Energy Mix Report
SDX Energy saw an increase in gas sales out of Morocco, with production remaining stable during Q1. The company’s Moroccan acreage, in which it holds 75% interest, consists of five concessions, all of which are located in the Gharb Basin in northern Morocco: Sebou, Lalla Mimouna Nord, Gharb Centre, Lalla Mimouna Sud, and Moulay Bouchta Ouest.
The Lalla Mimouna Sud and Moulay Bouchta Ouest concessions were acquired from the government of Morocco on February 7, 2019.
During 2018, SDX began selling natural gas to the following new customers: Peugeot, Extralait, and GPC Kenitra. In addition, during Q1 2019, natural gas sales began to another new customer, Setexam, and natural gas sales agreements were signed with Citic Dicastal and Omnium Plastic. Post period end Omnium Plastic and Citic Dicastal began taking natural gas.
The Moulay Bouchta Ouest exploration concession has been awarded to SDX for a period of eight years with a commitment to reprocess 150 km of 2D seismic data, acquire 100 km2 of new 3D seismic, and drill one exploration well within the first 3.5 year period. The Lalla Mimouna Sud exploration concession has been re-awarded to SDX for a period of eight years with a commitment to acquire 50 sq km of 3D seismic and drill one exploration well within the first three-year period.
The company said in its quarterly report that it would target an average gross production of 6.0 – 6.5 Mmscf/d of conventional natural gas sales, this is down significantly from its previous guidance of achieving 9.0 -11.0 Mmscf/d of conventional natural gas sales by the end of 2019. The new guidance is based on customers currently under contract and also reflects that, in Q1 2019, the company’s second largest customer reallocated a production line from Morocco to Spain and thus has reduced its volumes by 30% compared to 2018 levels.
While the company continues to work to develop new customer opportunities, given the slowdown in new companies setting up in the Atlantic Free Zone near its infrastructure in Kenitra, there is no guarantee that this will lead to incremental production and revenues by the end of the year.
SDX’s 240 sq km 3D seismic acquisition program in Gharb Centre has now been processed and an initial interpretation is completed. The data quality is good and, as a result, multiple leads and prospects have been identified. An inversion of the dataset has taken place and prospects identified for a proposed drilling campaign of up to twelve wells to take place between Q4 2019 and Q2 2020. Planning for the drilling campaign has begun and these wells are targeting sufficient reserves to satisfy existing customers’ forecast demand and to test new play opening areas of prospectivity across the portfolio.
Additional wells maybe drilled in 2020 depending on SDX’s assessment of the time between drilling these wells and selling gas to any new identified customers.
Source: Petroleum Africa
