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Research: Energy & Resources
SDX Energy has announced results from the SAH-2 well on the Sebou permit in Morocco (SDX 75%). SAH-2 is the seventh well in the company’s nine-well programme, and the fifth gas discovery. SAH-2 encountered 5.2 net meters across two pay zones, with average porosity of 33%. The well came in on prognosis but with a reservoir thickness above pre-drill expectations. This result will support the company’s previously announced planned production increase in Morocco to 8-10mmscfd by the end of 2018. We recently published a detailed update on our view of Moroccan gas sales and group valuation, which stands at a core NAV 58.3p/share and RENAV of 65.6p/share.
Written by
SDX Energy |
SAH-2 gas discovery |
Well result |
Oil & gas |
9 March 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 SAH-2 well on the Sebou permit in Morocco (SDX 75%). SAH-2 is the seventh well in the company’s nine-well programme, and the fifth gas discovery. SAH-2 encountered 5.2 net meters across two pay zones, with average porosity of 33%. The well came in on prognosis but with a reservoir thickness above pre-drill expectations. This result will support the company’s previously announced planned production increase in Morocco to 8-10mmscfd by the end of 2018. We recently published a detailed update on our view of Moroccan gas sales and group valuation, which stands at a core NAV 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) |
12/17e |
36.3 |
6.0 |
25.7 |
25.5 |
(23.5) |
12/18e |
65.2 |
31.2 |
49.8 |
26.1 |
(50.6) |
Note: *PBT is normalised, excluding amortisation of acquired intangibles, share-based payments.
SAH-2 was the first well in the Gharb basin that was successfully drilled using downhole directional tools, which allowed SDX to penetrate the crest of two individual targets with a single well. This technique will also be used in the company’s next well, LNB-1, on the Lalla Mimouna concession.
We estimate that SDX will need to add 11.9bcf of gas beyond the current nine-well drilling campaign to support risked market demand. This would require a further 10-11 wells to be drilled over the next 12-24 months. Our risked demand profile implies a 2018 exit rate of just over 10mmscfd, growing to 17.5mmscfd over the medium term. 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.
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Disclaimer
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Disclaimer
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Research: TMT
4imprint has announced another set of strong results, accompanied by a supplementary dividend of $0.60 to be paid alongside the final. It has also outlined a programme to build a more substantial longer-term business through adding brand awareness campaigns to the existing marketing spend. Revenues have grown at a CAGR of 18.1% over the last six years. Guidance for the next five years is for double-digit growth to reach the $1bn level by FY22 and we have lifted our forecasts to reflect this. Profit growth is restrained in the near term by the additional marketing spend, but should move on faster in FY19, with EPS further boosted by a lower US tax charge.