SDX Reaps Profit with High-Margin Circle

North Africa-focused SDX Energy reversed a 2016 loss into a profit last year as it benefited from "the high margin Moroccan business acquired from Circle Oil and a recovery in oil prices over the year."

SDX reported March 23 in annual results that its 2016 loss of $22.3mn had been transformed into a $22.2mn profit in 2017, and that revenues tripled from $12.9mn to $39.2mn, as the average oil price rose by almost 50% from $31.5/b to $46.7/b.

By the end of this year it is expecting gross production of 8-10mn ft³/day in Morocco, where it has a 75% working interest in the Gharb Basin. The net average realised gas price is $9.72/'000 ft³. Production from South Disouq in Egypt, where it is 55% owner, is expected to reach 50mn ft³/d from the SD-1X well. Cairo is behind with its payments, it said, but it is catching up: last year SDX received $4.9mn from the government, which primarily came from the Circle acquisition; and this year it has had a further $6.0mn in backdated receivables.

CEO Paul Welch commented: "We continued to see strong operational performance throughout the year across our portfolio. In North West Gemsa we are seeing the results of our twelve successful workovers, and in Meseda we successfully drilled two exploration wells in 2017 followed by the successful Rabul-5 appraisal well earlier this month.  The remainder of 2018 will see a second appraisal well, Rabul-4, followed by two development wells on the Meseda area of the concession [all the foregoing in Egypt].  Our nine well drilling programme in Morocco has seen five discoveries from seven wells drilled to date and we look forward to continuing this drilling success throughout the rest of 2018."

The most recent of these Moroccan discoveries, reported March 21, was the SAH-2 well which discovered gas on March 9 and achieved an average flow rate of 12.9 mn ft³/d and a maximum flow rate during the test of 13.5 mn ft³/d with a 40/64” choke.  This was the second highest flow rate achieved by SDX from its five discoveries to date, boosting its confidence in achieving 8-10mm ft³/d production by end-2018. Additionally SDX said March 21 that drilling of  LNB-1, its eighth well, had started and was expected to take between 10 and 15 days. 

SDX's nine-well Moroccan drilling campaign, to date

Credit: SDX Energy