SDX Finds More Egyptian Gas

North-Africa focused oil and gas company SDX has found gas in the South Disouq Concession, Egypt, it said June 18. SDX is operator of well SD-4X with a 55% stake. In Morocco, a test suffered a setback but there is confidence in the well's long-term future.

The SD-4X well was drilled to a total depth of 7,806 ft and found 89 ft of net conventional natural gas pay in the Abu Madi horizon, which had an average porosity in the pay section of 24%. The well came in on prognosis with a reservoir section of similar quality but thicker than the original SD-1X discovery well.

The well will be completed and tested when equipment is available. SDX said that if all goes to plan, the well will be connected to the infrastructure next to the original SD-1X discovery, where production start-up is anticipated late this year. After completion, the rig will move to the SD-3X well which is the second of two appraisal locations in the 2018 development programme.

Separately  it said that the well test programme in the LMS-1 well in the Lalla Mimouna Nord permit in Morocco has been completed but that flows were uncommercial owing to damage done below ground by drilling fluids. However the reservoir is otherwise "thought to be of excellent quality based upon the well log response," and the company said it would do more work on it.

CEO Paul Welch said SDX was "extremely encouraged by today's result at South Disouq. We had anticipated a thickening of the pay section as we moved away from the crest of the structure, and this has now been confirmed. We will now accelerate our development activity in the area.  It's our intent to establish production from both the South Disouq and Ibn Yunus areas before year end 2018. These results demonstrate the significant potential we see in this area."  

With seven of SDX' nine Morocco wells and three of its four Egyptian wells proving commercial with one more well to go, analysts at Cantor Fitzgerald repeated their buy rating, saying that "the discovery at SD-4X is very encouraging, and we look forward to the flow test results later in the summer. Whilst the LMS-1 flow test is disappointing, we do not see this as being a major issue, and simply a minor setback with no impact on the longer term potential at Lalla Mimouna."