South Disouq delivering ahead of expectations

SDX Energy 12 December 2019 Outlook
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SDX Energy

South Disouq delivering ahead of expectations

First gas

Oil & gas

12 December 2019

Price

21p

Market cap

£44m

US$1.23/£

Net cash ($m) at 30 September 2019

12.6

Shares in issue

204.7m

Free float

84%

Code

SDX

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.8)

0.0

(51.2)

Rel (local)

(6.6)

(0.3)

(55.3)

52-week high/low

44.3p

16.3p

Business description

SDX Energy is a North African E&P listed in London. SDX produces oil and gas in Egypt and gas in Morocco.

Next events

FY19 results

Q120

Analysts

Carlos Gomes

+44 (0)20 3077 5700

Elaine Reynolds

+44 (0)20 3077 5713

SDX Energy is a research client of Edison Investment Research Limited

SDX Energy announced early in November 2019 the commencement of production of natural gas in South Disouq, in Egypt. We expect this achievement to have a material effect on SDX’s cash generation in the coming years. The field has already achieved a plateau production of 50mmscfed, three months ahead of management expectations. Along with its Q319 results, SDX also outlined its exploration and appraisal drilling programme for end-FY19 and FY20, with up to five wells to be drilled in Egypt and 12 wells to be drilled in Morocco. In this note, we update our 2019 production to account for South Disouq contribution, and for 2020 at production plateau. We also update our exploration target resources. Our valuation moves from a RENAV of 49.8p/share to 50.3p/share (+1%), while our core NAV increases from 45.0p/share to 45.7p/share (+2%).

Year-end

Revenue ($m)

PBT*
($m)

Operating
cash flow ($m)

Net cash
($m)

Capex
($m)

Production
(kboed)

12/17

39.2

32.8

21.6

25.8

(24.9)

3.2

12/18

53.7

7.1

36.2

17.3

(44.8)

3.6

12/19e

45.6

8.3

22.6

5.1

(36.1)

3.6

12/20e

55.3

13.1

30.1

14.8

(21.4)

7.3

Note: *PBT is normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Excludes Circle acquisition ($28.1m).

South Disouq on-stream

Bringing South Disouq to production was SDX’s biggest objective for 2019. On 7 November 2019 first gas was achieved with production reaching 35mmscfed in the first two weeks of operations, and plateau production of 50mmscfed being achieved in December 2019, three months ahead of management expectations. Natural gas production from South Disouq will have a material effect on SDX’s cash generation in the coming years, with an Edison estimated contribution of c $15m in annual net revenues. This will shift SDX’s hydrocarbon production mix from 50% to 75% gas.

2019–20 exploration programme

Exploration drilling in South Disouq is due to commence in Q120. The first two wells will target the Salah and Sobhi prospects in the Kafr El Sheikh, which if successful can be tied back at low cost to the Central Processing Facility. The third well will target the deeper Cretaceous reservoir, high-impact Young prospect, which in case of success would open up a new play. In Morocco, to meet forecast demand from gas customers, SDX commenced a 12-well drilling campaign in October 2019 targeting gross mean prospective resources of 15bcf in its operated acreage.

Valuation: Core NAV increase by 2% to 45.7p/share

Our core NAV increases by 2%, driven by South Disouq progress in 2019 being ahead of our previous estimates. We also update SDX’s exploration and appraisal target resources for 2020, which, in combination with the core NAV, results in a RENAV of 50.3p/share, 1% higher than our previous valuation. The current share price appears to be heavily discounting SDX sanctioned projects, which correspond to 91% of our RENAV, as well as any future growth potential in Egypt and Morocco.

Investment summary

North Africa focus

SDX Energy is engaged in the exploration and production of oil and gas with current activities focused on Egypt and Morocco. The company has interests in nine concessions with short- and long-term potential and intends to develop the potential of its existing concessions while seeking growth opportunities within North Africa. SDX’s strategy is to create value through low-cost production growth and low-cost, high-impact exploration in its region of activity.

Core NAV corresponds to 91% of our 50.3p/share RENAV

We value SDX based on the NPV12.5 of the company’s producing assets and risked value of contingent and prospective resource. Recent changes in our valuation include the updated targeted mean unrisked prospective resource in Egypt at 275bcf, and 15bcf in Morocco. We also update our foreign exchange assumptions to reflect a stronger US dollar versus the pound sterling over the last six months and our short-term price assumptions based on EIA forecasts to $63.59/bbl and $60.10/bbl for 2019 and 2020. A breakdown of our RENAV is provided in Exhibit 1.

Exhibit 1: SDX Energy NAV waterfall

Source: Edison Investment Research

Financials: Exploration programme fully funded

SDX maintains a strong balance sheet with our forecast year-end 2019 net cash of c $5.1m and $10m loan facility undrawn. 2019–20’s well programme is fully funded from cash and cash flow, and we believe SDX’s assets have the capacity to attract debt to fund inorganic growth.

Risks and sensitivities: Asset concentration in North Africa

SDX Energy is exposed to generic sector uncertainties, such as volatile underlying commodity prices and currency movements; however, fixed price, long-term gas contracts provide an element of certainty to cash flow forecasts. Subsurface risks relate to SDX’s ability to recover gas and oil volumes in line with mid-case management/audited estimates. We view key risks as geopolitical, with the company’s assets concentrated in North Africa. Nevertheless, we note that Egypt is a mature hydrocarbon province and both Morocco and Egypt have relatively stable energy ministries and supportive fiscal regimes.


Egypt: South Disouq

SDX achieved the key milestone of first gas from South Disouq in November 2019. The company achieved a target gross plateau rate of 50mmscfed three months ahead of expectations in December 2019. The gas production from South Disouq, together with the expected shut down of the late life NW Gemsa field will shift the company’s producing hydrocarbon mix from 50% to 75% gas.

An exploration drilling campaign of up to five wells will follow in the coming year, commencing with two Kafr El Sheikh (KES) prospects similar to those seen in the existing producing wells. The third well will test a deeper, larger and potentially play-opening Cretaceous prospect, Young, which at 162bcf holds over half of the c 300bcf of prospective resources identified in South Disouq. The final two wells are also planned to be Cretaceous targets and will be drilled pending a successful outcome in Young.

First gas at South Disouq

South Disouq came onstream in November 2019 and to date has performed beyond expectations with the ramp-up to 50mmscfed proceeding faster than expected. Each of the four wells hooked up to the Central Processing Facility (CPF) tested at their expected rates of between 8mmscfed and 15mmscfed and production increased from 24mmscfed to 35mmscfed in the two weeks since first gas, and have now stabilised at the target gross production plateau of 50mmscfed.

Exhibit 2: South Disouq development map

Exhibit 3: South Disouq CPF

Source: SDX Energy

Source: SDX Energy

Exhibit 2: South Disouq development map

Source: SDX Energy

Exhibit 3: South Disouq CPF

Source: SDX Energy

The CPF is simple and straightforward. Produced gas is gathered at an inlet manifold before the condensate and water are separated from the gas. The gas is then compressed and exported via a metering station to THE Grid via a 10km 12” pipeline. Both the condensate and water are trucked away: the condensate for sale and the water for treatment.


2020 exploration targets

Exploration drilling is due to commence in Q120, pending final partner approval. The first two wells will be Salah and Sobhi, both of which are KES prospects and, if successful, these can be tied back at low cost to the CPF.

Exhibit 4: South Disouq work programme

Source: SDX Energy, Edison Investment Research

Three out of the four existing South Disouq production wells produce from the Abu Madi reservoir, but the fourth well, Ibn Yunus-1x, produces from the KES reservoir. Ibn Yunus-1x discovered gas in the shallower KES reservoir in 2018 and produced up to 39.3mmscfd during testing. Like Ibn Yunus-1x, Salah and Sobhi are similar stratigraphic traps that are identifiable as amplitude highs on 3D seismic. SDX estimates that Salah contains 75.1bcf, and Sobhi holds 31.8bcf of gross mean recoverable resources across three sandstone horizons. These company figures have been updated from the ERCE CPR figures from March 2019 following the interpretation of 170km2 of 3D seismic that was acquired in late 2018/early 2019. SDX has assigned a 35% geological chance of success (GCoS) to both prospects, with the presence of trap seen as the key risk.

Exhibit 5: South Disouq licence map

Source: SDX Energy

For the third well in the exploration campaign, the company will target the deeper Cretaceous reservoir in the Young prospect, c 10km to the west of South Disouq. The prospect is a faulted four-way dip closure, with four potential sandstone horizons within the reservoir. Success here would open up a new play, which SDX would immediately follow up with two further Cretaceous wells (which conversely will not be drilled if hydrocarbons are not encountered). Young is a higher-impact, higher-risk prospect than Salah and Sobhi with company estimated gross mean recoverable resources of 162bcf and a GCoS of 17%.

NW Gemsa: Uneconomic from early 2020

NW Gemsa is a late-life asset with declining production due to increasing water cut. SDX (50%WI) carried out nine workovers to offset the decline in 2019, but the field is now expected to become uneconomic in early 2020 unless opex can be reduced significantly. The company will exit with the loss of the current gross production of 3,000–3,200boed; however, the state will be liable for all aspects of decommissioning.

Morocco: 12-well drilling campaign

To continue to meet forecast demand from gas customers, SDX commenced a 12-well drilling campaign in October 2019 targeting gross mean prospective resources of 15bcf in its operated Gharb Basin acreage in Morocco (SDX: 75% working interest). The company is guiding to an exit rate of 6.0–6.5mmscfd to meet existing demand in 2019. In addition to accessing reserves to meet demand, the campaign is also designed to test a new play, opening areas of prospectivity across the portfolio.

Exhibit 6: Morocco licence map

Source: SDX Energy

Campaign covers a diverse range of prospects

The first seven wells are low-risk appraisal wells targeting prospects close to existing infrastructure in the Gharb centre. These wells can be tied in quickly, at low cost, and are similar in geological risk to the discoveries already made and producing in this area.

The next two wells will be of moderate risk at a step-out location to the north of the Gharb Centre and beyond the reach of existing infrastructure. The prospects are similar to previous discoveries made in Sebou but sit in an untested area. The BMK-1 well is the larger step out of the two, in the Beni Malek cluster area, while the OYF-2 well is located between the Gharb Centre and BMK-1. Success would open up this area of the concession for follow-on drilling.

Exhibit 7: Morocco prospect map

Source: SDX Energy

The final three wells will be higher-risk exploration wells in the Lalla Mimouna Nord concession, re-testing the Lalla Mimouna thermogenic gas play at LNB-2, LMS-2 and LGC-1. In the event that the first of these three wells do not meet expectations, the company may decide to return to its core producing area and drill two smaller, lower-risk prospects to add additional reserves instead. Drilling is expected to be completed in Q120.


Management

Non-executive chairman: Michael Doyle is a professional geophysicist with more than 35 years’ industry experience and was a founding director and chairman of Madison PetroGas from its inception in 2003. Mr Doyle is a principal of privately held CanPetro International. Mr Doyle was previously a principal and chief executive officer of Petrel Robertson, where he was responsible for providing advice and project management to clients throughout the world. Prior to that, he held a variety of exploration positions at Dome Petroleum and Amoco Canada.

CEO: Mark Reid has over 20 years’ experience in numerous sectors including financial services, investment banking and oil & gas. He has had significant exposure to M&A transactions and the equity and debt capital markets. Prior to becoming CEO in 2019, he was CFO at SDX and between 2009 and 2015 he was finance director at AIM-listed Aurelian and Chariot. Prior to this, he worked at BNP Paribas Fortis and Ernst & Young Corporate Finance advising on M&A, IPO and other fund-raising transactions. Mr Reid has an MBA and is a member of the Institute of Chartered Accountants of Scotland.

CFO: Nicholas Box was appointed as CFO and Director in November 2019. He joined SDX Energy in 2016 as group financial controller having previously worked for PwC in the UK, Australia and Mongolia, primarily in the natural resources sector. He has over 13 years’ professional experience in accounting, capital markets transactions, post-merger integrations and internal controls. Mr Box is a qualified chartered accountant as a member of the Institute of Chartered Accountants in England and Wales.

Director: Amr Al Menhali was appointed CEO of Waha Capital in September 2019. Waha Capital is SDX’s largest shareholder, through its subsidiary, SDX SPV, with a 19.48% interest in the company. Mr Al Menhali was appointed to the SDX board in November 2019. He has over 20 years’ experience in the financial services industry in a variety of leadership positions, including as CEO of one of the leading banks in the UAE. Mr Al Menhali sits on the boards of several local and international companies across diverse sectors.

Egypt Country manager: Mohamed Farid is an accountant by background and has 28 years’ experience, predominantly in the oil and gas sector. Prior to joining SDX, he was CEO for the upstream entities owned by one of the biggest private equity groups in North Africa, managing a total investment of $1.5bn. He previously worked for BG and BP in Africa, Asia, Europe and the Middle East where he acquired significant exposure to M&A in the energy sector.

Morocco Country manager: Lonny Baumgardner has over 25 years’ experience in oil & gas. He commenced his career as a drilling engineer in Canada. Mr Baumgardner started his international experience in Saudi Arabia, and has since worked in Tanzania, Greece, Australia and Egypt. Mr Baumgardner has a broad spectrum of technical, operational and general management experience.

Risks and sensitivities

Company specific risks and sensitivities include:

North Africa – SDX’s assets are concentrated in North Africa, and while Morocco and Egypt have mature hydrocarbon sectors and stable fiscal regimes, changes in leadership can drive uncertainty.

Egyptian receivables – SDX continues to reduce its Egyptian receivables and does not seem to have issues in collecting payments, possibly because it is prepared to accept Egyptian pounds (rather than US dollars).

Partner risk – SDX is reliant on its Egyptian partner supporting technical work programmes and development plans such that cash calls are met. SDX’s partner in South Disouq, IPR Energy Group, has been supportive and, assuming future development plans deliver a strong risked return on investment, we expect this support to continue.

Generic sector risks and sensitivities

Commodity price volatility: SDX has exposure to long-term fixed price gas price contracts that somewhat mitigate this risk.

Geological risk and uncertainty and reservoir performance uncertainty.

Small-/mid-cap availability of funding.

Valuation

We value SDX using an asset-by-asset NAV derived from detailed DCF modelling. Core value includes production, development and contingent resources that could be developed, while exploration is valued only if wells are planned and funded in the next 12 months. We apply a 12.5% discount rate given the geographical distribution of the assets and the size of the company. Our long-term oil price assumption is $70/bbl in 2022, inflated at 2.5% onwards, although our near-term assumptions for 2019 and 2020 follow EIA estimates. We assume Moroccan gas prices of $10.59/mcf in 2019 inflating at 2.5%.

Our updated valuation includes a 100bcf gas development at South Disouq and drill-ready gas prospects targeting c 275bcf of mean unrisked prospective resource in Egypt. In Morocco, we include our estimates of current discovered resource and we also include Lalla Mimouna discoveries and 12 planned appraisal/development wells in our valuation, targeting 15bcf. Nine of these wells are included in our core valuation, as risks are only around individual wells meeting the minimum threshold for commerciality – we include these at a 75% chance of success for nine of these wells. The remaining three riskier Lalla Mimouna wells step out of SDX’s core area and we assume a 30% chance of geological success.

Exhibit 8: SDX Energy detailed valuation

Asset

Country

Diluted WI

%

CoS

%

Recoverable reserves

Net risked value @12.5%

Gross

Net WI

Net

NPV

Absolute

Per share

mmboe

mmboe

mmboe

$/boe

$m

p/share

Net cash at December 2018

17.3

6.9

SG&A – NPV12.5 of 3 yrs

(19.3)

(7.7)

E&A expense for exploration prospects

(14.2)

(5.6)

NPV of net receivable recovery

16.8

6.6

Sebou Pipeline residual value (30% cost)

9.8

3.9

Production

Meseda Base + Workovers + Rabul

Egypt

50%

90%

8.9

4.4

1.7

6.9

27.5

10.9

Gemsa – to be abandoned in 2020

Egypt

50%

100%

2.2

1.1

1.1

0.5

0.5

0.2

South Disouq/Ibn Yunus

Egypt

55%

100%

16.7

9.2

9.2

2.0

18.4

7.3

Sebou 2P + discoveries to be booked

Morocco

75%

100%

0.9

0.7

0.7

33.1

21.5

8.5

LM discoveries and 2019/2020 9 shallow wells

Morocco

75%

75%

3.1

2.3

2.3

21.2

36.9

14.6

Core NAV

31.7

17.7

14.9

115.3

45.7

Exploration (known)

Kafr El Sheik prospects x2

Egypt

55%

32%

17.8

9.8

9.8

1.6

4.9

2.0

Abu Madi prospects x2

Egypt

55%

27%

1.1

0.6

0.6

1.6

0.3

0.1

Young gas prospect

Egypt

55%

13%

27.0

14.9

14.9

1.6

3.0

1.2

Lalla Mimouna 3 wells

Morocco

75%

23%

0.9

0.7

0.7

21.2

3.3

1.3

Group RENAV

78.6

43.6

40.9

126.8

50.3

Source: Edison Investment Research. Note: Number of shares = 204.7m; FX = US$1.23/£.


Other key changes include: higher production forecast for 2019, due to South Disouq contribution already in Q419, and a plateau production of 50mmscfed for full year 2020; a decrease in our short-term oil price assumptions, which move to $63.59/bbl and $60.10/bbl for 2019 and 2020, respectively; and an updated FX rate for a stronger US dollar versus the pound sterling over the last six months. These changes are highlighted in the table below.

Exhibit 9: Edison updated forecasts

New

Old

Change

2019

2020

2021

2019

2020

2021

2019

2020

2021

Production (kboed)

3.6

7.3

6.0

3.4

6.7

6.3

8%

10%

-4%

Revenue ($m)

45.6

55.3

45.7

45.3

51.5

46.0

1%

7%

-1%

EBITDA ($m)

19.7

29.2

28.1

19.5

29.7

28.4

1%

-2%

-1%

FCF ($m)

(12.2)

9.7

28.0

(12.5)

12.4

27.4

-2%

-22%

2%

 

 

Brent ($/bbl)

63.59

60.10

64.95

65.15

62.00

65.92

-2%

-3%

-1%

SD gas price ($/mcf)

2.85

2.85

2.85

2.85

2.85

2.85

0%

0%

0%

Sebou gas price ($/mcf)

10.59

10.85

11.12

10.59

10.85

11.12

0%

0%

0%

Source: Edison Investment Research

As a result, our RENAV moves from 49.8p/share to 50.3p/share (+1%), with our core value standing at 45.7p/share. We note that our valuation has a significant core value component at 91% of our RENAV, and only 9% attributed to exploration and appraisal. This is materially different to the current share price of 21.0p/share. As can be seen in Exhibit 10, based on the current share price, the market is not pricing in all of SDX’s producing assets, nor its risked prospective resource.

Exhibit 10: SDX Energy valuation waterfall

Source: Edison Investment Research

On 11 December 2019, SDX’s CEO Mark Reid purchased 94,233 ordinary shares at a price of 21.0p/share and Tim Linacre, Non-Executive Director of the company, purchased 40,000 ordinary shares at a price of 21.3p/share. Following this transaction, Mr Reid holds 461,203 ordinary shares in SDX representing 0.225% of the company's issued share capital and Mr Linacre holds 160,000 ordinary shares in the company, representing 0.078% of SDX's issued share capital. These initiatives reflect a sign of optimism from the company’s management on SDX current positioning and value proposition.


Financials

We forecast year-end 2019 net cash of c $5.1m and, as of end September 2019, SDX’s EBRD loan facility of $10m remains undrawn. The amount available under the EBRD facility was recently reduced to $7.5m, in line with the facility’s amortisation schedule, and discussions are underway to extend and re-establish the $10m availability under the facility. Based on the capex projections that underpin our production forecasts and SDX’s committed exploration programme, the company is fully funded and we forecast positive free cash flow from 2020, following South Disouq starting its production. We do not foresee the need for further equity capital at this stage, unless incremental growth capex, over and above our forecasts, is dedicated to new projects or acquisitions.

Exhibit 11: Capex and cash flow forecasts

Source: SDX Energy, Edison Investment Research

Exhibit 12: Financial summary

Accounts: IFRS, Year-end: December, US$000s

 

2015

2016

2017

2018

2019e

2020e

2021e

INCOME STATEMENT

Total revenues

 

11,372

12,914

39,166

53,679

45,561

55,283

45,717

Cost of sales (direct expense)

 

(4,973)

(5,282)

(10,254)

(11,934)

(18,405)

(17,851)

(8,781)

Gross profit

 

6,399

7,632

28,912

41,745

27,156

37,432

36,936

SG&A (expenses)

 

(4,770)

(3,679)

(8,793)

(7,270)

(7,634)

(8,015)

(8,416)

Other income/(expense)

 

1,021

1,701

1,820

1,025

1,333

1,018

767

Exceptionals and adjustments

 

(7,676)

(29,089)

(725)

(10,458)

(1,194)

(1,194)

(1,194)

Depreciation and amortisation

 

(2,057)

(3,266)

(17,824)

(17,268)

(11,149)

(15,988)

(13,919)

Reported EBIT

 

(7,083)

(26,701)

3,390

7,774

8,513

13,253

14,174

Finance income/(expense)

 

(96)

4

(129)

(542)

0

0

0

Other income/(expense)

 

18,289

0

29,558

(174)

(174)

(174)

(174)

Exceptionals and adjustments

 

0

0

0

0

0

0

0

Reported PBT

 

11,110

(26,697)

32,819

7,058

8,339

13,079

14,000

Income tax expense (includes exceptionals)

 

(1,063)

(1,503)

(4,541)

(7,021)

(1,473)

(1,766)

(1,781)

Reported net income

 

10,047

(28,200)

28,278

37

6,866

11,314

12,219

Shares at end of period – basic (m)

 

38

80

204

205

205

205

205

 

 

 

 

 

 

 

 

 

BALANCE SHEET

 

 

 

 

 

 

 

 

Property, plant and equipment

 

18,401

12,605

54,445

48,680

68,147

70,329

59,538

Goodwill

 

0

0

0

0

0

0

0

Intangible assets

 

23,473

10,623

15,231

39,128

44,612

47,866

48,426

Other non-current assets

 

2,106

2,503

2,724

3,394

3,394

3,394

3,394

Total non-current assets

 

43,980

25,731

72,400

91,202

116,153

121,590

111,358

Cash and equivalents

 

8,170

4,725

25,844

17,345

5,137

14,850

42,812

Inventories

 

1,188

1,698

5,157

5,236

5,000

4,849

2,385

Trade and other receivables

 

6,678

9,463

37,656

24,324

19,459

15,567

12,454

Other current assets

 

0

0

0

0

0

0

0

Total current assets

 

16,036

15,886

68,657

46,905

29,596

35,267

57,651

Non-current loans and borrowings

 

0

0

0

0

0

0

0

Other non-current liabilities

 

286

290

4,506

4,572

4,572

4,572

4,572

Total non-current liabilities

 

286

290

4,506

4,572

4,572

4,572

4,572

Trade and other payables

 

3,556

3,674

19,459

14,418

14,000

12,600

11,340

Current loans and borrowings

 

0

0

0

0

0

0

0

Other current liabilities

 

928

389

2,473

3,078

3,078

3,078

3,078

Total current liabilities

 

4,484

4,063

21,932

17,496

17,078

15,678

14,418

Equity attributable to company

 

55,246

37,264

114,619

116,039

124,099

136,606

150,020

Non-controlling interest

 

0

0

0

0

0

0

0

 

 

 

 

 

 

 

 

 

CASH FLOW STATEMENT

 

 

 

 

 

 

 

 

Profit before tax

 

11,110

(26,697)

32,819

7,058

8,339

13,079

14,000

Net finance expenses

 

0

0

0

0

0

0

0

Depreciation and amortisation

 

2,057

3,266

17,824

17,268

11,149

15,988

13,919

Share based payments

 

761

(47)

538

1,194

1,194

1,194

1,194

Other adjustments

 

(12,281)

25,742

(34,613)

3,224

(1,333)

(1,018)

(767)

Movements in working capital

 

(2,183)

(3,440)

5,412

8,584

4,683

2,642

4,317

Interest paid / received

 

0

0

0

0

0

0

0

Income taxes paid

 

(4,678)

(766)

(364)

(1,091)

(1,473)

(1,766)

(1,781)

Cash from operations (CFO)

 

(5,214)

(1,942)

21,616

36,237

22,559

30,120

30,883

Capex

 

(5,120)

(11,890)

(24,917)

(44,810)

(36,100)

(21,425)

(3,688)

Acquisitions & disposals net

 

0

0

(24,948)

0

0

0

0

Other investing activities

 

4,836

825

760

525

1,333

1,018

767

Cash used in investing activities (CFIA)

 

(284)

(11,065)

(49,105)

(44,285)

(34,767)

(20,406)

(2,920)

Net proceeds from issue of shares

 

0

10,127

48,510

114

0

0

0

Movements in debt

 

(3,702)

(96)

(43)

(197)

0

0

0

Other financing activities

 

0

0

0

0

0

0

0

Cash from financing activities (CFF)

 

(3,702)

10,031

48,467

(83)

0

0

0

Increase/(decrease) in cash and equivalents

 

(9,200)

(2,976)

20,978

(8,131)

(12,208)

9,713

27,962

Currency translation differences and other

 

(565)

(469)

141

(368)

0

0

0

Cash and equivalents at end of period

 

8,170

4,725

25,844

17,345

5,137

14,850

42,812

Source: SDX Energy, Edison Investment Research

Contact details

Revenue by geography

38 Welbeck Street
London W1G 8DP
United Kingdom
www.sdxenergy.com

Contact details

38 Welbeck Street
London W1G 8DP
United Kingdom
www.sdxenergy.com

Revenue by geography

Management team

Non-executive chairman: Michael Doyle

CEO: Mark Reid

Michael Doyle is a professional geophysicist with more than 35 years’ industry experience and was a founding director and chairman of Madison PetroGas from its inception in 2003. Mr Doyle is a principal of privately held CanPetro International. Mr Doyle was previously a principal and chief executive officer of Petrel Robertson, where he was responsible for providing advice and project management to clients throughout the world. Prior to that, he held a variety of exploration positions at Dome Petroleum and Amoco Canada.

Mark Reid has over 20 years’ experience in numerous sectors including financial services, investment banking and oil & gas. He has had significant exposure to M&A transactions and the equity and debt capital markets. Prior to becoming CEO in 2019, he was CFO at SDX and between 2009 and 2015 he was finance director at AIM-listed Aurelian and Chariot. Prior to this, he worked at BNP Paribas Fortis and Ernst & Young Corporate Finance advising on M&A, IPO and other fund-raising transactions. Mr Reid has an MBA and is a member of the Institute of Chartered Accountants of Scotland.

CFO: Nicholas Box

Nicholas Box was appointed as CFO and director in November 2019. He joined SDX Energy in 2016 as group financial controller having previously worked for PwC in the UK, Australia and Mongolia, primarily in the natural resources sector. He has over 13 years’ professional experience in accounting, capital markets transactions, post-merger integrations and internal controls.

Management team

Non-executive chairman: Michael Doyle

Michael Doyle is a professional geophysicist with more than 35 years’ industry experience and was a founding director and chairman of Madison PetroGas from its inception in 2003. Mr Doyle is a principal of privately held CanPetro International. Mr Doyle was previously a principal and chief executive officer of Petrel Robertson, where he was responsible for providing advice and project management to clients throughout the world. Prior to that, he held a variety of exploration positions at Dome Petroleum and Amoco Canada.

CEO: Mark Reid

Mark Reid has over 20 years’ experience in numerous sectors including financial services, investment banking and oil & gas. He has had significant exposure to M&A transactions and the equity and debt capital markets. Prior to becoming CEO in 2019, he was CFO at SDX and between 2009 and 2015 he was finance director at AIM-listed Aurelian and Chariot. Prior to this, he worked at BNP Paribas Fortis and Ernst & Young Corporate Finance advising on M&A, IPO and other fund-raising transactions. Mr Reid has an MBA and is a member of the Institute of Chartered Accountants of Scotland.

CFO: Nicholas Box

Nicholas Box was appointed as CFO and director in November 2019. He joined SDX Energy in 2016 as group financial controller having previously worked for PwC in the UK, Australia and Mongolia, primarily in the natural resources sector. He has over 13 years’ professional experience in accounting, capital markets transactions, post-merger integrations and internal controls.

Principal shareholders

(%)

SDX SPV (Waha Capital subsidiary)

19.48

Ingalls & Snyder LLC

18.91

River & Mercantile Asset Management LLP

8.35

Hargreaves Lansdown Asset Management Ltd

7.30

Highclere International Investors LLP

5.02

Interactive Investor Trading

4.82

Companies named in this report

EGAS, IPR Energy Group


General disclaimer and copyright

This report has been commissioned by SDX Energy and prepared and issued by Edison, in consideration of a fee payable by SDX Energy. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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Germany

London +44 (0)20 3077 5700

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United Kingdom

New York +1 646 653 7026

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United States of America

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Level 4, Office 1205

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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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by SDX Energy and prepared and issued by Edison, in consideration of a fee payable by SDX Energy. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: 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 and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. 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.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, 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 securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. 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, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “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.

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

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. 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 (i.e. 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.

United Kingdom

This document is prepared and provided by Edison 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.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison 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. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, 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

1,185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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