reserve
Balance, beginning of period 37,034 37,034
Balance, end of period 37,034 37,034
Retained earnings
Balance, beginning of period (10,872) 26,270
Part repurchase / disposal of subsidiary 30 (2,736)
Share-based options expired 6,932 684
Total comprehensive loss (21,343) (35,090)
Balance, end of period (25,253) - 10,872
Non-controlling interest
Balance, beginning of period 6,258 -
Part repurchase / disposal of subsidiary (6,396) 8,236
Dividends - - (891)
Profit /(loss) for the period 138 (1,087)
Balance, end of period - 6,258
Total equity 13,617 41,408
Consolidated Statement of Cash Flows
Year ended 31 December
$'000s 2023 2022
Cash flows generated from operating activities
Loss before income taxes (5,887) (35,619)
Adjustments for:
Depletion, depreciation and amortisation 5,006 10,083
Exploration and evaluation expense 5,543 22,564
Impairment expense - (1,641)
Share-based compensation (credit)/charge (220) 322
Foreign exchange loss (775) 1,404
Finance expense 1,424 354
Operating cash flow before working capital movements 5,091 (2,533)
Decrease in trade and other receivables 2,008 414
(Decrease)/Increase in trade and other payables (2,403) 307
Payments for inventory (1,681) (1,403)
Cash generated from/(used in) operating activities 3,015 (3,215)
Income taxes paid (46) (477)
Net cash generated from/(used in) operating activities 2,969 (3,692)
Cash generated from discontinued operations 1,917 20,546
Cash flows generated from/(used in) investing activities:
Property, plant and equipment expenditures (862) 1,006
Exploration and evaluation expenditures (4,932) (5,730)
Proceeds on part disposal of subsidiary - 5,500
Net cash (used in)/from investing activities (5,794) 776
Cash used in investing activities of discontinued operations (2,657) (17,025)
Cash flows generated from/(used in) financing activities:
Proceeds in respect of new loans and borrowings 2,000 5,500
Repayments in respect of loans and borrowings (3,157) -
Payments of lease liabilities (321) (382)
Finance expense (474) (36)
Net cash generated (used in)/from financing activities (1,952) 5,082
Cash used in financing activities of discontinued operations (27) (1,087)
(Decrease)/Increase in cash and cash equivalents (5,544) 4,600
Effect of foreign exchange on cash and cash equivalents (593) (4,549)
Cash and cash equivalents, beginning of period 10,613 10,562
Cash and cash equivalents, end of period 4,476 10,613
For further information:
SDX Energy Plc
Daniel Gould, Chief Executive Officer
William McAvock, Chief Financial Officer
Tel: +44 (0) 20 3219 5640
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs/Harry Davies-Ball
Tel: +44 (0) 20 7408 4090
InHouseIR (Investor and Media Relations)
Sarah Dees/Oliver Clark
Email: sdx@inhouseir.com
Tel: +44 (0) 7881 650 813 / +44 (0) 20 3239 1669
About SDX
For further information, please see the Company's website at
www.sdxenergygroup.com
(https://url.avanan.click/v2/___http:/www.sdxenergygroup.com/___.YXAxZTpzaG9yZWNhcDphOm86MDEzNTAyODI2ZTNhZWY5ZWM4YWU4MGY3MmNiNjhiMDc6Njo4MDY2OmIyZDJhNDdjNTNhNWU3Yjc5Y2VjZDQ5MzgxZTRkZWJlNTE2NjQyYTMwOTk0NmQwOGZjN2U4MWIyMzIxODExNjM6cDpU)
or the Company's filed documents at www.sedar.com (http://www.sedar.com) .
Glossary
"bbl" stock tank barrel of oil
"boe" barrels of oil equivalent
"boe/d" barrels of oil equivalent per day
"CO(2)e" carbon dioxide equivalent
"MMboe" million barrels of oil equivalent
"MMscf/d" million standard cubic feet per day
"2P" proved plus probable reserves
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:
liquidity and sources of cash flows in 2024, future drilling developments,
costs and results; future raising of external capital and management's beliefs
with respect to the Company's overall economic position 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
2023, which can be found on SDX's website and its SEDAR profile
at www.sedar.com
(https://url.avanan.click/v2/___http:/www.sedar.com/___.YXAxZTpzaG9yZWNhcDphOm86NTdhMTkwODdmZDQwZjFjZjYyYjA3ZmVjNDllNzdmMGI6NjozNGQxOjM1M2UzZGZiNzQwMWNiODRlMDA2ZDkwYzYxYjc3YjM5MDg5ODY5NmRlNDY3MzgwZGRlZWU5ODlmMDRhYjM5MmI6cDpUOk4)
, 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.
Non-IFRS Measures
This news release contains the terms "Netback," and "EBITDAX" which are not
recognized measures under IFRS and may not be comparable to similar measures
presented by other issuers. The Company uses these measures to help evaluate
its performance.
Netback is a non-IFRS measure that represents sales net of all operating
expenses and government royalties. Management believes that Netback is a
useful supplemental measure to analyse 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 Netback 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.
EBITDAX is a non-IFRS measure that represents earnings before interest, tax,
depreciation, amortisation, exploration expense and impairment. EBITDAX is
calculated by taking operating income/(loss) and adjusting for the add-back of
depreciation and amortisation, exploration expense and impairment of property,
plant, and equipment (if applicable). EBITDAX is presented in order for the
users to understand the cash profitability of the Company, which excludes the
impact of costs attributable to exploration activity, which tend to be one-off
in nature, and the non-cash costs relating to depreciation, amortization and
impairments. EBITDAX may not be comparable to similar measures used by other
companies.
Oil and Gas Advisory
Certain disclosures in this news release constitute "anticipated results" for
the purposes of National Instrument 51-101 - Standards of Disclosure for Oil
and Gas Activities ("NI 51-101") of the Canadian Securities Administrators
because the disclosure in question may, in the opinion of a reasonable person,
indicate the potential value or quantities of resources in respect of the
Company's resources or a portion of its resources. Without limitation, the
anticipated results disclosed in this news release include estimates of
volume, flow rate, production rates, porosity, and pay thickness attributable
to the resources of the Company. Such estimates have been prepared by Company
management and have not been prepared or reviewed by an independent qualified
reserves evaluator or auditor. Anticipated results are subject to certain
risks and uncertainties, including those described above and various
geological, technical, operational, engineering, commercial, and technical
risks. In addition, the geotechnical analysis and engineering to be conducted
in respect of such resources is not complete. Such risks and uncertainties may
cause the anticipated results disclosed herein to be inaccurate. Actual
results may vary, perhaps materially.
Use of the term "boe" or the term "MMscf" may be misleading, particularly if
used in isolation. A "boe" conversion ratio of 6 Mcf: 1 bbl and a "Mcf"
conversion ratio of 1 bbl: 6 Mcf are based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.
Use of a Standard
Reserve and resource estimates disclosed or referenced herein have been
prepared in accordance with the SPE's Canadian Oil and Gas Evaluation Handbook
and in accordance with NI 51-101.
(#_ftnref1)
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