Proactive Investors
Jamie Ashcroft
“We continued to make strong operational progress across our North African portfolio in the second quarter and we are also pleased to see the positive impact that the Circle acquisition is having on our business,” said chief executive Paul Welch.
SDX Energy PLC (LON:SDX) shares gained today as it revealed a first half boosted by the acquisition of the Circle Oil assets with net revenues transformed.
In late afternoon trading, SDX shares were up nearly 4%, or 1.75p at 46.00p.
READ: SDX Energy set for ‘considerable upside’ as it moves South Disouq to production – analyst
The company, in results for the six months ended June 30, reported revenue of US$18mln compared with US$4.6mln in the same period of 2016. Netback on oil production amounted to US$13mln, versus US$2.3mln, and SDX’s net cash generation amounted to US$11.1mln compared to US$0.8mln last year.
“We continued to make strong operational progress across our North African portfolio in the second quarter and we are also pleased to see the positive impact that the Circle acquisition is having on our business with improving Netbacks and a strong cash and working capital position as at the end of H1 2017,” said Paul Welch, SDX Energy chief executive.
SDX ended the first half with US$27.6mln of cash and equivalents.
Production growth
Operationally, the group produced an average of 3,351 barrels oil equivalent per day for the six month period – with 2,170 boepd coming from the North West Gemsa field, 635 boepd from the Meseda operation and the Morocco assets contributed 546 boepd.
SDX is investing in a number of new initiatives including a programme of work-overs in Egypt and … in Morocco.
Notably, in the first half the company successful unearthed a new gas discovery in the South Disouq exploration well (SD-1X) which in testing flowed at a stabilised rate of 25.8mln cubic feet per day, significantly ahead of company expectations.
Welch said: “Following the discovery at South Disouq, SDX is targeting first gas during Q1 2018, with preparations for both the development activities and the second exploration phase now significantly advanced.
“In due course, I am looking forward to updating the market with our plans to develop the existing discovery on South Disouq, to add additional gas resources to the reserve base and on how we propose to exploit the deeper oil potential within the concession.”
WATCH: ‘We think 2017 could be a watershed year for SDX Energy’ – CEO Paul Welch
Now, the group is preparing for its Morocco programme.
“Following a successful tendering process, we are ready to undertake an exciting drilling campaign in Morocco,” Welch said.
“We have significantly de-risked a portfolio of exploration and development prospects in these recently acquired concessions and we anticipate that positive drilling results will enable us to bring additional high margin gas production online in a timely manner.”
“Another set of impressive financials”
Cantor Fitzgerald analyst Sam Wahab described Friday’s update as “another impressive set of financials” and highlighted the active period that the statement covers.
Wahab, in a note, said: “we believe investors should focus on SDX’s operational progress in Morocco, with a multi-well drilling campaign slated to commence this quarter, to further grow SDX’s high margin production in the region, against the backdrop of an attractive local gas market.
“Sebou in particular will allow SDX to execute on a drilling campaign that will provide additional production capacity and reserves, if successful.
“We have been encouraged by the pace of operational progress SDX has demonstrated in 1H/17, and investors can look forward to a period of significant drilling activity providing material, near term, share price catalysts.”
