SDX Energy making good progress in at South Disouq and in Morocco

SDX Energy updated the market on Monday, reporting that the development of South Disouq, where it is the operator and holds a 55% working interest, was continuing on schedule and on budget.

The AIM-traded firm said the factory acceptance tests for the central processing facility and compressor - the first of three project milestones - had now successfully completed.

Both pieces of equipment were now beginning the process of being shipped to Egypt, with a view to arriving on site at South Disouq in mid-August and on schedule for first gas in the fourth quarter.

Interpretation of the South Disouq 3D seismic was also continuing, in a bid to refine the company’s understanding of prospectivity in the concession, the board explained.

It said that upon completion of that interpretation and partner discussions, a decision would be made on future drilling.

Beyond South Disouq, SDX said planning for the 12-well drilling campaign in Morocco, where it is also the operator with a 75% working interest, had started with long lead items ordered, key contracts finalised and drilling expected to begin in the fourth quarter.

The programme would be targeting 15 billion cubic feet of gross unrisked prospective resources.

On the production front, SDX said gross production for the six months to 30 June was in line with its 2019 full-year guidance, with 4,300 barrels per day at Meseda and Rabul, 3,900 barrels of oil equivalent per day at NW Gemsa, and six million standard cubic feet of gas per day in Morocco.

Cash as at 30 June stood at $11m on an unaudited basis, down from $11.4m at the end of March, as well as the undrawn $10m EBRD facility which would fully fund SDX for all existing and planned activities.

The board said it had provided chief financial officer and interim chief executive officer Mark Reid with a mandate to deliver first gas at South Disouq during the fourth quarter, and to successfully execute the Moroccan drilling campaign commencing in the same period.

To support the execution of that mandate, Reid had established an experienced executive committee which would meet monthly, consisting of the heads of subsurface and operations, facilities and finance and the country managers of Egypt and Morocco.

A further update on the company’s CEO position would be provided in due course.

“SDX continues to focus on the successful delivery of its key operational targets at the South Disouq development in Egypt and the upcoming Morocco drilling campaign,” said Mark Reid.

“We are pleased to report that good progress has been made on these initiatives and both remain on schedule and on budget.

“Once the South Disouq 3D has been interpreted, and after partner discussions, we will assess the potential for a drilling campaign and update the market in due course.”

Reid said the firm’s cash flow and receivables collections remained “strong”, reiterating that all of its existing and planned activities were fully-funded from current cash, near-term cash flows and the undrawn EBRD facility.

“I look forward to providing further updates on our activities during the second half of 2019.”