Sdx Energy Share Discussion Threads

[winnet] 26/6/2024 11:36

Neo. 4p [~6 million GBP] would be an absolute fire sale! SD alone is going for more than 5 million, probably double that!

Now is not the time to sell up unless the offer is at al least 15-20 million IMO.

There is value in the Morrocco assets - significant capex has meant they are well positioned there, the pipeline alone is worth several million!

Lets not get too hung up with small losses. Mgt are hopefully doing something about it!

[neo26] 26/6/2024 08:58

Its interesting what aleph do will they convert or will they ask for their money?Aleph put sdx in a mess.Best thing to do is sell conpany and try to get over 4p.Its silly..

[winnet] 26/6/2024 08:16

also 34 - the deal is dead, history, no point in crying about it now.

I voted against as I [incorrectly] believed a better deal could be found. Maybe they did as well. Its not all cloak-and-dagger stuff normally.

[winnet] 26/6/2024 08:12

34 - On the CAPEX point, the point you are missing is that there is value in the spend that cannot be recovered in years 1,2, 3, etc. So assigning all CAPEX in a particular year and then turning around and saying "Look, it is unprofitable" is a misleading argument! Whats the IRR on the fields - whats the flow rates etc all of that Geophysical stuff which presumably we pay someone brighter than me to calculate.

Yes, many of the reservoirs in Morocco are small, but they are easy to drill with strong local demand.

I would like to see a more disciplined approach to CAPEX, to better balance revenue and expenditure.

[34adsaddsa] 25/6/2024 23:10

But the previous management were correct and Aleph blocked them from doing the right thing for shareholders. I don't understand why you can't see it.

[littlened] 25/6/2024 22:42

The loan is repayable next month and convertible at 4.5p so that won’t happen,which Alephthought would be a cheap way in.I imagine that the conversion was priced in the shares so this should be a relief o existing shareholders.Whether the loan can be refinanced on better terms is anyones guess but we maybe in a position to pay it off. But don’t hang the faults of previous management on the new lot.

[34adsaddsa] 25/6/2024 20:33

Which I think is why they issued the options. It costs them nothing and makes some retail shareholders think they must be bullish about the future.

Why do you think the previous management team arranaged a sale? They were getting good salaries. It's because they were accountants and they could see where it was going to end up under its own steam.

It's a loss making business paying 20% interest.

The only way out is an acquisition (which they can't afford), selling the business (Aleph blocked) or a liquidation (which I think they'll resist because it means no more 20%).

The sale to Tenaz was terminated almost 2 years ago. Have those 2 years panned out the way you hoped? Have Aleph done anything to benefit shareholders?

[littlened] 25/6/2024 19:51

The board have share options to achieve.Why would they want a low price and why would Aleph .A price increase is worth much more than loan interest which ends soon

[34adsaddsa] 25/6/2024 19:29

I think it's in their interests for the situation to continue because they were put in by Aleph and Aleph clearly haven't been acting in the interests of any shareholders other than themselves.

They're getting 20% interest.

All you're getting is a falling share price.

[littlened] 25/6/2024 19:21

Do you think the new board havent worked this out and are not resolving this issue ?

[34adsaddsa] 25/6/2024 18:32

The oil and gas they find and extract is worth less than than the costs of extraction (CAPEX) + costs of operating the business.

The reason CAPEX is so high in Morocco is because the drills are targeting tiny amounts of gas. They've already consumed the best targets. They haven't cut CAPEX because they would very quickly run out of gas. It's a treadmill which destroys cash.

The business destroys value every day it exists. All non-essential CAPEX should cease and the business should be wound down/sold ASAP with the cash returned to shareholders (the sale to Tenaz should have gone through).

Do you still think we're making the same point?

[winnet] 25/6/2024 16:34

You misunderstand me, 34adsaddas. The point i was making is the same as you, but if you look at the accounts it isn't OPEX [selling the O&G] that kills the business its CAPEX [particularly in Morrocco]. Not all capex is priced in yet [i.e. the fields have a long shelf life], I would imagine. But yes, a loss is loss.

"Capex was US$27.6 million in 2023 compared to EBITDAX of US$24.6 million.

The problem here was CAPEX!"

[neo26] 25/6/2024 14:49

Edit "end of june." Not july

[34adsaddsa] 25/6/2024 13:52

"The issue has not been profitability; The issue is that we have not been able to repatriate the Egyptian money combined with an ill-disciplined approach to CAPEX in Morrocco."

NO! This is completely wrong. This company has reported net losses year after year and has burned tens of millions of dollars with reserves cotinutally falling. THERE IS NO PROFITABLE BUSINESS HERE.

This has been an asset liquidation opportunity for years. Every day it continues to be in business destroys value.

[winnet] 25/6/2024 13:26

What red flag do you think it indicates?

More likely, my guess, would be a private equity sale coming up.

[neo26] 25/6/2024 12:41

Well year end results should be out by end of july.Its a big red flag they still havent been issued.

[winnet] 25/6/2024 12:07

I would like to see the accounts. The issue has not been profitability; The issue is that we have not been able to repatriate the Egyptian money combined with an ill-disciplined approach to CAPEX in Morrocco. Despite this long wait for a resolution on the SD deal, I fully expect them to be operating profitably. However, I would like to see the accounts to confirm this.

Capex was US$27.6 million in 2023 compared to EBITDAX of US$24.6 million.

The problem here was CAPEX!

So, they've drilled [successfully] another well in the last year. We know CAPEX will be high, but I don't think it'll top out at over 27 million USD. It is hard to get a grip on EBITDAX in the last year. Oil prices have averaged 84 bucks BRENT, so pretty good and a slight increase on the previous year. But how much exposure we have to that, in Egypt, I don't know. Morocco gives us a poor, but stable fixed price, again, production would have been increasing here...

Add into this the WG disposal and I cannot see any liquidity issues. BWTFDIK

[neo26] 25/6/2024 10:47

By the time they sell SD all the current cash would be burnt. Companies business model is rubbish.Its no longer undervalued, they took too long to sell WG and now SD...

[littlened] 20/6/2024 17:53

When CFO said last week that WG proceeds will need shareholder agreement under AIM rules he can only refer to the existing market cap but his certainty surely gives quite some leeway

[winnet] 20/6/2024 14:21

Which cap will they exceed? I mean down at 3.6p we are at 7 million GBP ish. Say results come out and IMO should be pretty decent given the oil prices - we could be at 8-10p. In this case the SD transaction will not be 75% of cap. See my point. Kind of depends on when the transaction is announced. Unlikely before the end of June IMO.

[littlened] 19/6/2024 10:57

2023 results have to be posted by end June.Egypt deal is still being negotiated and proceeds will exceed 75% market cap

[chrisdgb] 19/6/2024 10:26

Really need some newsflow here..........

[winnet] 30/5/2024 10:34

Of course, I take that point. However, we are on AIM and our cap is just 7 million GBP! It's a slightly different context. We also have a funding environment where we cannot raise on decent terms and borrowing is expensive. Hence, management should aim to generate revenues that at least cover opex, while being more modest with capex IMO. Its too risky to drill everything and throw the cash around like confetti.

At 4p I am just waiting for someone to come and put us out of our misery. Tenez offered 11p and at the time I voted against it. I wouldn't now.

[littlened] 29/5/2024 18:11

Many companies with market cap over $1billion have no profits.It depends of course of how the capex is spent and whether it earns its keep

[winnet] 29/5/2024 17:06

I just got around to watching the video. At the end he said, come and see us at our London office. I think I might.

One of the worrying things was following the question about capex vs net profit, he stumbled. So, let's assume no profit this year chaps. However, whether the market punishes us for this is debatable, and possibly a decent SD figure will mean we can ride things out.

The other takeaway is the CFO is not a man of many words is he? His major piece to the camera was to explain the difference between organic and inorganic growth. It was like being back in the first year of my uni degree!