SDX Energy — Morocco – a simple, low-cost operation with growth

SDX Energy (LN: SDX)

Last close As at 28/03/2024

17.50

0.00 (0.00%)

Market capitalisation

36m

More on this equity

Research: Energy & Resources

SDX Energy — Morocco – a simple, low-cost operation with growth

Key takeaways from SDX’s analysts’ site visit to Morocco include the asset’s operational simplicity and low operating costs. Realised gas prices averaging $10/mcf combined with a 10-year tax holiday drive unit netbacks in the $8.5-9.0/mcf range. Demand growth potential in Kenitra, the fourth largest industrial town in Morocco, was very visible with the emphasis on SDX to grow the company’s gas resource base in order to underpin contract base expansion. SDX’s 2017/18 well programme should go some way to deliver on a 2018 production target of an 8-10mmscfd exit rate, and we estimate the market could support an incremental 10-11 wells of gas resource in 2019/2020. We have increased our core NAV from 52.5p/share to 58.3p/share (+11%) and RENAV from 64.0p/share to 65.6p/share (+3%).

Energy & Resources

SDX Energy

Morocco - a simple, low-cost operation with growth

Site visit

Oil & gas

30 January 2018

Price

53.0p

Market cap

£108m

£0.72/US$

Net cash ($m) at 30 June 2017

28

Shares in issue

204.5m

Free float

80%

Code

SDX

Primary exchange

AIM

Secondary exchange

TSX Venture

Share price performance

%

1m

3m

12m

Abs

(4.5)

0.0

38.6

Rel (local)

(4.3)

(2.1)

28.3

52-week high/low

67.4p

38.1p

Business description

SDX is a North African onshore E&P listed in Toronto and London. It has oil and gas production in Egypt, and Moroccan gas production. The company’s nine-well Moroccan well programme has an 80% success rate to date.

Next events

ONZ7 well flow test

Q118

2018 Sebou campaign

H118

Analysts

Sanjeev Bahl

+44 (0)20 3077 5700

Elaine Reynolds

+44 (0)20 3077 5713

SDX Energy is a research client of Edison Investment Research Limited

Key takeaways from SDX’s analysts’ site visit to Morocco include the asset’s operational simplicity and low operating costs. Realised gas prices averaging $10/mcf combined with a 10-year tax holiday drive unit netbacks in the $8.5-9.0/mcf range. Demand growth potential in Kenitra, the fourth largest industrial town in Morocco, was very visible with the emphasis on SDX to grow the company’s gas resource base in order to underpin contract base expansion. SDX’s 2017/18 well programme should go some way to deliver on a 2018 production target of an 8-10mmscfd exit rate, and we estimate the market could support an incremental 10-11 wells of gas resource in 2019/2020. We have increased our core NAV from 52.5p/share to 58.3p/share (+11%) and RENAV from 64.0p/share to 65.6p/share (+3%).

Year end

Revenue ($m)

PBT
($m)

CFO
($m)

Net cash ($m)

Capex
($m)

Yield
(%)

12/15

11.4

11.1

(5.2)

8.2

(5.1)

0.0

12/16

12.9

(26.7)

(1.9)

4.7

(11.9)

0.0

12/17e

36.3

6.0

25.7

25.5

(23.5)

0.0

12/18e

65.2

31.2

49.8

26.1

(50.6)

0.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

80% exploration success rate to date

SDX’s 2017/18 Moroccan well campaign has got off to an excellent start with an 80% success rate to date. Discovered resource within compartmentalised gas pockets ranges from 0.8bcf to 2bcf, but with completed well costs of just $2m and net-backs of $8-9/mcf, risked returns are attractive. The remainder of the company’s drilling campaign targets slightly higher risk prospectivity, with follow-on potential across Gharb central and the Lalla Mimouna exploration permit in the success case. The basin-wide unrisked prospective resource stands at c 50bcf providing adequate resource on which to base future drilling campaigns.

Bolstering the gas resource base to meet demand

We estimate that SDX will need to add 11.9bcf of gas beyond the current nine-well drilling campaign in order to support risked market demand. This would require a further 10-11 wells to be drilled over the next 12-24 months. We do not include this incremental value in our NAV at this point in time, with value expected to be unlocked as drilling is committed and gas contracts signed.

Valuation: Core NAV increases 11% to 58.3p/share

Key changes to our valuation include a revised production profile for Morocco, the inclusion of residual value for the company’s Kenitra-based pipeline network (at 50% of cost), and asset updates for the latest company production and capex guidance. Other material changes include an increase in our short-term oil price assumptions to reflect latest EIA forecasts (long-term Brent remains $70/bbl in 2022), and a mark-to-market for fx movements. Our group RENAV increases by 3% to 65.6p/share.

Kenitra gas demand growth

Kenitra is the fourth largest industrial city in Morocco and is a significant consumer of liquid fuels, LPG and natural gas. Imported liquid fuels and LPG dominate supply (94% of total), despite significant price and operational benefits of using piped natural gas. The key constraint on pipeline gas market penetration has been supply and, to a lesser extent, the time required to connect new customers.

Edison’s recent site visit to Kenitra provided us with an appreciation of the depth of the thermal gas market in Kenitra and the relative ease at which gas can be supplied to customers within key industrial areas including the regions new Atlantic Free Zone (AFZ) - a regional hub offering significant tax incentives for exporters located within its boundary.

SDX’s current gas customer base is dominated by three large customers: Super Cerame, CMCP, and Peugeot (located within the AFZ) which combined are forecast to consume approximately 6mmscfd of natural gas. Incremental demand is set to come from smaller thermal offtakers with the potential for a significant step-up in demand if SDX was to enter the power generation market and supply the Kenitra-based, state-owned ONEE power plant.

We base our market demand forecasts on company analysis of identified natural gas customers and SDX’s connection goals for 2018. Combined, these act as the basis for the company’s 2018 Moroccan sales guidance of an 8-10mmscfd exit rate. Demand analysis suggests that piped gas sales have the potential to increase dramatically over the next two to three years, especially if SDX is able to penetrate the power generation sector.

We see risk around this step-up in gas demand, as it is unlikely that every identified customer would necessarily switch to gas whilst some may already have existing long-term fuel supply arrangements. In addition, negotiating with large-scale state-owned entities adds additional risks and complexity. We have risked SDX’s projected market demand forecasts using a simplistic approach applying a 75% risk to existing customer Super Cerame’s second plant, a 50% risk to new thermal customers and a 20% risk to power plant consumers. Our risked demand profile is shown in Exhibit 1, which implies a 2018 exit rate of just over 10mmscfd, growing to 17.5mmscfd over the medium term. This is materially ahead of the production profile implied by our base case 2P reserves and risked volumes from the current nine well campaign. In other words, further gas supply, from incremental discoveries or externally sourced gas, would be required to meet our projected risked demand.

Exhibit 1: Gas demand forecasts

Exhibit 2: Key consumers – risked demand

Source: Edison Investment Research, SDX Energy

Source: Edison Investment Research, SDX Energy

Exhibit 1: Gas demand forecasts

Source: Edison Investment Research, SDX Energy

Exhibit 2: Key consumers – risked demand

Source: Edison Investment Research, SDX Energy

SDX Kenitra piped gas supply

As of December 2017, SDX Energy had a Moroccan 2P gas reserve base of 7.1bcf backed by 10 producing wells connected to pipeline infrastructure. The company’s current nine-well drilling campaign is targeting 15bcf of resource, with four discoveries out of five wells drilled to date.

To meet growing gas demand, SDX is incentivised to de-risk further gas resource across its Gharb Basin asset base. Much of the early success in the basin was on larger structures delineated on multi-trace 2D seismic, while more recent exploration has relied on high-resolution 3D seismic in order to define smaller pockets of trapped gas. SDX has refined its exploration strategy to focus on bright amplitudes in the basin which are indicative of reservoir sand, which this is then combined with inversion datasets in order to differentiate between fluid phases. The company’s current campaign has had an 80% success rate, or 100% success rate with wells drilled on high-resolution 3D. Three E&A wells remain to be drilled in 2018:

KSS-2 – a 1.5bcf prospect targeting Guebbas and Gaddari sands penetrated at Ksiri. SDX estimates a 58% geological chance of success (GCOS). Success here has the potential to de-risk a series of fault separated gas pockets with similar amplitude anomalies

SAH-2 – the SAH-2 well is a low risk (80% GCOS) well targeting a small gas pocket adjacent to existing production

LMS-1 – the first of two wells to be drilled on the Lalla Mimouna exploration permit targeting sand potential in the Miocene basin depocentre. LMS-1 is a large, unique anomaly located on the top Nappe and is an unusual seismic response not seen before across the 3D dataset. The central compartment of LMS-1 is estimated to hold 2bcf of gas but management regards the risk as higher than historical prospects at c 28% GCOS. Trap and charge remain key risks.

LNB-1 – a bright channel sand that is viewed as lower risk than LMS-1 and more typical of targets across the Lalla Mimouna exploration permit.

In addition to the wells described above, SDX is to begin a high-resolution 3D seismic survey over the Gharb centre permit in order to build a prospect inventory to the north of existing production and south-east of Lalla Mimouna. SDX Energy estimates the basin-wide unrisked prospective resource to be 50bcf.

Moving resource into reserves and contracted gas sales

In order to contract new gas supply, SDX is obliged to provide visibility of reserves which is the intention of the company’s 2018 exploration campaign. We estimate that SDX ended FY17 with c 5.2bcf of 2P gas reserves (excluding 2017 discoveries) which we forecast would rise to c12.7bcf including existing discoveries and risked 2018 campaign resource (2P + nine-well campaign) .

Our risked five-year demand forecast in Exhibit 1 consumes 24.6bcf of gas, implying further gas will need to be discovered in 2018/19 in order for this to be met. Based on an average discovery size of 1.5bcf and a GCOS of 75%, we estimate that an incremental 10-11 wells are required in order to meet this demand forecast. SDX sees the remaining unrisked exploration potential at over 50bcf, and as such we do not see this as a limiting factor. We note that our valuation only includes value for 2P reserves and the nine-well campaign and excludes incremental value from future Moroccan drilling activity.

Exhibit 3: Reserves required to meet demand

Exhibit 4: SDX Morocco asset map

Source: Edison Investment Research

Source: SDX Energy

Exhibit 3: Reserves required to meet demand

Source: Edison Investment Research

Exhibit 4: SDX Morocco asset map

Source: SDX Energy

A key take-away from our site visit was the simplicity of the company’s above ground operations. Gas is virtually export quality at the wellhead and land access for well-sites and pipe laying is straightforward. SDX has not experienced any pipeline-related integrity issues, which is a testament to the quality of the recovered gas and the effectiveness of the relatively simplistic cathodic protection system employed. Pipeline gas thefts are so far unheard of. The pictures below show the simplicity of the company’s well sites, top-side separation facilities and pipe-laying operations.

Exhibit 5: KSS-15 well site

Exhibit 6: Three-inch pipelay to Peugeot

Source: Edison Investment Research

Source: Edison Investment Research

Exhibit 5: KSS-15 well site

Source: Edison Investment Research

Exhibit 6: Three-inch pipelay to Peugeot

Source: Edison Investment Research

Valuation

We have updated our valuation to reflect our latest assumptions of gas sales growth in Morocco, and updated our asset models to reflect SDX’s latest guidance for its 2018 production and capital spend. Other material changes to our NAV include an increase in short-term oil price assumptions and a mark-to-market for recent fx movements. We reflect the EIA’s latest forecasts for Brent and WTI crude in 2018 and 2019, with our 2018 Brent crude price assumption rising from 50.0$/bbl to 59.7$/bbl. Our long-term oil price remains unchanged at $70/bbl in 2022. We continue to use an average Moroccan gas price of $10/mcf in 2018 rising to $12.5/mcf by 2022.

Valuing SDX’s Morocco asset

We base our valuation of SDX’s Moroccan asset on the exploitation of the company’s 2P reserve and committed nine-well campaign – an estimated 12.7bcf of gas. Our base case production profile is shown in Exhibit 1 of this note. We clearly see longer-term upside within the company’s Moroccan asset portfolio given our estimates of market risked gas demand, remaining Gharb Basin resource potential and historical exploration success rates. Our valuation of this future potential is sensitive to a number of risks and uncertainties including:

future exploration success rates and average discovery size

rate of exploration drilling

rate at which new customers are added to the pipeline network, in particular the timing and terms under which large-scale power plant customers are added

success of the company’s Gharb Centre high-resolution 3D seismic survey in located undrilled gas pockets and the company’s upcoming Lalla Mimouna exploration campaign

We see material value over and above our base case to reflect future gas sales, which would be based on yet to be discovered/acquired gas resource which we have chosen to reflect as residual value in the company’s installed pipelined network and customer connections. This residual value component is based on a US pipeline norm of $100,000 per inch mile of installed pipeline, discounted at 50% to reflect depreciated service life. This equates to $16m or 5.7p/share in our NAV valuation. This approach reflects the optionality that SDX retains in supplying future demand in existing Kenitra industrial zones and the AFZ. Supplied gas could come from future exploration, or through a JV with a CNG/LNG importer.

Key changes to NAV: 11% increase in core NAV

Key changes in our NAV include an increase in our Morocco valuation, and oil levered assets base on our higher oil price assumption for 2018/19. We only include the Kelvin and Ibn Yunus prospects in our South Disouq exploration valuation (which previously included incremental risked prospective upside) with modified risking to reflect the latest guidance from management.

Exhibit 7: Changes to Edison valuation

Old (p/share)

New (p/share)

Change (%)

Core NAV

52.5

58.3

11%

Development NAV

1.6

2.1

30%

Exploration risked upside

9.8

5.2

-46%

Group RENAV

64.0

65.6

3%

Source: Edison Investment Research

Exhibit 8: NAV summary

Asset

Number of shares: 204.5m

 

Recoverable reserves

 

Net risked value@ 12.5% 

Country

Diluted WI

CoS

Gross

Net WI

Net

NPV

GBp

C$

 

%

%

mmboe

$/boe

$m

per share

Net (debt)/cash - December 2017e

100%

100%

25

8.9

0.16

SG&A - NPV10 of four years

100%

100%

(17)

(5.9)

(0.10)

Net financial income (expenses) NPV two years

100%

100%

0

0.0

0.00

NPV of net receivable recovery

100%

100%

20

6.9

0.12

Sebou pipeline residual value (50% cost)

100%

100%

16

5.7

0.10

Production

Meseda base case + Rabul

Egypt

50%

100%

5.5

2.7

1.0

5.4

15

5.2

0.09

Meseda base + workovers + Rabul

Egypt

50%

90%

5.1

2.5

1.0

4.1

10

3.3

0.06

Gemsa 1P

Egypt

50%

100%

3.3

1.6

1.6

10.2

17

5.8

0.10

Gemsa 2P

Egypt

50%

100%

1.4

0.7

0.7

4.6

3

1.1

0.02

Sebou 2P

Morocco

75%

100%

0.7

0.5

0.5

41.6

22

7.7

0.14

Sebou – nine-well campaign

Morocco

75%

80%

1.6

1.2

1.2

15.4

15

5.1

0.09

South Disouq SD-1X

Egypt

55%

80%

21.4

11.7

11.7

4.4

41

14.5

0.25

Core NAV

 

 

 

38.9

21.1

17.8

5.8

167

58.3

1.02

Development upside

Meseda base + workovers + waterflood + Rabul

Egypt

50%

50%

6.2

3.1

1.2

1.7

3

0.9

0.02

Gemsa - Edison modelling on full field

Egypt

50%

75%

1.6

0.8

0.8

5.5

3

1.2

0.02

Exploration (known)

SouthDisouq-Kelvin

Egypt

55%

24%

15.1

8.3

8.3

3.4

7

2.3

0.04

SouthDisouq-IY

Egypt

55%

32%

14.6

8.0

8.0

3.2

8

2.9

0.05

Full NAV

 

 

 

76.4

41.3

36.1

 

188

65.6

1.15

Source: Edison Investment Research

Financials

We forecast SDX Energy ended 2017 with just over $25m of cash and no debt as well as a net working capital position of c $27m which continues to unwind after the Circle Oil acquisition. The company remains fully funded for anticipated spend in 2018, with flexibility to consider bolt-on acquisition opportunities. Our 2019 and 2020 forecast free cash flow will, to a large extent, be driven by asset production performance, prevailing commodity prices and committed capex. In our base case, we anticipate a material build up in cash available for NAV accretive investment or distribution to shareholders.

Exhibit 9: Movements in forecast operational cashflow (CFO)

Source: Edison Investment Research

Exhibit 10: Financial summary

Accounts: IFRS, Yr end: December, USD: Thousands

 

2015

2016

2017E

2018E

2019E

2020E

Total revenues

 

 

11,372

12,914

36,281

65,247

102,051

96,537

Cost of sales

 

 

(4,973)

(5,282)

(9,828)

(13,639)

(15,409)

(13,405)

Gross profit

 

 

6,399

7,632

26,453

51,607

86,642

83,132

SG&A (expenses)

 

 

(3,746)

(2,457)

(5,344)

(3,997)

(3,616)

(4,328)

Other income/(expense)

 

 

(3)

479

0

0

0

0

Exceptionals and adjustments

(7,676)

(29,089)

(1,000)

(1,000)

(1,000)

(1,000)

Depreciation and amortisation

 

 

(2,057)

(3,266)

(14,077)

(15,378)

(17,730)

(16,328)

Reported EBIT

 

 

(7,083)

(26,701)

6,032

31,232

64,296

61,476

Finance income/(expense)

 

 

(96)

4

0

0

0

0

Other income/(expense)

 

 

18,289

0

0

0

0

0

Exceptionals and adjustments

0

0

0

0

0

0

Reported PBT

 

 

11,110

(26,697)

6,032

31,232

64,296

61,476

Income tax expense (includes exceptionals)

 

 

(1,063)

(1,503)

(541)

(1,046)

(8,429)

(8,455)

Reported net income

 

 

10,047

(28,200)

5,492

30,186

55,868

53,021

Shares at end of period - basic

 

 

38

80

204

204

204

204

 

 

 

 

 

 

 

 

 

Balance sheet

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

18,401

12,605

26,467

56,669

45,390

36,949

Goodwill

 

 

0

0

0

0

0

0

Intangible assets

 

 

23,473

10,623

8,772

13,836

14,553

15,429

Other non-current assets

 

 

2,106

2,503

2,879

2,879

2,879

2,879

Total non-current assets

 

 

43,980

25,731

38,118

73,384

62,822

55,257

Cash and equivalents

 

 

8,170

4,725

25,469

26,110

97,538

162,914

Inventories

 

 

1,188

1,698

1,698

2,356

2,662

2,316

Trade and other receivables

 

 

6,678

9,463

36,900

29,520

23,616

18,893

Other current assets

 

 

0

0

0

0

0

0

Total current assets

 

 

16,036

15,886

64,067

57,987

123,816

184,122

Non-current loans and borrowings

 

 

0

0

0

0

0

0

Other non-current liabilities

 

 

286

290

290

290

290

290

Total non-current liabilities

 

 

286

290

290

290

290

290

Trade and other payables

 

 

3,556

3,674

10,000

8,000

6,400

5,120

Current loans and borrowings

 

 

0

0

0

0

0

0

Other current liabilities

 

 

928

389

389

389

389

389

Total current liabilities

 

 

4,484

4,063

10,389

8,389

6,789

5,509

Equity attributable to company

 

 

55,246

37,264

91,506

122,692

179,559

233,581

Non-controlling interest

 

 

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

Cashflow statement

 

 

 

 

 

 

 

 

Profit before tax

 

 

11,110

(26,697)

6,032

31,232

64,296

61,476

Net finance expenses

 

 

0

0

0

0

0

0

Depreciation and amortisation

 

 

2,057

3,266

14,077

15,378

17,730

16,328

Share based payments

 

 

761

(47)

1,000

1,000

1,000

1,000

Other adjustments

 

 

(12,281)

25,742

(1,156)

(1,503)

(2,159)

(1,736)

Movements in working capital

 

 

(2,183)

(3,440)

6,289

4,722

3,998

3,789

Interest paid / received

 

 

0

0

0

0

0

0

Income taxes paid

 

 

(4,678)

(766)

(541)

(1,046)

(8,429)

(8,455)

Cash from operations (CFO)

 

 

(5,214)

(1,942)

25,701

49,783

76,437

72,403

Capex

 

 

(5,120)

(11,890)

(23,488)

(50,645)

(7,168)

(8,763)

Acquisitions & disposals net

 

 

0

0

(30,000)

0

0

0

Other investing activities

 

 

4,836

825

781

1,503

2,159

1,736

Cash used in investing activities (CFIA)

 

(284)

(11,065)

(52,707)

(49,142)

(5,009)

(7,027)

Net proceeds from issue of shares

 

 

0

10,127

47,750

0

0

0

Movements in debt

 

 

(3,702)

(96)

0

0

0

0

Other financing activities

 

 

0

0

0

0

0

0

Cash from financing activities (CFF)

 

 

(3,702)

10,031

47,750

0

0

0

Increase/(decrease) in cash and equivalents

 

 

(9,200)

(2,976)

20,744

641

71,428

65,376

Currency translation differences and other

 

 

(565)

(469)

0

0

0

0

Cash and equivalents at end of period

 

8,170

4,725

25,469

26,110

97,538

162,914

Net (debt) cash

 

 

8,170

4,725

25,469

26,110

97,538

162,914

Movement in net (debt) cash over period

 

 

(7,558)

(3,445)

20,744

641

71,428

65,376

Source: SDX Energy accounts, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by SDX Energy and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Pty Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2018 Edison Investment Research Limited. All rights reserved. This report has been commissioned by SDX Energy and prepared and issued by Edison for publication globally. All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Investment Research Pty Ltd (Corporate Authorised Representative (1252501) of Myonlineadvisers Pty Ltd (AFSL: 427484)) and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. This document is provided for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
Edison has a restrictive policy relating to personal dealing. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (ie without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2018. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

More on SDX Energy

View All

Latest from the Energy & Resources sector

View All Energy & Resources content

Energy & Resources

ABO Wind: EKF 2023 QuickView

Energy & Resources

Canacol Energy — 2022 ESG report highlights new goals

Energy & Resources

Canacol Energy — Q2 results in line

Energy & Resources

Canacol Energy — Increasing activity

Research: TMT

EMIS Group — Loss of Welsh GP business

EMIS has been informed that it has not been selected as a preferred vendor for the NHS Wales Primary Care framework agreement. The 195 GP practices currently using EMIS Web, which generate annual revenues of c £2m at below group average operating margins, will need to transition to a new supplier over the course of FY19 and FY20. We estimate that this could have a less than 0.5% impact on FY19 EPS and less than 1% on an ongoing basis once all practices have transitioned. So soon after the news regarding issues in the customer support process, this is clearly disappointing. However, the financial impact is marginal and confirms that EMIS is focused on profitability when winning or retaining business.

Continue Reading

Subscribe to Edison

Get access to the very latest content matched to your personal investment style.

Sign up for free