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Sondex Share Discussion Threads
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|I took out my first slice last week at 22p. I'll add if there is a retrace but it's on a few radar screens now.|
|Positive note out from Cantor Fitzgerald today.
SDX Energy (BUY) – South Disouq has oil potential, in addition to gas
SDX LN (27p, TP 66p), Market Cap: £17.4m
SDX has reported the initial findings from interpretation of the 300 km2 of 3D seismic data acquired over its South Disouq concession in H1 2016. The initial interpretation of the data set has identified a number of leads and prospects in the Abu Madi as well as the overlying Kafr El Sheikh formations, which is in line with our understanding of the area. These gas and condensate prospects and leads are located in traps similar to those identified in the offset areas. Significantly, the company has also identified deeper oil-bearing potential in both the Abu Roash and AEB horizons, which are oil producers in the Western Desert region of Egypt. We are encouraged by the company’s development of its prospect inventory within the concession especially given the upcoming drilling campaign to test for not only the established gas potential in the area but also for oil.|
|Hi guys - a positive note out from Progressive on SDX today. Updated to include yesterday's news. The full document can be found at - hxxp://www.progressive-research.com/tearsheet/research/sdx-energy/sdx-energy-interpretation-of-3d-at-south-disouq
This is a good step forward for the company. The exploration well on the South Disouq licence could provide a step change in shareholder value. On a risked basis and using the original volumetrics, the industry standard valuation (of DCF analysis) would attribute a value of approximately 27 p/share.
Seismic data surpasses expectations
SDX Energy has updated the market on its initial findings from the interpretation of the 3D seismic data that was acquired over its South Disouq permit in H1 2016. Having received the Pre-Stack Time Migrated (PSTM) data in mid September, the quality of the data set has surpassed expectations. Not only has it identified numerous leads and prospects in the Abu Madi formation (as expected), but early stage analysis has also identified a deeper oil bearing potential in the block. At this stage Management has not altered its existing risking and volumes. However, Investors should be aware of the increasing prospectivity of the area and the potential upside in the event of exploration success.
*SDX Energy has a 55% working interest in the South Disouq licence. This is a huge 1,275 sq. km licence just north of Cairo and within the Abu Madi/Baltim trend that has yielded some very significant gas discoveries over the past few decades. The initial 2D seismic data identified several prospects and leads with one prospect having potential gross mean resources of 490 BCF of gas and 16.3 mmbbl of condensate (100 mmboe). This exciting prospect led to management deciding to carry out a 300 sq. km 3D seismic survey on the licence which was completed in the first half of the year.
*The initial interpretation of this data set has now been completed and the gas prospectivity that was indicated by the 2D data has now been corroborated by the initial interpretation of the 3D. In addition, the data has identified deeper oil bearing potential in the block with prospects identified in the Abu Roash and AEB horizons both of which are oil producing horizons in the Western Desert region of Egypt.
*Management is continuing with its interpretation of the PSTM data and also plans to carry out PSDM (Pre-Stack Depth Migration) analysis of the 3D data to further de-risk the prospects and lead identified. This analysis is expected to be completed in approximately 6 – 8 weeks and will be used to identify a well location for the first exploration well, on which SDX’s cost is carried by its partner. This first well is expected to be spudded at the end of the year or in early 2017.|
|Hi guys - Thought you might like to see Panmure's positive take on this morning's news flow.
SDX Energy – South Disouq seismic (SDX LN, Mkt cap: £17.1m) – Positive
SDX has announced initial results for the interpretation of the 300km2 3D seismic shot over the South Disouq concession, onshore Egypt. The quality of the data set surpassed pre-acquisition expectations and has allowed imaging of additional horizons that were not included in previous technical assessments. Initial interpretation has identified numerous leads and prospects in the Abu Madi section as well as the overlying Kafr El Sheikh formation. In addition, early stage analysis has identified deeper oil-bearing potential in both the Abu Roash and AEB horizons which are oil producers in the Western Desert. These two horizons are located significantly shallower in South Disouq compared to the Nile Delta, hence the source rocks are anticipated to be in the oil window. Consequently South Disouq may have oil as well as gas potential. SDX’s initial work has identified 15 leads and at least two currently drillable gas and oil bearing prospects. These will now be further interpreted ahead of the planned drilling campaign, expected to commence in late 2016/early 2017. SDX intends to have an independent third party auditor verify the internal assumptions and will update the market further in due course. SDX did not specifically address the timing of the completion of the seismic processing. However, PSTM processing appears to have been completed on schedule and PSDM processing was scheduled to be completed at the end of December. SDX had previously identified the Osiris-1X and Anubis-1X prospects in the Abu Roash/AEB and Abu Madi respectively but it is unclear if either or both are the drillable prospects referred to in the release. SDX will be carried for the initial well by its partner and has previously put Pmean potential at 320bcf, net to SDX’s 55% interest in the concession.|
|Up 10% this morning on no news that I can find|
|Just watched a very good interview of the CEO, Paul Welch, on TipTV. Looks like it was filmed today. Thought I'd share the Youtube link below:
|Egyptian play here. Irg Springs to mind. Highly volatile and unsettled environment|
Looks like Progressive Equity Research have put out a positive research note on SDX Energy today. I have listed some of the key points below.
Strong balance sheet and high margin production
SDX Energy is in a very strong position. With its listing in London the company raised US$10 million (net of expenses). This coupled with its high margin production in Egypt leaves the company in a position where management are able to start to build the business both organically and through acquisitions.
The company raised US$10 million on its admission to AIM to leave the company with net cash of US$14 million. The company has embarked on a major capital expenditure programme to build up production at its Meseda licence and drill an exciting exploration well at its South Disouq permit. However, we forecast that the company will finish the year with net cash of approximately US$7 million. Thereafter the company should be generating free cash flow. This will leave the management in a strong position to build up the company.
In its Meseda licence, where SDX has a 50% working interest (19% entitlement interest), management has now embarked on a work-over and waterflood programme, which should allow a doubling of gross production (up to 8,500 bbl/day) and hence boost cash flows. This is high margin production with 2016 unit operating costs forecast to be under US$10/bbl.
The company is also looking at exploration and expects to drill an exploration well on its South Disouq exploration asset (55% working interest). This will probe a potentially significant gas prospect at the end of the current year. This prospect has gross mean prospective resources of 490 BCF of gas and 16.3 mmbbl of condensate (100 mmboe in total). This could prove to be a step change in shareholder value.
We have looked at the industry standard valuation of the assets of the company through a discounted cash flow analysis, adding a risked element and adjusting for the balance sheet of the company. For the oil price, we have used the forward curve for the Brent oil price for the next four years and then escalated by 2.5% per annum. Using those assumptions, one could derive a value for the company of 101 p/share. Investors should view any valuation in the context of their own assessments of the relevant risks.
High margin production to fuel growth
In an E & P sector that is suffering from the recent weak oil prices, SDX Energy would appear to be in very fine fettle. On its recent listing in London (May 2016), the company raised US$10 million (net of expenses) to leave it, at the time, with net cash balance of US$14 million. Although the company is spending heavily in the current year to boost production, it should still have net cash at the end of the current year of US$7 million. This gives the management sufficient money to build up the business both organically and through acquisitions. Management wants to build up the company from a modest production level 1,500 boe/day to in excess of 20,000 boe/day – at which point it would become a material acquisition to a major player and, hopefully, generate substantial shareholder returns on exit.
In the short term, the first part of this growth will come through building up its Meseda licence where it has a 50% working interest (19% entitlement interest). This licence accounts for half of the group’s current production. Management has now embarked on a work-over and waterflood programme, which should allow a doubling of gross production (up to 8,500 bbl/day) and hence boost cash flows. Not only does this boost production but also the waterflood programme will allow the management to alleviate the natural decline in production from the original development and allow a very significant increase in reserves. The recovery factor in the field will increase to 35% of the oil in place (from 13% under the current development plan). This should also allow a substantial boost to the underlying asset value. On the NW Gemsa licence (SDX Energy 10% working interest), management have agreed a programme over 2016 to drill two development wells and workover a further nine wells in order to maintain a stable production rate in the field.
The company is also looking at exploration. The obvious potential trigger to production, reserves and value is its South Disouq exploration asset (55% working interest), where the company is intending to probe a potentially significant gas prospect at the end of the current year. This prospect has gross mean prospective resources of 490 BCF of gas and 16.3 mmbbl of condensate (100 mmboe in total). This could prove to be a step change in shareholder value. SDX has additional exploration upside in its Meseda licence and the offshore South Ramadan licence.
Beyond the expansion at Meseda and the exploration potential at South Disouq, management is looking at the full suite of options for expansion i.e. buying production, as well as, appraisal and exploration options. This is a good market to expand with many small players suffering from the weak oil price. Management does not intend to bulk up for the sake of size, rather it seeks opportunities with additional upside to the NPV valuation – similar to its Meseda licence where it is possible, through using its subsurface expertise, to add significant additional reserves and production. The company is looking to build up its Egyptian operations as well as expanding into other North African countries. We believe Morocco and Tunisia could provide attractive growth opportunities for SDX.
The balance sheet of the company is very strong following the placing. Although the company is in the middle of a heavy capital investment programme of approximately US$10 million, SDX Energy should end the year with net cash of approximately US$7 million. Going forward, the company should be in a position to generate free cash flow thus allowing internally generated funds to be used to expand the business.
We have looked at the industry standard valuation of the assets of the company through a discounted cash flow analysis, adding a risked element and adjusting for the balance sheet of the company. For the oil price, we have used the forward curve for the Brent oil price for the next four years and then escalated by 2.5% per annum. Using those assumptions, one could derive a value for the company of 101 p/share. Stripping out the subjective side of this (risked exploration upside and cash spend on this) provides a value of approximately 70 p/share using the same industry assumptions. Investors should view any valuation in the context of their own assessments of the relevant risks.|
|I'm surprised more people aren't talking about this. I keep checking to see if there is something I've missed. But it all looks good.|
|It is imo! RENAV is $120m!|
|From the above post this looks very cheap.|
|Profitable and debt free.This is from the last annual report."SDX Energy has experienced a truly transformational year in 2015 with the Company experiencing significant positive benefits from the merger in early October 2015. The combination has created a stronger company with a stable financial base which provides resilience in these challenging markets. We are fortunate to have a high margin production business, with significant growth potential, that has allowed us to remain profitable throughout the period. However, we maintain a strict financial discipline to ensure we run the company and its assets as efficiently and effectively as possible. We have already reported on several significant operational developments this year and that will be a running theme throughout the coming year as we execute our active work programme which will aim to increase production and discover new resources.'' Read more at http://www.stockhouse.com/news/press-releases/2016/04/29/sdx-energy-inc-announces-fourth-quarter-and-year-end-2015-financial-and#Cmk7zKAelubVHlMO.99"|
|Investing in beaten down oil companies, with cash in the coffers, is likely to prove extremely profitable. We know what has hit the oil companies so hard. Oil price is now much higher. SDX only needs $8 per barrel to be profitable. There is major upside here.|
|Trades in canada on the tsx for alot longer than a day|
|Haha. The chart is meaningless as it has only traded one day!! That chart is from an old epic of another company. Jeez...|
|Although i like this company, price is gonna fall based on the chart.|
|...the board of directors of the Company, acting in good faith, has determined, and at least two-thirds of the Company's independent directors, acting in good faith, have determined, that the Company is in serious financial difficulty, that the Placement is designed to improve the Company's financial position...|
|Looks like I am first.|