REG - SDX Energy PLC - RESULTS FOR THE 3 AND 9 MONTHS TO 30 SEPT 2022
17/11/2022 07:01
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RNS Number : 6831G SDX Energy PLC 17 November 2022
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17 November 2022
SDX ENERGY PLC ("SDX", the "Company" or the "Group")
FINANCIAL AND OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED 30
SEPTEMBER 2022
SDX Energy Plc (AIM: SDX), announces its unaudited financial and operating
results for the three and nine months ended 30 September 2022. All monetary
values are expressed in United States dollars net to the Company unless
otherwise stated.
YTD 9 months 2022 key highlights:
· Production of 512 bbls/d and 19.3mmscf/d (3,729 boe/d), 3% higher
than mid-point full year guidance of 3,480 - 3,795 boe/d.
· EBITDAX of US$21.6 million and operating cash flow (before capex)
of US$15.0 million.
· Out of the 14 wells completed across SDX's portfolio in the year
to date, eight were producing as at 30 September 2022, two were connected to
production post period-end and another two will be connected by the end of
November 2022.
· Capex US$22.4 million compared to revised full year guidance of
US$26.5 - 28.0 million.
· Net Cash position of US$9.4 million (unaudited) as at 30
September 2022.
· Aleph Commodities and a group of investors acquired a strategic
stake in the Company with a view to provide support and financing for growth
initiatives.
· Carbon intensity of 3.8kg CO(2)e/boe YTD'22 at operated assets.
Mark Reid, CEO of SDX, commented:
"SDX's business continued to generate strong EBITDAX and operating cash flow
for the nine months to date. We have also successfully drilled thirteen
development and exploration wells across our three assets and are delivering
on our production guidance. Due to higher than expected standby costs for
equipment needed to maintain facility operations, we have increased our Capex
guidance for the year.
During the quarter Aleph Commodities along with a group of strategic investors
were warmly welcomed into our Company. Aleph has stated that it is their
intention to further support the Company with its growth initiatives and at a
time of difficult capital markets, this provides the Company with a
significant differentiator versus its peers. SDX also underwent some changes
to our Board and Senior Management structure during the period with Krzysztof
Zielicki joining as a Non-Executive Director and Yvon Quillien joining as our
new Chief Operating Officer and, post-period, Jay Bhattacherjee joined as
Non-Executive Chairman. I welcome our new Board members and look forward to
the upcoming period in what is an exciting time for the Company's future
growth"
Three and nine months to 30 September 2022 Operations Highlights
· Entitlement production for the nine months ended 30 September
2022 of 3,729 boe/d was 3% higher than 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.
· The Company's operated assets recorded a carbon intensity of
3.8kg CO(2)e/boe during the first nine months of 2022.
· 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 cash flow. The
MA-1X gas discovery well is in the process of being evaluated to determine a
commercialisation strategy.
· In West Gharib, six wells have been successfully completed and
are on production. Post period-end the next two wells in the campaign, MSD-28
and MSD-22, were drilled and reached TD on 14 October 2022 and 25 October 2022
respectively. MSD-28 encountered 161ft of net oil pay and MSD-22 103ft of net
oil pay. Both wells are expected to be on production in Q4 2022.
· In Morocco, both wells (SAK-1 and KSR-20) in the two-well
drilling campaign during Q3 2022 discovered gas. SAK-1 was subsequently tied
into the Company infrastructure with production commenced post period-end.
KSR-20 is currently undergoing testing and will be brought on production in Q4
2022. During Q3, several workovers were performed to access behind-pipe
reserves.
Three and nine months to 30 September 2022 Corporate Highlights
· During the quarter a number of Board changes were announced. The
Board is now led by Jay Bhattacherjee as Non-Executive Chairman, with his
fellow directors being Tim Linacre, Mark Reid and Krzysztof Zielicki.
Three and nine months to 30 September 2022 Financial Highlights
Three months ended Nine months ended
30 September 30 September
US$ million, except per unit amounts 2022 2021 2022 2021
Net revenues((1)) 11.1 12.9 33.4 40.0
Netback((1)(3)) 8.5 10.5 26.4 32.6
Net realised average oil service fees - US$/barrel 77.81 57.90 81.42 52.98
Net realised average Morocco gas price - US$/Mcf 9.91 11.39 10.56 11.40
Net realised South Disouq gas price - US$/Mcf((2)) 2.85 2.85 2.85 2.85
Netback - US$/boe 18.15 19.53 19.97 20.25
EBITDAX((1)(3)) 6.4 9.8 21.6 29.7
Exploration & evaluation expense ("E&E") (0.3) (1.8) (0.8) (12.7)
Depletion, depreciation, and amortisation ("DD&A") (4.9) (8.4) (15.3) (23.3)
Total comprehensive loss((4)) (1.2) (2.0) (2.4) (12.1)
Capital expenditure 10.3 3.8 22.4 19.6
Net cash generated from operating activities 4.6 7.7 15.0 22.6
Net cash and cash equivalents 9.4 9.8 9.4 9.8
((1) ) Net revenues, Netback and EBITDAX for nine months ended
30 September 2022 and 2021 includes US$3.6 million and US$3.9 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$1.2 million and US$1.3 million for the
three months ended 30 September 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.
((3) ) Refer to the "Non-IFRS Measures" section of this release
below for details of Netback and EBITDAX.
((4) ) For the three and nine months ended 30 September 2022
total comprehensive loss is stated before minority interest. Total
comprehensive loss attributable to SDX shareholders for the three and nine
months ended 30 September 2022 is US$1.3 million and US$2.0 million,
respectively.
· Netback for the nine months to 30 September 2022 was US$26.4
million, 19% lower than the same period in 2021. Netback contribution from
South Disouq was US$11.2 million (YTD'21: US$12.1 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$1.8 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 the nine months to 30 September 2022 by US$7.1
million compared to the same period in 2021 due to lower production. Morocco
Netback was further impacted by lower realised pricing due to the weakening of
the Moroccan Dirham against the US Dollar.
· EBITDAX for the nine months to 30 September 2022 of US$21.6
million was 27% lower than the same period in 2021 of US$29.7 million due to
lower Netback, as described above.
· YTD'22 the depletion, depreciation and amortisation ("DD&A")
charge of US$15.3 million was lower than the US$23.3 million for the same
period in 2021 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 during H2 2021 and impairment recognised at year-end
2021.
· YTD'22 operating cash flow (before capex) of US$15.0 million, was
lower than the same period in 2021 of US$22.6 million, mainly due to lower
EBITDAX as explained above.
· Capex of US$22.4 million, reflects:
o US$8.7 million for the three-well drilling campaign at South Disouq
split between: US$1.9 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$2.7 million for the drilling, completion and
testing of the MA-1X well. In addition, US$0.8 million has been spent on
several workovers and US$0.2 million on other exploration costs;
o US$11.5 million in Morocco covering; pre-drilling and standby
expenditure for the recommencement of the Morocco drilling campaign (US$2.5
million), the drilling and completion costs for SAK-1 (US$4.3 million) and
KSR-20 (US$2.1 million), US$1.5 million of additional expenditure on the
KSR-19 well and US$1.1 million on various workovers and infrastructure works;
and
o US$2.2 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$9.4 million, with cash balances of US$14.9 million offset by
US$5.5 million drawn debt from the European Bank of Reconstruction and
Development ("EBRD") credit facility. As a result of various geopolitical
factors, US dollar transfers by the Central Bank of Egypt have been delayed
resulting in the need to draw the EBRD facility to pay head office general and
administrative costs and certain US$ denominated operational expenses. It has
been possible recently to repatriate funds, albeit this has incurred FX
trading costs. Under the existing facility with the EBRD, US$0.2 million of
additional undrawn lines remain available to the Company.
YTD'22 Performance vs 2022 Guidance
Production
· Average entitlement production as at 30 September 2022 of 3,729
boe/d, which was 3% 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 - 9 months ended 30 September 2022 Guidance - 12 months ended 31 December 2022 Actual - 9 months ended 30 September 2022 Actual - 9 months ended 30 September 2021
Core assets
South Disouq - WI 36.9% & 67.0%((1)) 38 - 40 MMscfe/d 38.7 MMscfe/d 2,500 - 2,700((2)) 2,724 4,477((3))
West Gharib - WI 50% 2,000 - 2,450 bbl/d 2,032 bbl/d 380 - 470 389 473
Morocco - WI 75% 4.8 - 5.0 MMscf/d 4.9 MMscf/d 600 - 625 616 951
Total 3,480 - 3,795 3,729 5,901
((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 September 2021 South Disouq entitlement production
is shown at pre-disposal working interest of 55%/100%.
o South Disouq: During the first nine months 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 two wells (SD-5X and
SD-12_East) that came into production after 30 September 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 and SD-5X and several well workovers. 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 eight wells of which six wells were on
production as at 30 September 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 development
drilling campaign will arrest the asset's natural decline, with new wells
beginning to grow production into 2023.
o Morocco: The first nine months of 2022 saw strong demand from the customer
portfolio, although consumption in the third quarter was lower compared to
consumption during the first six months of the year due to summer/EID demand
slowdown. 2022 production guidance is 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.
Capex
· The Company is updating its 2022 capex guidance to US$26.5-28.0
million (previously US$25.5-27.0 million) as it has incurred higher than
anticipated standby charges for drilling equipment in Morocco. It was
necessary to incur these charges to ensure appropriate operational flexibility
for the two-well campaign.
· 2022 capex 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 two new wells and a number of
workovers in Morocco.
· The remaining capex activities for 2022 includes two wells in
West Gharib, a well workover in South Disouq and completion and the connection
of one well in Morocco.
Asset Guidance - 12 months ended 31 December 2022 Actual - 9 months ended 30 September 2022
South Disouq - WI 36.9% & 67.0%((1)) US$9.0 - 9.5 million((2)) US$8.7 million((3))
West Gharib - WI 50% US$4.5 - 5.0 million US$2.2 million
Morocco - WI 75% US$13.5 - 14.0 million US$11.5 million
Total US$26.5 - 28.0 million US$22.4 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$0.7 million of decommissioning provisions. Net of
minority interest, SDX's share of capex for the 9 months ended 30 September
2022 was US$6.3 million.
o South Disouq: One appraisal well, SD-12_East, and two exploration wells,
SD-5X (Warda) and MA-1X (Mohsen), have been drilled during the first nine
months to 30 September 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 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: The development drilling campaign which saw three wells being
drilled completed, tied-in and brought on-line during the first half of the
year continued throughout the third quarter. The MSD-23 well, which spudded in
Q2, reached TD on 11 July 2022 and encountered 131.5ft of good quality net-oil
pay. MSD-23 also found an undepleted oil sand above the main Meseda reservoir
interval, which represents a new reservoir that will be exploited at a future
date. MSD-27, spudded on 22 July 2022 and reached TD on 7 August 2022,
encountering 137.3ft of good-quality, net oil pay sandstone. The MSD-20 well,
which spud 5 April 2022 but encountered technical difficulties, was
side-tracked and ultimately reached TD on 23 August 2022, finding 58.5ft of
good quality net-oil pay. The Rabul Field exploration well, Rabul Deep-1, spud
21 August 2022 and reached TD in the Matulla Formation on 17 September 2022.
The well did not encounter hydrocarbons and is likely to be completed as a
water injector. A total of 10 well workovers across the concession were
undertaken during the third quarter of 2022, relating to a variety of
operations (sand clean-out, tubing replacement, pump replacement, and
recompletions to shallower reservoir sections).
o Morocco: The Company concentrated on maximising recovery from its existing
well stock, utilising its two compressors. During the third quarter, 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 production
commended post period-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 is currently
undergoing testing and will be brought on production in Q4 2022. In addition
to the drilling campaign, workovers were performed to access behind-pipe
reserves in a number of wells.
YTD'22 ESG metrics
· The Company's operated assets recorded a carbon intensity of
3.8kg CO2e/boe in 2022.
· Scope 1 greenhouse gas emissions at operated assets were 7,500
tons of CO(2)e. Scope 3 greenhouse gas emissions in Morocco were 70,800 tons
of CO(2)e, which is approximately 35,900 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
YTD'22.
· 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.
Nine months to 30 September 2022 Financial Update
· Netback for the nine months to 30 September 2022 was US$26.4
million, US$6.2 million (19%) lower than the Netback of US$32.6 million for
the nine months to 30 September 2021, driven by:
o Net revenue decrease of US$6.6 million compared to the same period in 2021
due to:
o US$7.0 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$1.4 million lower South Disouq revenue compared to 2021, due to lower
production partly offset by improved condensate pricing; and
o US$1.8 million higher revenue at West Gharib compared to 2021 due to
higher realised service fees (2022: US$81.42/bbl, 2021: US$52.98/bbl), partly
offset by lower production (2022: 389 bbl/d, 2021: 473 bbl/d).
o Operating costs decreased by US$0.4 million from the prior year due to
lower production at South Disouq and West Gharib.
· EBITDAX for the nine months to 30 September 2022 was US$21.6
million, US$8.1 million (27%) lower than EBITDAX of US$29.7 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$2.4 million for YTD'22 are:
o US$26.4 million Netback
o US$0.8 million of E&E expense which relates to ongoing new venture
activity (predominantly internal management time)
o US$15.3 million of DD&A expense
o US$3.4 million of ongoing G&A expense
o US$1.7 million of transaction costs
o US$2.8 million of FX loss mainly due to the devaluation of the Egyptian
Pound during the first nine months of the year; and
o US$4.9 million of corporate tax, being Egyptian corporate income tax
(South Disouq: US$3.6 million, West Gharib: US$1.2 million) and corporate
social tax in Morocco (US$0.1 million).
· Operating cash flow (before capex) for the nine months to 30
September 2022 of US$15.0 million, was lower than the same period in 2021 of
US$22.6 million, primarily due to a decline in EBITDAX and income taxes paid
during 2022.
KEY FINANCIAL & OPERATING HIGHLIGHTS
Prior Quarter Three months ended Nine months ended
30 September((3)) 30 September
$000s except per unit amounts 2022 (unaudited) 2021 (unaudited) 2022 (unaudited) 2021 (unaudited)
FINANCIAL
Net revenues 11,098 11,059 12,867 33,392 39,975
Operating costs (2,321) (2,554) (2,378) (6,946) (7,357)
Netback ((1)) 8,777 8,505 10,489 26,446 32,618
EBITDAX ((1)) 7,062 6,356 9,826 21,630 29,740
Total comprehensive loss (624) (1,227) (2,060) (2,430) (12,146)
Total comprehensive loss attributable to SDX shareholders (612) (1,257) $(0.010) (2,018) $(0.059)
Net loss per share - basic $(0.003) $(0.006) $(0.010) $(0.010) $(0.059)
Cash, end of period 15,272 14,889 9,789 14,889 9,789
Capital expenditures 8,929 10,250 3,806 22,423 19,645
Total assets 103,607 108,585 108,706 108,585 108,706
Shareholders' equity 77,073 74,951 84,450 74,951 84,450
Common shares outstanding (000's) 204,563 204,563 205,378 204,563 205,378
OPERATIONAL
West Gharib production service fee (bbl/d) 363 414 387 389 473
South Disouq gas sales (boe/d) ((2)) 3,460 3,944 4,360 3,672 4,257
Morocco gas sales (boe/d) 635 574 867 616 951
Other products sales (boe/d) ((2)) 175 162 223 173 220
Total sales volumes (boe/d) ((2)) 4,633 5,094 5,837 4,850 5,901
Realised West Gharib service fee (US$/bbl) $88.66 $77.81 $57.90 $81.42 $52.98
Realised South Disouq gas price (US$/Mcf) $2.85 $2.85 $2.85 $2.85 $2.85
Realised Morocco gas price (US$/Mcf) $10.60 $9.91 $11.39 $10.56 $11.40
Royalties ($/boe) $6.17 $5.66 $5.41 $5.79 $5.09
Operating costs ($/boe) $5.50 $5.45 $4.43 $5.25 $4.57
Netback ($/boe) ((1)) $20.82 $18.15 $19.53 $19.97 $20.25
(1) Refer to the "Non-IFRS Measures" section of this release below for
details of Netback and EBITDAX.
(2) Sales volumes from the South Disouq concession have been presented gross
of minority interest. For the period 1 February (transaction effective date)
to 30 September 2022, the share of volumes assigned to the Company's minority
interest holder equals 1,122 boe/d and therefore the Company's share of South
Disouq volumes (incl. other products) equals 2,723 boe/d. Net of minority
interest total sales volumes are 3,728 boe/d.
Consolidated Balance Sheet (unaudited)
(US$'000s) As at 30 September 2022 As at 31 December 2021
Assets
Cash and cash equivalents 14,889 10,562
Trade and other receivables 18,076 19,942
Inventory 7,549 6,747
Current assets 40,514 37,251
Investments 3,483 3,593
Property, plant and equipment 28,784 34,593
Exploration and evaluation assets 34,925 21,611
Right-of-use assets 1,279 1,367
Non-current assets 68,071 61,164
Total assets 108,985 98,415
Liabilities
Trade and other payables 18,852 17,157
Decommissioning liability 22
-
Current income taxes 1,194 1,150
Borrowings 5,560 -
Lease liability 464 439
Current liabilities 26,070 18,768
Decommissioning liability 6,825 5,747
Deferred income taxes 290 290
Lease liability 849 956
Non-current liabilities 7,964 6,993
Total liabilities 34,034 25,761
Equity
Share capital 2,601 2,601
Share premium 130 130
Share-based payment reserve 7,654 7,536
Accumulated other comprehensive loss (917) (917)
Merger reserve 37,034 37,034
Retained earnings 21,516 26,270
Non-controlling interest 6,933 -
Total equity 74,951 72,654
Equity and liabilities 108,985 98,415
Consolidated Statement of Comprehensive Income (unaudited)
Three months ended Nine months ended
30 September 30 September
(US$'000s) 2022 2021 2022 2021
Revenue, net of royalties 11,059 12,867 33,392 39,975
Direct operating expense (2,554) (2,378) (6,946) (7,357)
Gross profit 8,505 10,489 26,446 32,618
Exploration and evaluation expense (307) (1,820) (841) (12,700)
Depletion, depreciation and amortisation (4,900) (8,350) (15,266) (23,295)
Share-based compensation 4 (80) (118) (254)
Share of profit from joint venture 135 186 397 409
General and administrative expenses
- Ongoing general and administrative expenses (1,336) (769) (3,378) (3,033)
- Transaction costs (951) - (1,716) -
Operating income/(loss) 1,150 (344) 5,524 (6,255)
Finance costs (94) (170) (282) (504)
Foreign exchange loss (565) 116 (2,803) (46)
Income/(loss)e before income taxes 491 (398) 2,439 (6,805)
Current income tax expense (1,718) (1,662) (4,869) (5,341)
Loss and total comprehensive loss for the period (1,227) (2,060) (2,430) (12,146)
Attributable to
SDX shareholders (1,257) (2,060) (2,018) (12,146)
Non-controlling interests 30 - (412) -
Net loss, attributable to SDX shareholders, per share
Basic $(0.006) $(0.010) $(0.010) $(0.059)
Diluted $(0.006) $(0.010) $(0.010) $(0.059)
Consolidated Statement of Changes in Equity (unaudited)
Nine months ended 30 September
(US$'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 118 254
Balance, end of period 7,654 7,253
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 (2,018) (12,146)
Balance, end of period 21,516 38,079
NCI
Balance, beginning of period - -
Part disposal of subsidiary 8,236 -
Dividends paid (891)
Loss for the period (412) -
Balance, end of period 6,933 -
Total equity 74,951 84,450
Consolidated Statement of Cash Flows (unaudited)
Three months ended 30 September Nine months ended 30 September
(US$'000s) 2022 2021 2022 2021
Cash flows generated from/(used in) operating activities
Income/(loss) before income taxes 491 (389) 2,439 (6,805)
Adjustments for:
Depletion, depreciation and amortisation 4,900 8,350 15,266 23,295
Exploration and evaluation expense - 1,299 - 11,612
Finance expense 94 170 282 504
Share-based compensation charge (4) 80 118 254
Foreign exchange loss 565 160 2,803 86
Tax paid by state (1,249) (1,383) (3,551) (3,949)
Share of profit from joint venture (135) (186) (397) (409)
Operating cash flow before working capital movements 4,662 8,092 16,960 24,588
(Increase)/decrease in trade and other receivables (69) 80 2,021 (193)
Increase/(decrease) in trade and other payables 1,020 (468) (1,033) (1,231)
Payments for inventory (1,009) (48) (2,106) (560)
Payments for decommissioning - - (35) -
Cash generated from operating activities 4,604 7,656 15,807 22,604
Income taxes paid - - (841) -
Net cash generated from operating activities 4,604 7,656 14,966 22,604
Cash flows generated from/(used in) investing activities:
Property, plant and equipment expenditures (3,298) (6,699) (9,473) (16,793)
Exploration and evaluation expenditures (3,157) (372) (8,526) (5,654)
Proceeds on part disposal of subsidiary (891) - 4,609 -
Dividends received - 522 311 522
Net cash used in investing activities (7,346) (6,549) (13,079) (21,925)
Cash flows generated from/(used in) financing activities:
Net proceeds from loans and borrowings 3,000 - 5,500 -
Payments of lease liabilities (137) (195) (398) (698)
Finance income/(expense) 27 (68) 10 (163)
Net cash generated from/(used in) financing activities 2,890 (263) 5,112 (861)
Increase/(decrease) in cash and cash equivalents 148 844 6,999 (182)
Effect of foreign exchange on cash and cash equivalents (531) (163) (2,672) (85)
Cash and cash equivalents, beginning of period 15,272 9,108 10,562 10,056
Cash and cash equivalents, end of period 14,889 9,789 14,889 9,789
About SDX
SDX is an international oil and gas exploration, production, and development
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 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
"EUR" estimated ultimate recovery
"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; currency control risks; 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 (COGE)
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 (COGE) 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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