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Research: Energy & Resources
SDX Energy has announced results from the Ibn Yunus-1 well at South Disouq, Egypt (SDX 55%). Ibn Yunus-1 is the second consecutive gas discovery at South Disouq (after SD-1X) and encountered 100.8 net meters of conventional pay in the Abu Madi horizon, with average porosity of 28.5%. The well came in on prognosis but with a reservoir thickness and quality above pre-drill expectations. We expect to de-risk Ibn Yunus on flow testing; however, indicatively moving to an 80% chance of success (equivalent to our risking for SD-1X) from 32% would add 4.4p/share to our RENAV in our 90bcf recoverable case. We recently published a detailed update on our view of the group valuation, which stands at a core NAV of 58.3p/share and RENAV of 65.6p/share.
Written by
SDX Energy |
Ibn Yunus-1 de-risking Abu Madi Baltim trend |
Well result |
Oil & gas |
12 April 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 results from the Ibn Yunus-1 well at South Disouq, Egypt (SDX 55%). Ibn Yunus-1 is the second consecutive gas discovery at South Disouq (after SD-1X) and encountered 100.8 net meters of conventional pay in the Abu Madi horizon, with average porosity of 28.5%. The well came in on prognosis but with a reservoir thickness and quality above pre-drill expectations. We expect to de-risk Ibn Yunus on flow testing; however, indicatively moving to an 80% chance of success (equivalent to our risking for SD-1X) from 32% would add 4.4p/share to our RENAV in our 90bcf recoverable case. We recently published a detailed update on our view of the group valuation, which stands at a core NAV of 58.3p/share and RENAV of 65.6p/share.
Year |
Revenue |
PBT* |
Operating |
Net cash |
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) |
12/17 |
39.2 |
3.3 |
21.6 |
25.8 |
(49.1)** |
12/18e |
65.2 |
31.2 |
49.8 |
26.1 |
(50.6) |
Note: *PBT is normalised, excluding amortisation of acquired intangibles and share-based payments. **Includes Circle acquisition ($28.1m)
The Ibn Yunus-1 well opens up the Abu Madi Baltim trend beyond the SD-1X discovery area and likely de-risks the Kelvin prospect, which displays a similar seismic inversion response but to the south of SD-1X. Management estimates a combined volume across Ibn Yunus-1 and Kelvin of 150bcf unrisked and with total play potential of c 2.5tcf unrisked.
Next steps include moving the drill rig of location with flow testing anticipated 30-45 days after the rig departs. The SD-1X well flowed at 25.8mmscfd and a similar flow rate at Ibn Yunus should support the construction of a central processing facility, enabling produced gas to be exported in the gas distribution system 10km from South Disouq.
Today’s exploration success adds to the company’s 71% E&A success rate across its nine-well campaign in Morocco.
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Research: Financials
FY17 was a further year of change for Secure Trust Bank (STB) as management completed the shift away from unsecured consumer loans and reduced the risk profile in motor finance. This restricted near-term profits but the pace of loan book growth has remained strong and looks set to feed into substantial earnings growth as the cost of risk subsides, more than offsetting the lower returns earned on lower risk lending. The shares have begun to respond to this prospect following the results, but the valuation suggests further upside.