REG - SDX Energy PLC - FULL YEAR 2022 FINANCIAL AND OPERATING RESULTS
28/04/2023 07:00
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RNS Number : 7853X SDX Energy PLC 28 April 2023
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.
28 April 2023
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
FULL YEAR 2022 FINANCIAL AND OPERATING RESULTS
SDX Energy Plc (AIM: SDX), reports its audited financial and operating results
for the twelve months ended 31 December 2022. All monetary values are
expressed in United States dollars net to the Company unless otherwise stated.
The Annual Report & Accounts of the Group for the year ended 31 December
2022 is now available on the Company's website and on Sedar.
Full year 2022 key results:
· Net Production, 3,723 boe/d (507 bbls/d and 19.3mmscf/d),
marginally ahead of mid-point full year guidance of 3,480 - 3,795 boe/d.
· EBITDAX of US$24.6 million and operating cash flow (before capex)
of US$16.9 million.
· Out of 14 wells completed across SDX's portfolio in the year to
date, twelve were put on production during 2022.
· Capex US$27.6 million compared to revised full year guidance of
US$26.5 - 28.0 million.
· Net Cash of US$4.9 million as at 31 December 2022.
· As at 31 December 2022, the Company's working interest share of
audited 2P reserves was 4.9 MMboe.
Jay Bhattacherjee, Interim Executive Chairman of SDX, commented:
"2022 was a busy year for the Company operationally and corporately. During
the summer of 2022 the shareholders rejected a takeover attempt and the
Company welcomed new shareholders to support the Company's growth.
Additionally, during the period there was significant personnel change at both
a Board and Executive Management level and I joined the company as the
non-Executive Chairman at the end of October and assumed the role as Interim
Executive Chairman in December. SDX enters 2023 with a renewed focus on
delivering long term sustainable returns to shareholders by pursuing
opportunities both within and outside our current portfolio across the wider
energy space.
In Egypt, the planned three well drilling campaign was completed during the
year, as well as a necessary workover programme on several existing wells.
While our Egyptian assets continue to produce, at present Egypt is a
challenging operating environment for energy companies with sharp devaluation
in the value of the currency, which has impacted the dollar value of the cash
we hold there, and severe limitations on our ability to transfer funds out of
the country due to capital controls. These are both outside our control.
Historically our producing Egyptian assets have funded the Company's growth
initiatives and we are having to find other solutions, and minimising the risk
associated with this has been a key focus in recent months. This is a dynamic
situation and we will provide further updates in due course.
In Morocco, SDX drilled two new wells which were put into production during
the year and the Company is currently maximising recovery from our existing
wells to maintain customer supply. It is our intention to have an expanded
drilling programme later in 2023 to continue to meet existing demand and to
produce to meet any increase or additional customer demand. Morocco remains
a core piece of the portfolio and as the country's only gas producer, we
maintain an opportunity to grow into a market that is hungry for every
molecule of gas we can produce.
While the Company faces a number of challenges, the changes made in 2022 and
the ongoing modifications we make as part of our strategic review are
positioning SDX with a foundation from which to grow. We are revaluating our
standing in the wider energy sector and will consider all reasonable avenues,
including transition fuels and alternative energies, to deliver long term
sustainable returns to shareholders. The Company has great strengths, and I'm
confident that we can rise to and overcome the challenges faced and return to
growth, and I thank all shareholders and colleagues for their support during
2022."
Twelve months to 31 December 2022 Operations Highlights
· Entitlement production for the twelve months ended 31 December 2022
of 3,723 boe/d was marginally ahead of 2022 mid-point guidance of 3,638 boe/d,
driven by strong performances in Morocco and at South Disouq, with West
Gharib's production lower than expected due to drilling delays and higher
water and sand production from some wells drilled on the flanks of the Meseda
field.
· In South Disouq, the planned three-well drilling campaign has
been successfully completed. The SD-5X and SD-12_East discoveries have been
brought online ahead of schedule, delivering production and revenues. The
MA-1X gas discovery well has been evaluated post year-end and the Company will
progress with developing the area after it has finalised the area's
commercialisation strategy.
· In West Gharib, eight wells have been successfully completed and
are on production. One exploration well was a dry-hole and is waiting on a
workover to convert it to a water-injector for the Rabul Field. Eighteen well
workovers across the concession were completed during 2022.
· In Morocco, both wells (SAK-1 and KSR-20) in the two-well
drilling campaign discovered gas and have been tied into the Company
infrastructure and were contributing to production at the end of 2022. During
the year, several workovers were performed to access behind-pipe reserves.
· As at 31 December 2022, the Company's working interest share of
audited 2P reserves was 4.9 MMboe. The Company's 2P reserves and 2C resources
estimates have been audited in accordance with the COGE Handbook & PRMS by
Gaffney, Cline & Associates, an independent qualified reserves evaluator
and auditor.
· The Company's operated assets recorded a carbon intensity of
3.6kg CO(2)e/boe
Twelve months to 31 December 2022 Corporate Highlights
· During the year a number of Board changes were announced. The
Board is now led by Jay Bhattacherjee as Executive Chairmen, with his fellow
directors being Tim Linacre and Krzysztof Zielicki.
· New shareholders were introduced to the register and have
provided a clear mandate to the Board for growth.
Twelve months to 31 December 2022 Financial Highlights
Twelve months ended 31 December
US$ million except per unit amounts 2022 2021
Net revenues 43.8 53.9
Netback((1)) 33.2 44.1
Net realised average oil service fees - US$/barrel 76.67 55.27
Net realised average Morocco gas price - US$/Mcf 10.39 11.34
Net realised South Disouq gas price - US$/Mcf 2.85 2.85
Netback - US$/boe 18.59 20.54
EBITDAX((1) (2)) 24.6 40.0
Exploration & evaluation expense((3)) (25.6) (14.1)
Impairment expense (4.8) (9.5)
Depletion, depreciation, and amortisation (19.3) (32.6)
Total comprehensive loss attributable to SDX shareholders (35.1) (24.0)
Capital expenditure 27.6 27.8
Net cash generated from operating activities 16.9 28.7
Cash and cash equivalents 10.6 10.6
((1) ) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
((2) ) EBITDAX for twelve months ended 31 December 2022 and
2021 includes US$4.8 million and US$5.3 million respectively of non-cash
revenue relating to the grossing up of Egyptian corporate tax on the South
Disouq PSC which is paid by the Egyptian State on behalf of the Company.
((3) ) For the twelve months ended 31 December 2022 and 2021
US$23.9 million and US$12.3 million respectively of non-cash Exploration &
Evaluation ("E&E") write offs in total are included within this line item.
· Netback for the year was US$33.2 million, 25% lower than during
2021. Netback contribution from South Disouq was US$15.2 million (YTD'21:
US$16.5 million) due to lower gas and condensate production owing to natural
decline being partly offset by higher realised price for condensate and lower
opex. West Gharib Netback increased by US$1.5 million compared to 2021 due to
the increase in the realised oil service fee, partly offset by lower
production. Morocco Netback was US$11.1 million, which was lower compared to
2021 due to lower production as a result of the non-renewal of a customer
contract, coupled with lower realised pricing due to the weakening of the
Moroccan Dirham against the US Dollar.
· EBITDAX for the year of US$24.6 million was 39% lower
year-on-year due to lower Netback, as described above.
· The 2022 depletion, depreciation and amortisation ("DD&A")
charge of US$19.3 million was lower than the US$32.6 million in the prior year
due to lower production in Morocco and a lower depreciable asset base in South
Disouq, following the accelerated depreciation of the SD-12X borehole costs in
2021 and impairment recognised at year-end 2021.
· E&E expenditure and non-cash write offs totalled US$25.6
million, predominantly related to the non-cash impairment charge relating to
four exploration wells in Morocco (US$21.5 million) and the write off seismic
costs at South Disouq (US$1.3 million).
· A non-cash PP&E impairment of US$4.8 million was recognised
for the Gharb Basin (Morocco) Cash Generating Unit ("CGU") as at 31 December
2022, following a downward revision in the anticipated recoverable reserves
from the producing wells.
· 2022 operating cash flow (before capex) of US$16.9 million, was
41% lower compared to prior year (US$28.7 million), mainly due to lower
EBITDAX as explained above.
· Capex of US$27.6 million, reflects:
o US$7.1 million for the three-well drilling campaign at South Disouq
split between: US$1.8 million for the drilling, completion, testing and tie in
of the SD-5X well, US$2.6 million for the drilling, completion and tie in of
the SD-12_East well and US$2.8 million for the drilling, completion, and
testing of the MA-1X well. In addition, US$0.9 million has been spent on
several workovers and US$0.7 million on other exploration costs;
o US$15.4 million in Morocco covering; pre-drilling and standby
expenditure for the recommencement of the Morocco drilling campaign, the
drilling and completion costs for SAK-1 and KSR-20, additional expenditure on
the KSR-19 well and on various workovers and infrastructure works; and
o US$3.5 million of West Gharib drilling costs across the eight wells
drilled.
· Liquidity: The Company's net cash position as at 30 September
2022 was US$4.9 million, with cash balances of US$10.6 million offset by
US$5.7 million drawn debt (incl. interest) from the European Bank of
Reconstruction and Development ("EBRD") credit facility. Given the ongoing
liquidity needs for corporate G&A and to develop the Moroccan assets, the
Company is exploring options to maintain and strengthen its liquidity.
· The Directors have reviewed the cash flow projections prepared by
management for the period ending 31 December 2024 and believe that a material
uncertainty exists that may cast significant doubt over the ability of the
Group to continue as a going concern. As a result of various geopolitical
factors, US dollar transfers by the Central Bank of Egypt have been restricted
and the Company is currently unable to expatriate any funds currently in Egypt
and there can be no guarantee of timing on when funds will become available.
These factors have also impacted the Egyptian pound which has been devalued
several times since March 2022 and is currently trading at less than half of
its value compared with the USD since that date. Whilst the company's
receivables are not impacted by this devaluation, the company's cash balance
in country is fully exposed to any additional currency fluctuations. In
addition, the Board believes it has options to raise external capital, the
Board however cannot guarantee on the final quantum and timings of any
proposed financing. The Board would also note that there are no guarantees
that current discussions with the EBRD 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.
Detailed Operations Update
Twelve months to 31 December 2022 Production
· Average entitlement production as at 31 December 2022 of 3,723
boe/d,
Gross production SDX entitlement production
Asset Guidance - 12 months ended 31 December 2022 Actual - 12 months ended 31 December 2022 Guidance - 12 months ended 31 December 2022 Actual 12 months ended 31 December 2022 Actual 12 months ended 31 December
2021
Core assets
South Disouq - WI 36.9% &67.0%((1)) 38 - 40 MMscfe/d 38.5 MMscfe/d 2,500 - 2,700((2)) 2,720 4,465((3))
West Gharib - WI 50% 2,000 - 2,450 bbl/d 2,033 bbl/d 380 - 470 389 457
Morocco - WI 75% 4.8 - 5.0 MMscf/d 4.9 MMscf/d 600 - 625 614 964
Total 3,480 - 3,795 3,723 5,886
((1) ) After completion of the South Disouq disposal with
effect from 1 February 2022.
((2) ) Net of minority interest. Gross of minority interest,
production guidance is expected to be 3,500 - 3,700 boe/d.
((3) ) 31 December 2022 South Disouq entitlement production
is shown at pre-disposal working interest of 55%/100%.
o South Disouq: During 2022, the existing wells continued to exhibit natural
decline and expected sand and water production, albeit this was partly offset
by contribution from the two wells (SD-5X and SD-12_East) that came into
production during 2022. Production guidance for 2022 reflects the disposal of
33% of SDX's interest in the asset, 2-3% CPF and compressor downtime due to
planned maintenance, the successful drilling of SD-12_East and SD-5X and
several well workovers. At the year-end, the MA-1X gas discovery well was
still in the process of being evaluated to determine a commercialisation
strategy.
o West Gharib: The existing well stock at the asset continued to produce
steadily, albeit exhibiting natural decline as expected, partly offset by
contribution from the recently drilled eight wells, all of which were on
production during 2022, and successful well workovers. Some of the new wells
that were drilled on the flanks of the Meseda field have exhibited higher
water and sand production than previously expected. The goal of the
development campaign is to fully exploit the volumes in the West Gharib
fields.
o Morocco: 2022 production guidance was lower than 2021 production as the
Company evaluates its ability to deliver to new and existing consumers based
on its current reserves base and pricing environment. 2022 saw strong demand
from the customer portfolio.
2022 Drilling and Operations
Morocco drilling campaign update (SDX 75% working interest)
o The Company concentrated on maximising recovery from its existing well
stock, utilising its two compressors.
o The 2022 drilling campaign commenced with the spudding of the SAK-1 well
on 6 August 2022. The SAK-1 well reached TD of 1,196m MD on 24 August 2022 and
encountered a gas sand at the primary target interval at 1,107m MD finding
3.7m of net pay with an average porosity of 31%. A secondary gas sand was
found at 1,079.6m MD, with a net pay thickness of 1.1m and an average porosity
of 28%. The well was subsequently tied into the Company's infrastructure and
was contributing to production at the year-end. The second well in the
campaign, KSR-20, spud 12 September 2022 and reached TD of 1,410m MD post
period-end on 1 October 2022, finding the primary target gas sands at 1,265m
MD. The well was brought on production during the last quarter of 2022.
o In addition to the drilling campaign, workovers were performed to access
behind-pipe reserves in a number of wells.
South Disouq Egypt exploration drilling campaign update (SDX 55%/100% working
interest pre-farm out, SDX 36.9%/67% working interest post-farm out)
o One appraisal well, SD-12_East, and two exploration wells, SD-5X (Warda)
and MA-1X (Mohsen), have been drilled during 2022.
o The SD-5X well discovered gas in the basal Kafr El Sheikh sand, with EUR
similar to the pre-drill expectation. SD-5X was tied-in and started production
13 May 2022 and is currently producing at around 10 MMscf/d of dry gas and
c.100 bbl/d of condensate.
o The second well in the campaign, SD-12_East (Ibn Yunus North development
lease) was successfully drilled and brought onto production on 1 July 2022 and
is currently producing at around 7 MMscf/d, with no condensate.
o The third and final well of the 2022 South Disouq drilling campaign, MA-1X
on the Mohsen prospect in the Exploration Extension Area, is a gas discovery
in the primary Kafr El Sheikh Fm reservoir target finding 56.3ft of
high-quality net gas pay. A well-test was conducted on MA-1X and has post
year-end been evaluated. The Company will progress with developing the area
after it has finalised the area's commercialisation strategy.
o Following the disposal transaction, all three wells have been drilled with
partner participation. In addition to the drilling activity, several well
workovers will be undertaken to maximise recovery from the fields.
West Gharib Egypt exploration drilling campaign update (SDX 50% working
interest)
o Much of the activity in the West Gharib concession during 2022 was centred
around the aforementioned infill drilling campaign.
o During 2022, eight infill wells and one exploration well (Rabul Deep-1)
were drilled. The Rabul Deep-1 well was a dry-hole but is waiting on workover
to convert it to a water-injector for the Rabul Field.
o Eighteen well workovers across the concession were completed during 2022.
2022 ESG metrics
· The Company's operated assets recorded a carbon intensity of
3.6kg CO(2)e/boe in 2022.
· Scope 1 greenhouse gas emissions at operated assets were 9,600
tons of CO(2)e. Scope 3 greenhouse gas emissions in Morocco were 93,900 tons
of CO(2)e, which is approximately 47,600 tons of CO(2)e less than using
alternative heavy fuel oil.
· 2022 was an incident and injury-free year for South Disouq, with
the last Lost Time Injury ("LTI") being in October 2020. There were no LTIs in
our Morocco operations during 2022. A Health and Safety Management system was
rolled out by the Morocco asset team, including safety training of all field
and office-based personnel.
· No produced water was discharged into the environment in Morocco
(100% contained and evaporated) or at South Disouq (100% recycled).
· There were no hydrocarbon spills at operated assets.
· Continuing our engagement with local communities who are affected
by our operations, in 2022 SDX was delighted to provide three hospitals near
our South Disouq operation with a ventilator each to support the medical needs
of the local population in Gharbia State. In Morocco, SDX supported the Dar
Lekbira organisation, an NGO with no political or religious affiliation that
aims to help children in distress in Kenitra and the surrounding region
(within SDX's operating footprint) with winter clothing, school supplies and
non-perishable food items.
· The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Twelve months to 31 December 2022 Financial Update
· Netback was US$33.2 million, 25% lower than the Netback of
US$44.1 million for the twelve months to 31 December 2021, driven by:
o Net revenue decrease of US$10.1 million due to:
o US$9.8 million lower revenue in Morocco compared to 2021 due to the
non-renewal of an expired customer contract and lower realised pricing due to
adverse FX movement;
o US$2.0 million lower South Disouq revenue compared to 2021, due to lower
production partly offset by improved condensate pricing; and
o US$1.7 million higher revenue at West Gharib compared to 2021 due to
higher realised service fees, partly offset by lower production.
o Operating costs increased by US$0.8 million from the prior year due to
significant one-off costs incurred for handling production and drilling water
produced at one of the worked over wells in Morocco.
· EBITDAX was US$24.6 million, (down 39%) compared with US$40.0
million for the twelve months to 31 December 2021, mainly as a result of the
decrease in Netback described above.
· The main components of SDX's comprehensive loss (before minority
interest) of US$35.1 million for the twelve months ended 31 December 2022 are:
o US$33.2 million Netback;
o US$25.1 million of E&E expense, of which:
§ US$21.5 million represents non-cash write off of exploration expenditure
incurred in Morocco relating to the KSR-19, KSR-20, SAK-1 and BMK-1 wells,
representing the total of their book value exceeding their recoverable
amount;
§ a US$1.3 million non-cash write off of seismic cost incurred in South
Disouq as the result of the relinquishment of the Young area;
§ a US$0.6 million bonus payment to the Egyptian Natural Gas Holding Company
("EGAS") as a result of the indirect assignment of part of the South Disouq
concession;
§ a write off of US$0.5 million for an unsuccessful exploration well drilled
in the Rabul area in West Gharib; and
§ other expenditure of US$1.7 million mainly for non-trade receivable write
off (US$0.7 million), new business evaluation activities (US$0.6 million) and
a provision for obsolete drilling inventory in Morocco (US$0.4 million).
o US$19.3 million of DD&A expense;
o US$4.8 million of impairment of the Gharb Basin (Morocco) CGU;
o US$5.2 million of ongoing G&A expense;
o US$3.7 million of transaction costs;
o US$4.6 million of FX loss mainly due to the devaluation of the Egyptian
Pound during the first nine months of the year; and
o US$5.8 million of corporate tax.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Twelve months ended
31 December
$000s except per unit amounts 2022 2021
FINANCIAL
Net Revenues 43,758 53,860
Operating costs (10,532) (9,732)
Netback (1) 33,226 44,128
EBITDAX (1) 24,577 39,993
Total comprehensive loss (SDX shareholders) (35,090) (23,955)
Net loss per share - basic $(0.171) $(0.117)
Cash, end of period 10,613 10,562
Capital expenditures 27,574 27,774
Total assets 97,510 98,415
Shareholders' equity 41,408 72,654
Common shares outstanding (000's) 204,563 205,378
OPERATIONAL
West Gharib production service fee (bbl/d) 389 457
South Disouq gas sales (boe/d) 3,726 4,245
Morocco gas sales (boe/d) 614 964
Other products sales (boe/d) 169 220
Total sales volumes (boe/d) 4,898 5,886
Realised West Gharib service fee (US$/bbl) $76.67 $55.27
Realised South Disouq gas price (US$/Mcf) $2.85 $2.85
Realised Morocco gas price (US$/Mcf) $10.39 $11.34
Royalties ($/boe) $5.68 $5.12
Operating costs ($/boe) $5.89 $4.53
Netback ($/boe) (1) $18.59 $20.54
(1) Refer to the "Non-IFRS Measures" section of this release below for
details of Netback and EBITDAX.
Consolidated Balance Sheet
(US$'000s) As at 31 December 2022 As at 31 December 2021
Assets
Cash and cash equivalents 10,613 10,562
Trade and other receivables 18,549 19,942
Inventory 7,988 6,747
Current assets 37,150 37,251
Investments 3,390 3,593
Property, plant and equipment 25,205 34,593
Exploration and evaluation assets 11,618 21,611
Right-of-use assets 1,147 1,367
Non-current assets 41,360 61,164
Total assets 78,510 98,415
Liabilities
Trade and other payables 22,787 17,157
Decommissioning liability - 22
Current income taxes 854 1,150
Borrowings 5,658 -
Lease liability 441 439
Current liabilities 29,740 18,768
Decommissioning liability 6,349 5,747
Deferred income taxes 290 290
Lease liability 723 956
Non-current liabilities 7,362 6,993
Total liabilities 37,102 25,761
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment reserve 7,174 7,536
Accumulated other comprehensive loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings (10,872) 26,270
Non-controlling interest 6,258 -
Total equity 41,408 72,654
Equity and liabilities 78,510 98,415
Consolidated Statement of Comprehensive Income
Year ended 31 December
(US$'000s) 2022 2021
Revenue, net of royalties 43,758 53,860
Direct operating expense (10,532) (9,732)
Gross profit 33,226 44,128
Exploration and evaluation expense (25,617) (14,085)
Depletion, depreciation and amortisation (19,345) (32,624)
Impairment expense (4,810) (9,528)
Stock-based compensation (322) (267)
Share of profit from joint venture 502 383
General and administrative expenses
- Ongoing general and administrative expenses (5,165) (4,251)
- Transaction costs (3,665) -
Operating (loss)/income (25,196) (16,244)
Finance costs (532) (641)
Foreign exchange loss (4,646) (179)
Loss before income taxes (30,374) (17,064)
Current income tax expense (5,803) (6,891)
Loss and total comprehensive loss for the period (36,177) (23,955)
Attributable to
SDX shareholders (35,090) -
Non-controlling interests (1,087) -
Net loss, attributable to SDX shareholders, per share
Basic $(0.171) $(0.117)
Diluted $(0.171) $(0.117)
Consolidated Statement of Changes in Equity
Year ended 31 December
(US$'000s) 2022 2021
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 7,536 7,269
Share-based compensation for the period 322 267
Share-based options terminated (684) -
Balance, end of period 7,174 7,536
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 26,270 50,225
Part disposal of subsidiary (2,736) -
Share-based options terminated 684 -
Total comprehensive loss for the year (23,955) (23,955)
Balance, end of period (10,872) 26,270
Non-controlling interest
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Dividends (891) -
Loss for the period (1,087) -
Balance, end of period 6,258 -
Total equity 41,408 72,654
Consolidated Statement of Cash Flows
Year ended 31 December
(US$'000s) 2022 2021
Cash flows generated from/(used in) operating activities
Loss before income taxes (30,374) (17,064)
Adjustments for:
Depletion, depreciation and amortisation 19,345 32,624
Exploration and evaluation expense 24,374 12,327
Impairment expense 4,810 9,528
Finance expense 532 641
Stock-based compensation charge 322 267
Foreign exchange loss 4,646 203
Tax paid by state (4,757) (5,295)
Share of profit from joint venture (502) (383)
Operating cash flow before working capital movements 18,396 32,848
Decrease/(increase) in trade and other receivables 1,746 (1,373)
Decrease in trade and other payables (29) (1,902)
Payments for inventory (2,354) (377)
Payments for decommissioning (66) (205)
Cash generated from operating activities 17,693 28,991
Income taxes paid (839) (324)
Net cash generated from operating activities 16,854 28,667
Cash flows generated from/(used in) investing activities:
Property, plant and equipment expenditures (13,810) (18,947)
Exploration and evaluation expenditures (8,250) (8,675)
Proceeds on disposal 5,500 -
Dividends received 311 522
Net cash used in investing activities (16,249) (27,100)
Cash flows generated from/(used in) financing activities:
Net proceeds from loans and borrowings 5,500 -
Payments of lease liabilities (569) (664)
Dividends paid - NCI in Sea Dragon Energy (Nile) BV (891) -
Finance costs paid (45) (197)
Net cash generated from/(used in) financing activities 3,995 (861)
Increase in cash and cash equivalents 4,600 706
Effect of foreign exchange on cash and cash equivalents (4,549) (200)
Cash and cash equivalents, beginning of period 10,562 10,056
Cash and cash equivalents, end of period 10,613 10,562
About SDX
SDX is an international energy company, headquartered in London, United
Kingdom. In Egypt, SDX has a working interest in two producing assets: a 36.9%
operated interest in the South Disouq and Ibn Yunus gas fields and a 67.0%
operated interest in the Ibn Yunus North gas field in the Nile Delta 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 (http://www.sdxenergygroup.com) or the Company's filed
documents at www.sedar.com (http://www.sedar.com) .
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the London Stock
Exchange, the technical information contained in the announcement has been
reviewed and approved by Rob Cook, VP Subsurface of SDX. Dr. Cook has 30 years
of oil and gas industry experience and is the qualified person as defined in
the London Stock Exchange's Guidance Note for Mining and Oil and Gas
companies. Dr. Cook holds a BSc in Geochemistry and a PhD in Sedimentology
from the University of Reading, UK. He is a Chartered Geologist with the
Geological Society of London (Geol Soc) and a Certified Professional Geologist
(CPG-11983) with the American Institute of Professional Geologists (AIPG).
For further information:
SDX Energy Plc
Jay Bhattacherjee
Interim Executive Chairman
Tel: +44 203 219 5640
Shore Capital (Nominated Adviser and Broker)
Toby Gibbs/Iain Sexton
Tel: +44 (0) 207 408 4090
Camarco (PR)
Billy Clegg/Owen Roberts/Violet Wilson
Tel: +44 (0) 203 757 4980
Glossary
"bbl" stock tank barrel
"bbl/d" barrels of oil per day
"bcf" billion cubic feet
"boe" barrels of oil equivalent
"boe/d" barrels of oil equivalent per day
"CO(2)e " carbon dioxide equivalent
"DD&A" depletion, depreciation and amortisation
"E&E" exploration & evaluation
"MMboe" million barrels of oil equivalent
"Mcf" thousands of cubic feet
"MMscf/d" million standard cubic feet per day
"MMscfe/d" million standard cubic feet equivalent per day
"WI" working interest
"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 2023; 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
2022, which can be found on SDX's SEDAR profile at www.sedar.com
(http://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.
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 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 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, amortization, exploration expense and impairment. EBITDAX is
calculated by taking operating income/(loss) and adjusting for the add-back of
depreciation and amortization, 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.
Prospective Resources Data
The prospective resources estimates disclosed or referenced herein have been
prepared by Dr. Rob Cook, a qualified reserves evaluator, in accordance with
the SPE's Canadian Oil and Gas Evaluation Handbook and in accordance with NI
51-101. The prospective resources disclosed herein have an effective date of 1
January 2023. Prospective resources are those quantities of gas, estimated as
of the given date, to be potentially recoverable from undiscovered
accumulations through future development projects. As prospective resources,
there is no certainty that any portion of the resources will be discovered.
The chance that an exploration project will result in a discovery is referred
to as the "chance of discovery" as defined by the management of the Company.
There is no certainty that it will be commercially viable to produce any
portion of the resources discussed herein; though any discovery that is
commercially viable would be tied back to the Company's pipeline in Morocco
and then connected to customers' facilities within 9 to 12 months of
discovery. Based upon the economic analysis undertaken on any discovery,
management has attributed an associated chance of development of 100%.
There are uncertainties associated with the volume estimates of the
prospective resources disclosed herein, due to the level of information
available on prospective resources, but ranges are defined based on data from
the Company's nearby existing analogous wells. Some of the risks and
uncertainties are outlined below:
· Petrophysical parameters of the sand/reservoir;
· Fluid composition, especially heavy end hydrocarbons;
· Accurate estimation of reservoir conditions (pressure and
temperature);
· Reservoir drive mechanism;
· Potential well deliverability; and
· The thickness and lateral extent of the reservoir section,
currently based on 3D seismic data.
"P50" means that there is at least a 50% probability that the quantities
actually recovered will equal or exceed the best estimate.
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