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SDX Energy Inc: THE INVESTMENT CASE

Busy SDX Energy continues to serve up growth catalysts

The company has exploration and development upside with its suite of North African oil assets
Exploration oil well
INVESTMENT OVERVIEW: SDX The Big Picture
Drilling has started on the third of nine wells

Although oil prices have notably picked up in recent months London’s junior oil space has been somewhat lacking big-bang exploration events for speculators, but, that doesn’t mean there aren’t opportunities for investors.

There’s something to be said for a more incremental approach to growing an oil business, especially when it’s supported by cash generating production.

North Africa focussed SDX Energy Plc (LON:SDX) is fortunate enough to have exploration and development upside.

READ: SDX Energy latest Morocco well comes online ahead of expectations

On Friday, it confirmed the start of drilling for the third of nine planned wells in Morocco as it continues to build on bargain assets picked up from a distressed seller last year.

It has been among London’s busier oil firms, mixing both exploration and production drilling, and only last week it reported US$10.1mln of quarterly revenue, marking a 271% increase year-on-year thanks to the Circle Oil acquisition and improved oil prices.

Development projects in Egypt and Morocco promise further growth

The quarterly figures confirmed net production of 3,280 barrels oil equivalent per day, while development projects in Egypt and Morocco promise further growth.

The company’s cash balance at the end of September stood at US$30.5mln, which along with cash flow, supports the ongoing capital outlay.

The KSR-16 well, which has now spudded, is expected to be drilled in 20-25 days with production potentially following about 21 days after that.

READ: SDX Energy is now seeing the financial benefits of the Circle Oil acquisition

SDX also confirmed that the recently drilled KSR-15 well is currently being connected to the production infrastructure, and it is expected to be placed on test production within the next 10 days.

Nine well programme across Moroccan portfolio

These are part of a nine well programme across the company’s Morocco portfolio which comprises the Sebou, Gharb Centre and Lalla Mimouna permits.

The Morocco assets are expected to yield up to 1,666 boepd (9.5 to 10mln cubic feet of gas per day) compared to around 916 boepd (5.5 to 6mln cubic feet) today.

In Egypt, meanwhile, the group has field development catalysts in the pipeline with the new South Disouq discovery due to come online next year – the discovery well tested at a rate of 4,300 boepd, so that will be a very meaningful lift to overall group volumes.

The catalyst packed schedule means oil investors can expect to hear plenty more from SDX Energy in the coming months, plainly there may be much to look forward to.

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