REG - SDX Energy PLC - RESULTS FOR THE 3 AND 6 MONTHS ENDED 30 JUNE 2022
18/08/2022 07:00
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RNS Number : 3956W SDX Energy PLC 18 August 2022
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18 August 2022
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
ANNOUNCES ITS FINANCIAL AND OPERATING RESULTS FOR THE THREE AND SIX MONTHS
ENDED 30 JUNE 2022
SDX Energy Plc (AIM: SDX), the EMEA-focused oil and gas company, is pleased to
announce its unaudited financial and operating results for the three and six
months ended 30 June 2022. All monetary values are expressed in United States
dollars net to the Company unless otherwise stated.
H1 2022 Key Highlights:
· Production of 3,724 boe/d, 2% higher than mid-point of recently
increased full year guidance of 3,480 - 3,795 boe/d
· Out of nine wells drilled across SDX's portfolio in the year to
date, six are now producing, one, MSD-27 has now completed drilling and
another, MSD-20, is drilling ahead. These two wells should add a further gross
400 to 500 bbl/d to our West Gharib production in the next four to six weeks.
The final well, MA-1X, is undergoing testing and analysis.
· EBITDAX of US$15.3 million and operating cash flow (before capex)
of US$10.4 million
· Capex US$12.2 million compared to full year guidance of US$25.5 -
27.0 million.
· Net Cash position of US$12.8 million (unaudited) as at 30 June
2022
· Carbon intensity of 3.8kg CO(2)e/boe in H1 2022, one of the
lowest rates in the industry
· Aleph Commodities Limited introduced as new cornerstone
shareholder. Assisting with strategic review, expansion and financing plans
with a focus on increased production, reserves and shareholder returns
Mark Reid, CEO of SDX, commented:
"The results for the last quarter have been both positive and encouraging with
our production from Morocco and South Disouq ahead of our guidance and the
drilling success seen at South Disouq earlier in the year already contributing
to cashflows. Whilst mechanical issues with a rig at West Gharib mean that
production is slightly lower than forecast, our success with the remainder of
the wells, including as announced today, MSD-27, means that we are now
achieving gross production of approximately 2,400-2,500 bbl/d from this
concession, and we are set to continue to add valuable barrels to our
production mix as the year progresses.
We believe that continued strong operational performance from the Company has
been overshadowed to some degree by corporate news in the past quarter, with
the proposed combination with Tenaz Energy ultimately not progressing and the
introduction onto the Company's register of a new group of shareholders led by
Aleph Commodities Limited. We are very pleased to welcome the Aleph
shareholders as long-term investors who are aligned with Management's strategy
of growth and increasing returns for all SDX stakeholders. We look forward to
updating the market further as we work with our shareholders to map out what
will be an exciting future for the Group."
Three and six months to 30 June 2022 Operations Highlights
· H1 2022 entitlement production of 3,724 boe/d was 2% higher than
recently increased 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 the mechanical issues with a previous rig that has
now been replaced. West Gharib production is expected to increase in the
second half of the year.
· The Company's operated assets recorded a carbon intensity of
3.8kg CO(2)e/boe in H1 2022 which is one of the lowest rates in the industry.
· 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 and are now contributing to production and
cash flow. The MA-1X gas discovery well is in the process of being evaluated
to determine a commercialisation strategy.
· In West Gharib the MSD-21, -25, -24 and -23 wells have been
successfully completed and are on production. Today, the Company is pleased to
announce the completion of drilling at the MSD-27 infill development well. The
well encountered 137.3 feet of good-quality, net oil pay sandstone, with an
average porosity of 22.8% in the Asl Formation reservoir. MSD-27 will now be
tied-in to the existing facilities and flow tested. Operations at MSD-20,
which had been temporarily halted due to the replacement of a rig, have now
recommenced and, assuming trouble free operations, the well should reach its
target horizon by mid-September. The development drilling campaign is aimed at
growing production to c.3,500 - 4,000 bbl/d by mid 2023
· In Morocco, the SAK-1 exploration well was spud on 6 August 2022
and is targeting the Guebbas Formation reservoir at around 1,108m MD (1,095m
TVDSS). The well will also fulfil the remaining commitment on the Lalla
Mimouna Sud Concession. SAK-1 is the first of a fully-funded, two-well
drilling campaign on the SDX Gharb Basin acreage which is expected to take
place during Q3 2022 with three further wells being considered for Q4'2022.
Three and six months to 30 June 2022 Corporate Highlights
· On 25 May 2022, it was announced that the boards of directors of
Tenaz Energy Corp. ("Tenaz") and SDX had reached agreement on the terms of a
recommended share-for-share combination pursuant to which Tenaz would acquire
the entire issued ordinary share capital of SDX (the "Combination") which was
proposed to be effected by means of a Scheme of Arrangement under Part 26 of
the Companies Act 2006 (the "Scheme"). On 30 June 2022, Tenaz announced the
introduction of a cash alternative that was made available under the terms of
the Combination, through which shareholders of SDX could elect to receive cash
instead of some or all of the share consideration to which they would
otherwise be entitled to under the terms of the Combination. On 29 July 2022,
SDX convened the Court Meeting and General Meeting in connection with the
Combination. The total votes in favour of the resolutions were 48.30% at the
Court Meeting and 54.27% at the General Meeting, which were below the minimum
threshold (75% of those shares voted) needed to approve the resolutions.
Accordingly, certain of the conditions of the Scheme were not satisfied and,
consequently, the Combination has been terminated and the Scheme has lapsed.
· During July 2022, a group of shareholders led by Aleph
Commodities Limited ("Aleph"), acquired 25.65% of the issued share capital of
the Company and in doing so purchased 18.72% of the Company previously owned
by Waha Capital PSJC. Aleph confirmed that it is assisting the Company with a
strategic review and expansion plans with a focus on increasing production,
reserves and shareholder returns.
· Aleph Commodities Limited is a global trading and investment
company, founded in 2018 by former executives of Deutsche Bank, Goldman Sachs,
JP Morgan, Engelhart Commodities Trading Partners, and Credit Suisse,
supported by several large US and European family offices who are also
shareholders of Aleph.
Three and six months to 30 June 2022 Financial Highlights
Three months ended Six months ended
30 June 30 June
US$ million, except per unit amounts 2022 2021 2022 2021
Net revenues((1)) 11.1 13.7 22.3 27.1
Netback((1)(3)) 8.8 11.4 17.9 22.1
Net realised average oil service fees - US$/barrel 88.67 54.61 83.45 51.10
Net realised average Morocco gas price - US$/Mcf 10.60 11.49 10.86 11.40
Net realised South Disouq gas price - US$/Mcf((2)) 2.85 2.83 2.85 2.85
Netback - US$/boe 20.82 20.81 20.97 20.61
EBITDAX((1)(3)) 7.1 10.1 15.3 19.9
Exploration & evaluation expense ("E&E") (0.3) (10.6) (0.5) (10.9)
Depletion, depreciation, and amortisation ("DD&A") (5.1) (7.5) (10.4) (14.9)
Total comprehensive loss((4)) (0.6) (10.7) (1.2) (10.1)
Capital expenditure 8.9 11.9 12.2 15.8
Net cash generated from operating activities 3.8 8.8 10.4 14.9
Net cash and cash equivalents 12.8 9.1 12.8 9.1
((1) ) Net revenues, Netback and EBITDAX for six months ended
30 June 2022 and 2021 includes US$2.3 million and US$2.6 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 (respectively US$1.1 million and US$1.3 million for the three months
ended 30 June 2022 and 2021).
((2) ) South Disouq gas is sold to the Egyptian State at a
fixed price of US$2.65 Mmbtu, which equates to approximately US$2.85/Mcf.
During the three months ended 30 June 2021, a small quantity of
off-specification gas was produced, which reduced the realised price for this
period to US$2.83/Mcf.
((3) ) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
((4) ) For the three and six months ended 30 June 2022 total
comprehensive loss is stated before minority interest. Total comprehensive
loss attributable to SDX shareholders for the three and six months ended 30
June 2022 is US$0.6 million and US$0.8 million, respectively.
· H1 2022 Netback was US$17.9 million, 19% lower than the same
period in 2021. Netback contribution from South Disouq was US$7.4 million (H1
2021: US$7.8 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$1.0 million compared to
the same period in 2021 due to the increase in the realised oil service fee,
partly offset by lower production. Morocco Netback was lower in H1 2022 by
US$4.8 million compared to the same period in 2021 due to lower production
following the Company's decision not to immediately renew a customer contract,
as well as slightly lower realised pricing due to the weakening of the
Moroccan Dirham against the US Dollar.
· H1 2022 EBITDAX of US$15.3 million was 23% lower than the same
period in 2021 of US$19.9 million due to lower Netback, as described above.
· H1 2022 the depletion, depreciation and amortisation ("DD&A")
charge of US$10.4 million was lower than the US$14.9 million for the same
period in 2021 due to lower production in Morocco and a lower depreciable
asset base in South Disouq following the impairment recognised at year-end
2021.
· H1 2022 operating cash flow (before capex) of US$10.4 million,
was lower than the same period in 2021 of US$14.9 million, primarily due to
prepayments made in June 2022 and income taxes paid during Q2 2022.
· Capex of US$12.2 million, reflects:
o US$7.4 million for the three-well drilling campaign at South Disouq split
between: US$2.0 million for the drilling, completion, testing and tie in of
the SD-5X well, US$3.0 million for the drilling, completion and tie in of the
SD-12_East well and US$2.4 million for the drilling, completion and testing of
the MA-1X well. In addition, US$0.3 million has been spent on a workover of
SD-3X to replace the production tubing;
o US$2.4 million of pre-drilling and preparation costs associated with the
re-commencement of the Moroccan drilling campaign, US$0.3 million on the SAH-4
well recompletion and US$0.3 million of infrastructure works; and
o US$1.5 million of West Gharib drilling costs across the MSD-20, -21, -23,
-24, and -25 wells
· Liquidity: The Company's net cash position as at 30 June 2022 was
US$12.8 million, with cash balances of US$15.3 million offset by US$2.5
million drawn debt from the EBRD facility. As a result of various geopolitical
factors, US dollar transfers by the Central Bank of Egypt have been delayed
resulting in the need to draw the EBRD facility to pay head office G&A and
certain US$ dominated operational expenses. Under the existing facility with
the EBRD, US$3.2 million of additional undrawn lines remain available to the
Company.
· Together with cash generated from operations, management believes
the Company is fully funded for all its stated objectives in 2022.
H1 2022 Performance vs 2022 Guidance
Production
· Average entitlement production as at 30 June 2022 of 3,724 boe/d,
which was 2% higher than mid-point 2022 market guidance of 3,638 boe/d.
Gross production SDX entitlement production (boe/d)
Asset Guidance - 12 months ended 31 December 2022 Actual - 6 months ended 30 June 2022 Guidance - 12 months ended 31 December 2022 Actual - 6 months ended 30 June 2022 Actual - 6 months ended 30 June 2021
Core assets
South Disouq - WI 36.9% & 67.0%((1)) 38 - 40 MMscfe/d 38.7 MMscfe/d 2,500 - 2,700((2)) 2,710 4,422((3))
West Gharib - WI 50% 2,000 - 2,450 bbl/d 1,976 bbl/d 380 - 470 376 516
Morocco - WI 75% 4.8 - 5.0 MMscf/d 5.1 MMscf/d 600 - 625 638 993
Total 3,480 - 3,795 3,724 5,931
((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) ) 30 June 2021 South Disouq entitlement production is
shown at pre-disposal working interest of 55%/100%.
o South Disouq: During the first half of 2022, the existing wells continued
to exhibit natural decline and expected sand and water production, albeit this
was partly offset by contribution from the three wells (IY-2X, SD-5X and
SD-12_East) that came into production after 30 June 2021. 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, several well workovers and was recently updated for the successful
drilling of SD-5X. The MA-1X gas discovery well is in the process of being
evaluated to determine a commercialisation strategy.
o West Gharib: The existing wellstock at the asset continued to produce
steadily, albeit exhibiting natural decline as expected, partly offset by
contribution from the recently-drilled three wells (MSD-21, MSD-24 and MSD-25)
and successful well workovers. The development drilling campaign will arrest
the asset's natural decline, with new wells beginning to grow production
during the second half of the year and into 2023.
o Morocco: H1 2022 saw strong demand from the customer portfolio in Morocco,
which is the reason that the Company is currently exceeding guidance. 2022
production guidance is lower than 2021 production as the Company decided not
to immediately renew a five-year customer contract that expired on 31 December
2021 until the Company has better visibility on future gas supply and pricing
to support the full term of a new contract. The Company is exploring several
options for re-entering into discussions with this customer.
Capex
· 2022 capex guidance range of US$25.5-27.0 million is fully funded
and predominantly relates to one appraisal and two exploration wells in South
Disouq, up to eight new wells and facilities upgrades in West Gharib, and up
to five new wells in Morocco.
Asset Guidance - 12 months ended 31 December 2022 Actual - 6 months ended 30 June 2022
South Disouq - WI 36.9% & 67.0%((1)) US$9.0 - 9.5 million((2)) US$7.7 million((3))
West Gharib - WI 50% US$4.5 - 5.0 million US$1.5 million
Morocco - WI 75% US$12.5 - 13.0 million US$3.0 million
Total US$25.5 - 27.0 million US$12.2 million
((1) ) After completion of the South Disouq disposal with effect from
1 February 2022.
((2) ) As the legal entity that holds the South Disouq asset is 100%
consolidated in the financial statements of the Company, capex guidance is
gross of minority interest. Net of minority interest, capex guidance is US$7.5
- 8.0 million.
((3) ) Includes US$0.3 million of decommissioning provisions. Net of
minority interest, SDX's share of capex for the 6 months ended 30 June 2022
was US$6.3 million
· The actual and anticipated timings of planned key capex
activities are outlined below:
Asset Activity 2022 Timing
South Disouq SD-5X (Warda) exploration well Q1((1))
SD-12_East appraisal well Q2((1))
MA-1X (Mohsen) exploration well Q2((1))
SD-3X Tubing replacement Q3((2))
SD-3X workover (AM-I) Q3
SD-4X workover Q3
SD-3X workover (KES) Q4
Morocco Two well drilling campaign Q3
SAH-4 workover Q2((1))
Three well drilling campaign Q4'22-Q2'23
West Gharib Eight development wells Q1((1))-Q4
Water injection well and facilities upgrades Q3-Q4
((1) ) Activity completed
((2) ) Activity completed post period-end.
o South Disouq: One appraisal well, SD-12_East, and two exploration wells,
SD-5X (Warda) and MA-1X (Mohsen), have been drilled during H1 2022. 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. The second well in the campaign, SD-12_East (Ibn Yunus North
development lease) was successfully drilled and brought onto production just
after period end on 1 July 2022 and is currently producing at around 7
MMscf/d, with no condensate. 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 is currently being evaluated to determine a commercialisation strategy.
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.
o West Gharib: In early January production commenced from MSD-21, the first
well in a 13-well campaign that commenced in Q4 2021 and will complete in
2023. The second well of the infill drilling campaign, the MSD-25, reached TD
on 22 February 2022, encountering 85ft of oil pay sand. MSD-25 was then
completed, tied-in and brought on-line. Following MSD-25, the drilling
campaign continued with MSD-20, MSD-24 and MSD-23. MSD-24 encountered 86.5ft
of net oil pay sand, MSD-23 encountered 131.5ft of net oil pay. Both wells
have been tied-in and brought on-line. MSD-20 spudded on 5 April 2022 but
encountered technical difficulties, but at period end operations were
continuing at this well. The fifth well, MSD-27, spud on 22 July 2022 and
today the Company announced that MSD-27 encountered the primary top Asl
Formation reservoir at 3,927 feet MD (3,119 feet TVDSS) and reached a TD of
4,412 feet MD on 7 August. The well encountered 137.3 feet of good-quality,
net oil pay sandstone, with an average porosity of 22.8% in the Asl Formation
reservoir. MSD-27 will now be tied-in to the existing facilities and flow
tested. A total of eleven well workovers across the concession were completed
during H1 2022 relating to a variety of operations (sand clean-out, tubing
replacement, pump replacement, recompletion to shallower reservoirs).
o Morocco: The Company concentrated on maximising recovery from its existing
well stock, utilising the two compressors we have in the field. In April 2022,
the SAH-4 well was worked over and recompleted to the Upper Guebbas interval
and this well is now contributing to production. Much of H1 2022 was spent on
planning and preparing for the 2022 drilling campaign and for well workovers
to access behind-pipe opportunities. In the second half of 2022, SDX will be
conducting a two well drilling campaign targeting around a gross unrisked 1.1
bcf EUR. Post period end, the drilling rig was mobilised to the first well
location, SAK-1, with a planned spud in August. The SAK-1 well, if successful,
will open a new area for exploration and exploitation in future drilling
campaigns. After the two wells, the rig will go to another operator before
returning to SDX at the end of 2022, to potentially drill a third well before
the year end. Workovers of existing wells, including re-perforation and
sliding sleeve operations to exploit behind-pipe reserves, will continue
throughout 2022, with operations to start in August 2022 on the KSR-8 well
(sliding sleeve operation), followed by KSR-10 and, depending on results,
KSR-11 and then SAH-W1.
H1 2022 ESG metrics
· The Company's operated assets recorded a carbon intensity of
3.8kg CO2e/boe in 2022, which is one of the lowest rates in the industry.
· Scope 1 greenhouse gas emissions at operated assets were 5,100
tons of CO(2)e. Scope 3 greenhouse gas emissions in Morocco were 50,100 tons
of CO(2)e, which is approximately 25,400 tons of CO(2)e less than using
alternative heavy fuel oil.
· There were no Lost Time Injuries at any of the Company's assets
during H1 2022.
· 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.
· The Company continues to adopt high standards of Governance
through its adherence to the QCA Code on Corporate Governance.
Six months to 30 June 2022 Financial Update
· H1 2022 Netback was US$17.9 million, US$4.2 million (19%) lower
than the Netback of US$22.1 million for H1 2021, driven by:
o Net revenue decrease of US$4.8 million compared to the same period in 2021
due to:
o US$4.8 million lower revenue in Morocco compared to the same period in
2021 due to the non-renewal of an expired customer contract and slightly lower
realised pricing due to adverse FX movement;
o US$0.9 million lower South Disouq revenue compared to the same period in
2021, due to lower production partly offset by improved condensate pricing;
and
o US$0.9 million higher revenue at West Gharib compared to the same period
in 2021 due to higher realised service fees (2022: US$83.45/bbl, 2021:
US$51.10/bbl), partly offset by lower production (2022: 376 bbl/d, 2021: 516
bbl/d).
o Operating costs decreased by US$0.6 million from the prior year due to
lower production at South Disouq and West Gharib.
· H1 2022 EBITDAX was US$15.3 million, US$4.6 million (23%) lower
than EBITDAX of US$19.9 million for H1 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$1.2 million for H1 2022 are:
o US$17.9 million Netback;
o US$0.5 million of E&E expense which relates to ongoing new venture
activity (predominantly internal management time);
o US$10.4 million of DD&A expense reflects lower production across all
assets and a lower depreciable asset base at South Disouq following the
impairment recorded during Q4 2021;
o US$2.0 million of ongoing G&A expense;
o US$0.8 million of transaction costs
o US$2.2 of FX loss following the devaluation of the Egyptian Pound during
the first six months of the year; and
o US$3.2 million of corporate tax, being Egyptian corporate income tax
(South Disouq: US$2.3 million, West Gharib: US$0.8 million) and corporate
social tax in Morocco (US$0.1 million).
Operating cash flow (before capex)
· H1 2022 operating cash flow (before capex) of US$10.4 million,
was lower than the same period in 2021 of US$14.9 million, primarily due to
prepayments made in June 2022 and income taxes paid during Q2 2022.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Prior Quarter Three months ended Six months ended
30 June((3)) 30 June
$000s except per unit amounts 2022 (unaudited) 2021 (unaudited) 2022 (unaudited) 2021 (unaudited)
FINANCIAL
Net revenues 11,235 11,098 13,725 22,333 27,108
Operating costs (2,071) (2,321) (2,363) (4,392) (4,979)
Netback ((1)) 9,164 8,777 11,362 17,941 22,129
EBITDAX ((1)) 8,212 7,062 10,103 15,274 19,914
Total comprehensive loss (579) (624) (10,699) (1,203) (10,086)
Total comprehensive loss attributable to SDX shareholders (149) (612) (10,699) (671) (10,086)
Net loss per share - basic $(0.001) $(0.003) $(0.052) $(0.004) $(0.049)
Cash, end of period 12,145 15,272 9,108 15,272 9,108
Capital expenditures 3,244 8,929 11,875 12,173 15,839
Total assets 98,916 103,607 114,645 103,607 114,645
Shareholders' equity 77,641 77,073 86,430 77,073 86,430
Common shares outstanding (000's) 205,378 204,563 205,378 205,563 205,378
OPERATIONAL
West Gharib production service fee (bbl/d) 388 363 490 376 516
South Disouq gas sales (boe/d) ((2)) 3,610 3,460 4,313 3,534 4,204
Morocco gas sales (boe/d) 640 635 964 638 993
Other products sales (boe/d) ((2)) 183 175 235 179 218
Total sales volumes (boe/d) ((2)) 4,821 4,633 6,002 4,727 5,931
Realised West Gharib service fee (US$/bbl) $78,51 $88.66 $54.61 $83.45 $51.10
Realised South Disouq gas price (US$/Mcf) $2.85 $2.85 $2.83 $2.85 $2.85
Realised Morocco gas price (US$/Mcf) $11.11 $10.60 $11.49 $10.86 $11.40
Royalties ($/boe) $5.56 $6.17 $5.02 $5.86 $4.93
Operating costs ($/boe) $4.77 $5.50 $4.33 $5.13 $4.64
Netback ($/boe) ((1)) $21.12 $20.82 $20.81 $20.97 $20.61
(1) Refer to the "Non-IFRS Measures" section of this release below for
details of Netback and EBITDAX.
(2) Sales volumes from the South Disouq concession have been presented gross
of minority interest. For the period 1 February (transaction effective date)
to 30 June 2022, the share of volumes assigned to the Company's minority
interest holder equals 1,003 boe/d and therefore the Company's share of South
Disouq volumes (incl. other products) equals 2,710 boe/d. Net of minority
interest total sales volumes are 3,724 boe/d.
Consolidated Balance Sheet (unaudited)
(US$'000s) As at 30 June 2022 As at 31 December 2021
Assets
Cash and cash equivalents 15,272 10,562
Trade and other receivables 17,991 19,942
Inventory 7,591 6,747
Current assets 40,854 37,251
Investments 3,375 3,593
Property, plant and equipment 31,589 34,593
Exploration and evaluation assets 26,647 21,611
Right-of-use assets 1,142 1,367
Non-current assets 62,753 61,164
Total assets 103,607 98,415
Liabilities
Trade and other payables 15,542 17,157
Decommissioning liability 22
-
Current income taxes 906 1,150
Borrowings 2,500 -
Lease liability 381 439
Current liabilities 19,329 18,768
Decommissioning liability 6,117 5,747
Deferred income taxes 290 290
Lease liability 798 956
Non-current liabilities 7,205 6,993
Total liabilities 26,534 25,761
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment reserve 7,658 7,536
Accumulated other comprehensive loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings 22,773 26,270
Non-controlling interest 7,794 -
Total equity 77,073 72,654
Equity and liabilities 103,607 98,415
Consolidated Statement of Comprehensive Income (unaudited)
Three months ended Six months ended
30 June 30 June
(US$'000s) 2022 2021 2022 2021
Revenue, net of royalties 11,098 13,725 22,333 27,108
Direct operating expense (2,321) (2,363) (4,392) (4,979))
Gross profit 8,777 11,362 17,941 22,129
Exploration and evaluation expense (285) (10,612) (534) (10,880)
Depletion, depreciation and amortisation (5,091) (7,521) (10,366) (14,945)
Share-based compensation (56) (50) (122) (313)
Share of profit from joint venture 141 108 262 223
General and administrative expenses
- Ongoing general and administrative expenses (1,035) (1,317) (2,042) (2,264)
- Transaction costs (765) - (765) -
Operating income/(loss) 1,686 (8,030) 4,374 (5,911)
Finance costs (97) (334) (188) (276)
Foreign exchange loss (652) (70) (2,238) (162)
Income/(loss)e before income taxes 937 (8,253) 1,948 (6,407)
Current income tax expense (1,561) (2,446) (3,151) (3,679)
Loss and total comprehensive loss for the period (624) (10,699) (1,203) (10,086)
Attributable to
SDX shareholders (612) (10,699) (761) (10,086)
Non-controlling interests (12) - (442) -
Net loss, attributable to SDX shareholders, per share
Basic $(0.003) $(0.052) $(0.004) $(0.049)
Diluted $(0.003) $(0.052) $(0.004) $(0.049)
Consolidated Statement of Changes in Equity (unaudited)
Six months ended 30 June
(US$'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 122 174
Balance, end of period 7,658 7,443
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) -
Total comprehensive loss (761) (10,086)
Balance, end of period 22,773 40,139
NCI
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Loss for the period (442) -
Balance, end of period 22,773 -
Total equity 77,073 86,430
Consolidated Statement of Cash Flows (unaudited)
Three months ended 30 June Six months ended 30 June
(US$'000s) 2022 2021 2022 2021
Cash flows generated from/(used in) operating activities
Income/(loss) before income taxes 937 (8,253) 1,948 (6,407)
Adjustments for:
Depletion, depreciation and amortisation 5,091 7,521 10,366 14,945
Exploration and evaluation expense - 10,313 - 10,313
Finance expense 97 153 188 334
Share-based compensation charge 56 50 122 174
Foreign exchange loss/(gain) 652 (137) 2,238 (74)
Tax paid by state (1,137) (1,338) (2,302) (2,566)
Share of profit from joint venture (141) (108) (262) (223)
Operating cash flow before working capital movements 5,555 8,201 12,298 16,496
(Increase)/decrease in trade and other receivables (120) 1,603 2,090 (273)
Decrease in trade and other payables (840) (1,057) (2,053) (763)
Payments for inventory 11 73 (1,097) (512)
Payments for decommissioning (13) - (35) -
Cash generated from operating activities 4,593 8,820 11,203 14,948
Income taxes paid (841) - (841) -
Net cash generated from operating activities 3,752 8,820 10,362 14,948
Cash flows generated from/(used in) investing activities:
Property, plant and equipment expenditures (3,891) (7,409) (6,175) (10,094)
Exploration and evaluation expenditures (1,768) (1,907) (5,369) (5,282)
Proceeds on part disposal of subsidiary 3,603 - 5,500 -
Dividends received 311 - 311 -
Net cash used in investing activities (1,745) (9,316) (5,733) (15,376)
Cash flows generated from/(used in) financing activities:
Net proceeds from loans and borrowings 2,500 - 2,500 -
Payments of lease liabilities (127) (229) (261) (503)
Finance costs paid (11) (40) (17) (95)
Net cash generated from/(used in) financing activities 2,362 (269) 2,222 (598)
Increase/(decrease) in cash and cash equivalents 4,369 (765) 6,851 (1,026)
Effect of foreign exchange on cash and cash equivalents (1,242) 139 (2,141) 78
Cash and cash equivalents, beginning of period 12,145 9,734 10,562 10,056
Cash and cash equivalents, end of period 15,272 9,108 15,272 9,108
About SDX
SDX is an international oil and gas exploration, production, and development
company, headquartered in London, United Kingdom, with a principal focus on
EMEA. 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 or the Company's filed documents at 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 Dr 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
Mark Reid
Chief Executive Officer
Tel: +44 203 219 5640
Stifel Nicolaus Europe Limited (Nominated Adviser and Broker)
Callum Stewart
Jason Grossman
Ashton Clanfield
Tel: +44 (0) 20 7710 7600
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/d" barrels of oil equivalent per day
"CO(2)e/boe" carbon dioxide equivalent per barrels of oil equivalent
"Mcf" thousands of cubic feet
"MD" measured depth
"MMscf/d" million standard cubic feet per day
"MMscfe/d" million standard cubic feet equivalent per day
"P50" means that there is at least a 50% probability that the quantities actually
recovered will equal or exceed the best estimate.
"TD" total depth
"TVDSS" Total vertical depth sub-sea
"2P Reserves" 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
the formulation of the Company's strategic review and expansion plans, the
Company's production and capex guidance; liquidity and sources of cash flows
for the remainder of 2022, and the Company's future drilling developments and
results, should 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
2021, 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.
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 adjusted 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 2022. 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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