SDX Energy shares up on early seismic results

Egypt-focused oil and gas company SDX Energy updated the market on its initial findings from interpretation of the 300 sq km of 3D seismic data acquired over its South Disouq concession in the first half of 2016.

The AIM-traded firm said data processing commenced in June and the first pass data set was delivered in mid-September.

It said the quality of the data set surpassed pre-acquisition expectations, which has allowed imaging of additional horizons that were not included in previous technical assessments.

An initial interpretation has been undertaken with a view to building a prospect inventory and selecting a location to drill the initial, fully carried, exploration well.

The South Disouq concession, which SDX operates with a 55% equity interest, is located in the onshore Nile Delta region, 65km north of Cairo, within the Abu Madi - Baltim trend that contains numerous gas and condensate discoveries.

SDX said the initial interpretation of the data set identified numerous leads and prospects in the Abu Madi section as well as the overlying Kafr El Sheikh formation, as expected.

These gas and condensate prospects and leads are located in traps similar to those identified in the offset areas.

In addition, early stage analysis has identified deeper oil-bearing potential in both the Abu Roash and AEB horizons, which are oil producers in the Western Desert region of Egypt.

These two horizons are located significantly shallower in South Disouq compared to other areas in the Nile Delta, the company reported.

It added that the Cretaceous and Jurassic source rocks are anticipated to be in the oil window, giving South Disouq has the dual benefit of having potential not only in the primary targets normally found in the Nile Delta, but also in older horizons that are productive across the Western Desert.

SDX's initial internal assessment of the 3D seismic data has identified 15 leads and at least two currently drillable gas and oil bearing prospects.

These will now be further interpreted ahead of the planned drilling campaign, expected to commence in late 2016 to early 2017.

The company said it intends to have an independent third party auditor verify the internal assumptions and will update the market further in due course.

“We are very encouraged by the quality of the data delivered by our 3D seismic programme,” said CEO Paul Welch.

“Our ability to identify and map prospectivity at the Abu Madi and deeper Abu Roash and AEB horizons greatly expands the potential of the concession.”

Welch said the company is developing an “excellent” prospect inventory within the concession and is excited by the potential of the forthcoming drilling campaign to test for not only the established gas potential in the area but also for oil.

“Identifying these Western Desert producing horizons within the oil window in South Disouq is fantastic news,” he said.

“I look forward to reporting on our progress to develop this newly identified potential in future periods.”

At 1200 BST, shares in SDX Energy were up 4.04% at 24.45p.