SDX Energy to Accelerate Drilling Campaign in South Disouq into Q2/Q3 2021

Nine months to 30 September 2020

Drilling and prospectivity 

·      South Disouq two-well drilling campaign completed during the period, with the second well, SD-12X (100% W.I.), being a commercial discovery in the Kafr el Sheikh (KES) Formation, and management estimating 24 bcf of recoverable resources. Work is underway to connect SD-12X to the Company’s gas processing plant via a 5.8km flow line to the Ibn Yunus-1X well location with production start-up expected in Q1 2021. Based upon well-test data, it is anticipated that when connected the well will produce at a stabilised rate of 10-12 MMscf/d. 

·      Following the success of SD-12X at South Disouq and further review of the 3D seismic, management has now high-graded c.233bcf of mean unrisked recoverable volumes, which are; close to our existing infrastructure, located in horizons that are either productive in South Disouq or in adjacent blocks and which have now been high-graded to ready-to-drill prospects. This increase of 137bcf from the Company’s previous estimates of c.96bcf is primarily attributable to the identification of the Hanut prospect which Company the estimates has an unrisked mean recoverable volumes of 139bcf. 

·      Subject to receipt of final Ministerial and Parliamentary approval of the two-year extension to the South Disouq exploration area, which has already been approved by EGAS, the Company plans to accelerate its drilling campaign to Q2/Q3 2021 from late 2021/early 2022.  The campaign will commence with the drilling of the two commitment wells proposed for the extension which will target c.165bcf in the Hanut and Mohsen prospects. The Company’s 45% partner has still to confirm whether they will participate in the proposed extension. 

·    Management’s estimate of the mean prospective resources and chance of success of the prospects identified in the South Disouq area are shown below.

  The Company continues to identify exciting areas of prospectivity in South Disouq and expects to provide further updates as appropriate. 

·      The 2019/20 Moroccan drilling campaign has resulted in seven commercial discoveries from nine wells drilled, with the tenth well, LMS-2, completed and awaiting crew mobilisation for testing once COVID-19 restrictions are lifted. Discoveries at OYF-2 and BMK-1 confirm the prospectivity in SDX’s existing core production and development area extends to the north, and have de-risked c.20 bcf of P50 prospective resources.   

·      Further analysis of the LMS-2 well results and a re-interpretation of the 3D seismic across SDX’s concessions has revealed that structures similar to LMS-2 are present throughout the Company’s acreage.  This new prospectivity is located in horizons that are slightly deeper than the Company’s core production and development area and the areas previously targeted in Lalla Mimouna.   Work is ongoing to further define the scale of this prospectivity and, subject to a successful flow test of LMS-2, the intention is to target it as part of the planned 2021 Moroccan drilling campaign which we will also seek to accelerate into H1 2021.


·      Average entitlement production for the period of between 6,488-6,598 boe/d, an increase of 85-89% from same period in 2019 and exceeding current guidance of 6,000-6,250 boe/d

Mark Reid, CEO of SDX, commented: 

We have continued to perform strongly in the second half of 2020 despite challenging global conditions. Production is ahead of guidance; we have a healthy cash and liquidity position; and we now plan to accelerate an exciting and potentially transformational drilling campaign in South Disouq into Q2/Q3 2021. 

In addition, as a result of the recent LMS-2 well in Morocco, and further work interpreting existing 3D seismic data, we are very encouraged by a new prospective horizon that we have identified and which we believe is present throughout our acreage.

Gas consumption from our Moroccan customers is now back to around 90% of pre-COVID-19 restriction levels and we go into the final quarter of 2020 with momentum, exciting and new prospectivity and strong cash generation.

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