Sdx Energy Share Discussion Threads

[thelung] 04/5/2017 14:33

let the share price do the talking

[captain james t kirk] 04/5/2017 14:32

Lowflow

I thought I gave you some good advice yesterday.
To repeat, if you are shorting as a play on the oil discovery, then you pays your money etc.
But just taking the Moroccan asset that you have highlighted, there is absolutely no basis to short the Company.
They are drilling 7 wells in Morocco in the next 8 months and their aim is to fill the gas pipe to potential.
Their plan is to double production this year to between 10 and 12 mcuft per day and then double it again in 2018.
Your Morocco quote is just a red herring for your decision to short this as a binary play.
I won't waste any more time on you.

[deltrotter] 04/5/2017 14:29

He has got what he wanted from you guys anyway.... attention.

[oilandgas1] 04/5/2017 14:29

What does SDX get pricing wise??
SDx are selling gas for $9 per mcf and costing them only $1 per mcf.

[petergennery] 04/5/2017 14:27

Fantastic, come on then low, size of short and timescale, if you're so certain.

[saw89] 04/5/2017 14:24

lowflow, size of short? is it screaming sized?

[oilandgas1] 04/5/2017 14:23

Lowflow= Mortie Who typically is a deramper and shorter

[rapiddave] 04/5/2017 14:22

Lowflow - what mechanism did you use to short the stock and who did you take the position with?

[thegreatgeraldo] 04/5/2017 14:22

lowflow, sounds like you see this as a nailed on short, what sort of timescale are you thinking of before itdelivers & are you staking your reputation/credibility on it?

[lowflow] 04/5/2017 14:17

neo26,

Yes the gas price in Morocco is high, I dont disagree on that, but its a small declining assets.

- 7.1bcf of 2P reserves (from SDX)
- 5.46 mmscf/d gross in Q4 2016 production
- 3.5 reserve life, which is nothing.
- H1 2016 production was 6 mmscf/d, so the production decline 9% from H1 2016 to Q4 2016, pretty steep decline.

[gymratt] 04/5/2017 14:08

He's already under water(guffaw!).

[saw89] 04/5/2017 14:05

this is the most screaming short out there, it is deafening.

lowflow- size of short?

[plentymorefish] 04/5/2017 14:02

lowflow, just out of interest, what's the difference between a short and a screaming short and do you have to pay more commission for a screaming short?

[neo26] 04/5/2017 14:01

lowflow

how much gas do they produce in egypt? The current gas find company believes they can get around $3.5-$4.5 per mcf.

So majority of oil analyst believe circle deal was great but you think otherwise. If you give me 39p and i give you £1, who got the better deal, me or you?

[thegreatgeraldo] 04/5/2017 14:00

lowflow, so you're short around the 60p level. Let us know how you get on.

[soulsauce] 04/5/2017 13:55

lowflow what price do they get for the Moroccan gas or did you not think to mention that?

[lowflow] 04/5/2017 13:53

Time to go short, ok I am short the stock now. The stock looks incredibly overvalued considering,
1) The current weak oil price and the very low gas price SDX is getting in Egypt.
2) The company likes to talk about operating cash flow and the retail holders seem to find this very compelling. What seems to be forgotten is the high requirement for both maintenance capex in the producing asset and committed capex for appraisal and exploration.
3) SDX reserve life is very short, so the company will be forced to put in a lot of capital in the ground.
4) A lot of companies was looking at the Circle Oil asset and choose not to acquire them. I think this is pretty telling. The deal looks initially compelling but considering the reserve life, its a nice deal in the short term, but its not a company maker in any way.

I will post a longer write-up, with estimates etc in the coming days why I think the stock is a screaming short.

[tidy 2] 04/5/2017 13:31

Thanks for posting Griffin. Spot on.

[neo26] 04/5/2017 13:19

griffin81

good post..

Alot of people say it will take a dive if no oil found, yes on the day it might fall 4p to 5p because all the daytraders and spreadbetters may sell but imho this will move back up quickly, testing will begin on the gas find. Company are very confident on the abu madi and they can easily increase production by drilling development wells quickly.

I think in a few months investors will be kicking themselves why they didnt buy more, it cheap at these levels. Dont forget the well was almost a free carry.

Strong buy, im kicking myself why i didnt buy more on 44p. :-)

[soulsauce] 04/5/2017 13:14

Great post griffin, says it all.

[griffin81] 04/5/2017 13:10

When I first reviewed SDX after the year end results, I skipped through them and missed the bigger picture, deciding not to invest. When the gas discovery at South Disouq was announced, it caught my attention again and this time I undertook full due diligence. During this process, every key box was ticked; the quality of the management and especially the track record of Paul Welch, the acquisition of the Circle assets at a significant market discount, zero debt, clear and convincing commercial strategic focus, the potential for future value enhancing acquisitions, the material exploration upside potential, strong cash balance in both USD and Egyptian Pounds, the increases in production scheduled for H2-2017 enhancing already strong net cash generation.

SDX ticked every single investment box for me. I would have invested in this company even if the market cap was double current levels, based on the future growth potential and prudent management / governance. The fact that the stock is significantly undervalued made the case even more compelling. Whether oil is found at SD-1X over the coming days is entirely irreverent to my future investment in this company, as over the coming year as production levels increase and gas from SD-1X is tested and rapidly taken to market, the share price will rise to reflect the true value of this company. If no oil is found, the share price will get a little bumpy but this is just short term noise and will quickly pass. If oil is found here however the potential is a fairly rapid doubling and greater of the share price, I personally believe it should double without oil as the company is on track to deliver net cash of $65m + next year including SD-1X flows and that is not including the higher production in Morocco. I always buy and hold, and I have confidence SDX is going to be a share to watch this year and beyond, with or without oil.

[neo26] 04/5/2017 13:02

tidy

it appears so, calm before the storm.

[tidy 2] 04/5/2017 09:11

Indicators are cooling off nicely during this consolidation period.

[pauliewonder] 04/5/2017 08:27

Agree Neo. Your spot on also, if we weren't going for oil also we wouldn't be seeing these games!!