SDX Energy PLC WEST GHARIB PSA EXTENDED FOR 10 YEARS TO 2031 (2544R)

TIDMSDX

RNS Number : 2544R

SDX Energy PLC

05 March 2021

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

5 March 2021

SDX ENERGY PLC ("SDX" or the "Company")

WEST GHARIB PRODUCTION SERVICES AGREEMENT EXTED FOR 10 YEARS TO 2031

SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company, is pleased to announce that it has received final approval from the Egyptian authorities to extend the Production Services Agreements governing its producing Meseda and Rabul oil fields in its West Gharib concession in Egypt until 9 November 2031.

Mark Reid, CEO of SDX, commented:

"We are very pleased to have secured this ten-year extension to the Production Services Agreement which we estimate increases SDX's share of reserves in our core West Gharib oil asset, certified at 2.2 million barrels in our 31 December 2019 CPR, by 60%. With a breakeven price of approximately US$20 Brent and to take advantage of the current strong oil price, we plan to commence in Q2 of this year, a drilling programme of up to twelve wells over the next three years with the goal of growing gross production back to around 3,000bbl/d. This drilling programme is in line with the capex guidance provided to the Market in our 26(th) January 2021 update.

We would like to thank our partners The General Petroleum Company, a wholly owned subsidiary of the Egyptian General Petroleum Corporation, and Dublin Petroleum Limited for their valuable co-operation in agreeing this extension."

The key terms of the extension, in which SDX has a 50% working interest, are as follows:

-- A commitment, irrespective of Brent price, to drill six development wells by 31 December 2022 and one water injection well;

-- If Brent reaches US$55 for twelve consecutive months during the extension period, four further development wells will be drilled during the extension period;

-- If Brent reaches US$60 for twelve consecutive months during the extension period, two further development wells will be drilled during the extension period;

-- Payment of a deferred signature bonus of US$2.0 million (SDX share US$1.0 million). US$1.0 million of this deferred bonus will be paid in monthly installments in the next 12 months and the remaining US$1.0 million will be paid in two installments of US$0.5 million each, on 31 December 2022 and 31 December 2023; and

-- A further contingent bonus of up to US$2.0 million (SDX share US$1.0 million) would be payable if Brent reaches the following price points;

   --      US$75 for a period of six months - a further US$0.5 million is payable 
   --      US$80 for a period of six months - a further US$0.5 million is payable 
   --      US$85 for a period of six months - a further US$1.0 million is payable 

About SDX

SDX is an international oil and gas exploration, production and development company, headquartered in London, United Kingdom, with a principal focus on MENA. In Egypt, SDX has a working interest in two producing assets: a 55% operated interest in the South Disouq gas field in the Nile Delta and a 50% non-operated interest in the West Gharib concession, which is located onshore in the Eastern Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75% working interest in five development/production concessions, all situated in the Gharb Basin. The producing assets in Morocco are characterised by attractive gas prices and exceptionally low operating costs. SDX has a strong weighting of fixed price gas assets in its portfolio with low operating costs and attractive margins throughout, providing resilience in a low commodity price environment. SDX's portfolio also includes high impact exploration opportunities in both Egypt and Morocco.

For further information, please see the Company's website at www.sdxenergy.com or the Company's filed documents at www.sedar.com .

Competent Persons Statement

In accordance with the guidelines of the AIM Market of the London Stock Exchange, COGE and National Instrument 51-101, the technical information contained in the announcement has been reviewed and approved by Rob Cook, VP Subsurface of SDX. Dr. Cook has over 25 years of oil and gas industry experience and is the qualified person as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies. Dr. Cook holds a BSc in Geochemistry and a PhD in Sedimentology from the University of Reading, UK. He is a Chartered Geologist with the Geological Society of London (Geol Soc) and a Certified Professional Geologist (CPG-11983) with the American Institute of Professional Geologists (AIPG).

For further information:

 
 SDX Energy Plc 
  Mark Reid 
  Chief Executive Officer 
  Tel: [phone] 
 Stifel Nicolaus Europe Limited (Nominated Adviser and Joint Broker) 
  Callum Stewart 
  Jason Grossman 
  Ashton Clanfield 
  Tel: [phone] 
 Peel Hunt LLP (Joint Broker) 
  Richard Crichton 
  David McKeown 
  Tel: [phone] 
 
 Camarco (PR) 
  Billy Clegg/Owen Roberts/Violet Wilson 
  Tel: [phone] 
 

Glossary

 
 "bbl/d"   barrels of oil per day 
 

Forward-looking information

Certain statements contained in this press release may constitute "forward-looking information" as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as forward-looking information. In particular, statements regarding the Company's forecast production from West Gharib and the proposed drilling campaign of up to twelve wells, should all be regarded as forward-looking information.

The forward-looking information contained in this document is based on certain assumptions, and although management considers these assumptions to be reasonable based on information currently available to them, undue reliance should not be placed on the forward-looking information because SDX can give no assurances that they may prove to be correct. This includes, but is not limited to, assumptions related to, among other things, commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost - savings; applicable tax laws; future production rates; receipt of necessary permits; the sufficiency of budgeted capital expenditures in carrying out planned activities, and the availability and cost of labour and services.

All timing given in this announcement, unless stated otherwise, is indicative, and while the Company endeavours to provide accurate timing to the market, it cautions that, due to the nature of its operations and reliance on third parties, this is subject to change, often at little or no notice. If there is a delay or change to any of the timings indicated in this announcement, the Company shall update the market without delay.

Forward-looking information is subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward - looking statements. Such risks and other factors include, but are not limited to, political, social, and other risks inherent in daily operations for the Company, risks associated with the industries in which the Company operates, such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; permitting risks; the ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. Readers are cautioned that the foregoing list of risk factors is not exhaustive and are advised to refer to the Principal Risks & Uncertainties section of SDX's Annual Report for the year ended 31 December 2019, which can be found on SDX's SEDAR profile at www.sedar.com , for a description of additional risks and uncertainties associated with SDX's business.

The forward-looking information contained in this press release is as of the date hereof and SDX does not undertake any obligation to update publicly or to revise any of the included forward -- looking information, except as required by applicable law. The forward -- looking information contained herein is expressly qualified by this cautionary statement.

Oil and Gas Advisory

Certain disclosures in this news release constitute "anticipated results" for the purposes of National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") of the Canadian Securities Administrators because the disclosure in question may, in the opinion of a reasonable person, indicate the potential value or quantities of resources in respect of the Company's resources or a portion of its resources. Without limitation, the anticipated results disclosed in this news release include estimates of volume, flow rate, production rates, porosity, and pay thickness attributable to the resources of the Company. Such estimates have been prepared by Company management and have not been prepared or reviewed by an independent qualified reserves evaluator or auditor. Anticipated results are subject to certain risks and uncertainties, including those described above and various geological, technical, operational, engineering, commercial, and technical risks. In addition, the geotechnical analysis and engineering to be conducted in respect of such resources is not complete. Such risks and uncertainties may cause the anticipated results disclosed herein to be inaccurate. Actual results may vary, perhaps materially.

Use of the term "boe" or the term "MMscf" may be misleading, particularly if used in isolation. A "boe" conversion ratio of 6 Mcf: 1 bbl and a "Mcf" conversion ratio of 1 bbl: 6 Mcf are based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

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March 05, 2021 02:00 ET (07:00 GMT)