SDX Energy says first quarter was positive despite challenging backdrop
SDX Energy PLC (LON:SDX) has described the first quarter of 2020 as a positive period despite a challenging backdrop amid low oil prices and the coronavirus pandemic.
In an update, SDX said its entitlement production for the first quarter amounted to 8,061 barrels oil equivalent (boe), up 117% compared to the comparative period in 2019, while gross production equated to 4,994 boe per day.
The strong year-on-year production growth was driven by the South Disouq in Egypt which performed ahead of expectations, it added.
“Production has been above expectations and I am pleased that our resilient business continued to generate cash from our oil and gas production as well as discovering new resource through the drill bit in both Morocco and Egypt,” Mark Reid, SDX’s chief executive said in the statement.
“Although we are currently living in a dynamic and fast-changing environment, it gives me great reassurance that approximately 90% of the company’s 2020 cash flows are expected to be generated from our fixed-price gas business,” he added.
At South Disouq, a two-well drill programme kicked off in the first quarter – the first well found sub-commercial volumes of gas, and the second well confirmed a commercial discovery.
A drilling campaign also advanced in Morocco where the company has so far made seven discoveries over nine wells. The tenth well, LMS-2, is presently awaiting testing.
The drilling at South Disouq and in Morocco has satisfied the majority of the company’s planned capex for 2020.
SDX gave production guidance for 2020 of 6,750 to 7,000 boe, which would be 66%-72% above actual production in 2019.
Commenting on the impact of coronavirus (COVID-19), Reid added: “Disruption to our business as a result of COVID-19 has so far been minimal, and we are pleased that our three Moroccan customers that were temporarily closed are beginning to take gas again.
“Our ongoing cash generation and cash position remains strong and we continue to have access to US$7.5 million of additional liquidity through our EBRD credit facility.
“That said, capital discipline remains our key priority as we continue to navigate the year with necessary caution to our surrounding environment but also with confidence in the ability of our business to produce significant returns in 2020 and to continue to grow thereafter.”