REG - SDX Energy PLC - Morocco Operations Update

SDX EnergyAnnouncement

18/09/2024 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240918:nRSR5953Ea&default-theme=true

RNS Number : 5953E  SDX Energy PLC  18 September 2024

 

 

18 September 2024

 

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

MOROCCO OPERATIONS UPDATE

 

Highlights

·    Completion of a large data reprocessing project that enables high
grading of leads to prospects to target productive resources more accurately.
This data reprocessing has increased SDX's confidence in the earlier-presented
47 Bcf gas play, of potentially significant value to the Company.

·    SDX plans to drill a stratigraphic well in Q4 2024 which, if
successful, will help to develop a drilling campaign for the 47 Bcf play in
early 2025.

·    The Company has identified its next two well targets, with total
unrisked gas in place of over 3 Bcf with a view to commence drilling these in
Q4 2024.

·    SDX is in discussions with its partner, the Moroccan state, to tie-in
a stranded gas well in the near-term, generating additional revenue for SDX.
Existence of other stranded gas wells in the Rharb basin may give rise to a
broader project to connect multiple wells, subject to agreement.

·    SDX is preparing the tender process for the acquisition of a further
150 km(2) of 3D seismic data - significantly increasing opportunities for more
gas discoveries in the north west of the Company's Rharb basin licence.

·    SDX has received two draft term sheets for structured financing,
backed by future gas revenues, to fund the planned drilling campaign in Q4
2024.

·    The Company is also in advanced negotiations with two multi-billion
dollar international companies for a deeper partnership in accelerating SDX's
gas exploration and production activities in Morocco.

 

Completion of 3D Seismic Merge and Reprocessing

SDX is pleased to announce the successful completion of the merging and
reprocessing of more than 650 square kilometres of 3D seismic data. In
February 2024, SDX awarded the project to Absolute Imaging, based in Calgary,
Alberta, Canada. Their task was to merge five contiguous legacy 3D seismic
surveys into a single unified survey, with consistent processing parameters.
The objectives of this intensive process were to enhance consistency across
the surveys, improve structural resolution, identify new drilling
opportunities, and de-risk previously identified prospects.

Initial reviews of the final data have confirmed that all the objectives have
been achieved, providing greater confidence and resolution across all the
surveys. The next phase will involve amplitude-versus-offset ("AVO") inversion
analysis to increase the reliability of using direct hydrocarbon indicators
("DHIs") for identifying and de-risking leads and prospects within the merged
seismic area. SDX expects to complete this process by the end of Q4 2024.

 

47 Bcf Clustered Amplitude Play Update

Recent reinterpretation of subsurface data, prior to merging and reprocessing
of the data, identified multiple clusters of densely packed amplitude DHIs.
Preliminary management estimates suggest that the largest cluster could
contain mean recoverable unrisked resources of 47 Bcf. Pending successful
evaluation, SDX plans to develop this new play type using multi-lateral
drilling techniques, commonly employed in the North American market and which
SDX's operational team has experience with.

At today's gas prices in Morocco, 47 Bcf of gas, once developed, would
represent a significantly valuable asset to the Company and a significant
multiple of current reserves. SDX sees large demand for gas from current and
future industrial offtakers in country and is encouraged by the discussions
that have been held with potential funding partners to develop these
opportunities.

With the newly merged and reprocessed seismic data, SDX has increased its
confidence in this play and has identified an exploratory drilling location.
This stratigraphic well will target multiple stacked anomalies to confirm the
presence of both reservoir and gas. It will also test deeper stratigraphic
leads, which, if successful, could unlock a new play type in the basin. SDX is
preparing to initiate the mandatory Environmental Impact Assessment ("EIA")
process, which is expected to be complete in early Q1 2025. Concurrently, the
conclusion of the AVO analysis will allow the company to rapidly proceed
towards full-field development of the clustered anomaly play in the first half
of 2025.

 

Two New Drilling Locations

SDX has identified two new drilling locations and is in the final stages of
securing land permits for each. The newly processed seismic data has been
integrated into the original interpretations, further de-risking both
prospects. These locations, designated as KSR-22 and OLME-A, have unrisked
mean gas in place estimates of 2.4 Bcf and 0.6 Bcf, respectively. SDX plans to
commence its next drilling campaign during Q4 2024.

 

Near-Term Production Opportunity

The Company is waiting for the approval from Office National des Hydrocarbures
et des Mines ("ONHYM") to tie-in an existing ONHYM-owned well to the Company's
pipeline, which would bring proven gas reserves online in the near term. SDX
would share the gas sales revenue with ONHYM. This would help maintain supply
of gas to customers and bring additional revenue to SDX, while the Company
focuses on progressing its drilling campaign, identifying new opportunities,
and developing the 47 Bcf clustered amplitude anomaly play. Other currently
stranded wells with gas-behind-pipe may also be tied into the Company's
pipeline, subject to further negotiations with ONHYM.

 

Temporary Reduction of Gas Supply to CITIC Dicastal Subsidiaries

The Company has directed CITIC Dicastal subsidiaries, including DIKA MOROCCO
AFRICA ("DMA") to temporarily reduce their gas consumption from 48,000 cubic
metres per day average during August 2024 to 10,000 cubic metres per day, as
part of a proactive effort to responsibly manage remaining resources and to
ensure maximum recovery from the field. The Company remains committed to
supplying gas at existing consumption volumes to other offtakers. Plans are in
place to restore historical supply levels to DMA as soon as new gas reserves
are assessed, either by connecting ONHYM's legacy wells with identified pay
zones or by drilling new wells.

 

Tendering for 150 km(2) of New 3D Seismic Data Acquisition

SDX is preparing a tender process to select a partner for the acquisition of
over 150 km(2) of 3D seismic data. The area selected for this new seismic
acquisition campaign is to the north-west of the existing newly merged seismic
surveys and has been strategically placed to allow SDX to tie-in to its
existing pipeline infrastructure, merge into the newly merged data set while
covering a thicker and prospective portion of the basin. SDX anticipates
finalising the tender and commencing the seismic acquisition in Q1 2025. The
EIA for this project commenced in July and is expected to be completed during
Q4 2024.

 

Progress on Structured Financing Arrangements and Strategic Partnership
Discussions

SDX has been in negotiations with two separate counterparties to secure
financing, secured by SDX's future gas revenues. SDX has draft term sheets
from both counterparties and the Company hopes to be able to finalise a
transaction in Q4 2024. This structured financing will be used to fund the
upcoming drilling of the new production well KSR-22 and potentially the
stratigraphic well, to significantly de-risk the 47 Bcf play.

A separate tranche of financing is being negotiated for the tie-in of the
ONHYM well, referred to above and should be in place also in Q4 2024.

SDX also continues to explore strategic partnership options with two
multi-billion dollar international companies to provide financing support in
the short-term, enabling SDX to drill an additional well within six months and
acquire the new 3D seismic data. In the longer-term, such a strategic
partnership may significantly accelerate and expand SDX's exploration and
production activities in Morocco.

As the sole independent gas producer in Morocco, SDX works closely with its
partner, ONHYM, in all aspects of development and production. SDX's gas is
sold to multiple offtakers in the Kenitra industrial area.

 

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 (mailto:sdx@inhouseir.com)

 Tel: +44 (0) 7881 650 813 / +44 (0) 20 3239 1669

 

Competent Persons Statement

In accordance with the AIM Rules for Companies, the technical information
contained in this announcement has been reviewed and approved by Mr. Aaron
LeBlanc, Head of Operations at SDX Energy Plc. Mr. LeBlanc is a qualified
person as defined in the London Stock Exchange's Guidance Note for Mining and
Oil and Gas Companies and has the necessary professional and technical
competencies to conduct and review petroleum operations. Mr. LeBlanc has a
Bachelor of Science Degree in Geology from the University of Calgary, an
Executive Master of Science in Finance from HEC Paris and is a professional
member of the AAPG. Mr. LeBlanc has 22 years of oil and gas industry
technical, operational and leadership experience.

 

Abbreviations

Bcf       billion cubic feet

 

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
(https://url.avanan.click/v2/___http:/www.sedar.com/___.YXAxZTpzaG9yZWNhcDphOm86MDEzNTAyODI2ZTNhZWY5ZWM4YWU4MGY3MmNiNjhiMDc6NjplNWE4OjE1YTQ5NzZmMjEyMWQ5MjgyZjhkZjI1YmQzNmU3YzE3ODdlMWMyY2MwM2E4YjBiYTJmY2M3ODk2ZWE5MmI3YTM6cDpU)
.

 

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
future drilling and seismic data acquisition should be regarded as
forward-looking information.

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDEANNXFSFLEFA