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Research: Energy & Resources
SDX Energy has announced the discovery of gas at the ONZ-7 development well on the Sebou permit in Morocco. The ONZ-7 well was drilled to a total depth of 1,167m, with 5m of net conventional gas pay in the Hoot formation. Reservoir quality exceeded initial expectations with porosity in the pay section at 35.3% – a further update on well flow rates is expected in early February. SDX has made four discoveries from five wells drilled in the current nine well campaign – an 80% E&A success rate with all prospects drilled on high resolution 3D seismic discovering gas. Our last published valuation stands at 65p/share (full NAV breakdown), with Sebou making up c 17% or 10.9p/share of our group risked valuation. We intend to revise our valuation for recent Moroccan exploration success on our return from the company’s analyst site visit to be held on 24 and 25 January 2018.
Written by
SDX Energy |
Gas discovery ONZ-7 |
Well spud |
Oil & gas |
23 January 2018 |
Share price performance
Business description
Analysts
SDX Energy is a research client of Edison Investment Research Limited |
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SDX Energy has announced the discovery of gas at the ONZ-7 development well on the Sebou permit in Morocco. The ONZ-7 well was drilled to a total depth of 1,167m, with 5m of net conventional gas pay in the Hoot formation. Reservoir quality exceeded initial expectations with porosity in the pay section at 35.3% – a further update on well flow rates is expected in early February. SDX has made four discoveries from five wells drilled in the current nine well campaign – an 80% E&A success rate with all prospects drilled on high resolution 3D seismic discovering gas. Our last published valuation stands at 65p/share (full NAV breakdown), with Sebou making up c 17% or 10.9p/share of our group risked valuation. We intend to revise our valuation for recent Moroccan exploration success on our return from the company’s analyst site visit to be held on 24 and 25 January 2018.
Year end |
Revenue |
PBT* |
Operating |
Net (debt)/ |
Capex |
12/15 |
11.4 |
11.1 |
(5.2) |
8.2 |
(5.1) |
12/16 |
12.9 |
(26.7) |
(1.9) |
4.7 |
(11.9) |
12/17e |
35.8 |
4.8 |
22.8 |
23.3 |
(22.7) |
12/18e |
54.9 |
20.2 |
34.5 |
16.1 |
(44.9) |
Note: *PBT is normalised, excluding amortisation of acquired intangibles, share-based payments.
Confirmation of a gas discovery and incremental flow from ONZ-7 should provide the basis for a gas reserve upgrade and provides confidence in the company’s ability to deliver on a forecast gas sales rate of 10-11mmscfd in 2018 (a material increase on our current forecasts based on current contracted volumes of 5.7mmscfd in 2018 and 8mmscfd in 2019). Three producers are individually capable of meeting current daily sales commitments of 6mmscfd (KSR-14 flow tested at 6.4mmscfd, KSR-15 at 7.52mmscfd and KSR-16 at 8.43mmscfd). Moroccan gas attracts an average sale price of c $9.5/mcf with high net-backs.
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Disclaimer
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