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Research: Energy & Resources
SDX Energy announced this morning that it has spudded the South Disouq (SD-1X) well in Egypt, targeting gas and oil across a number of intervals. This is a high impact event for SDX Energy, as current company 2P reserves of 4.7mmboe (post acquisition) would be dwarfed by success at South Disouq (we model a 65mmboe field of which SDX holds 55% WI), which could be developed quickly due to existing pipeline infrastructure passing through the block. Our valuation for South Disouq is 6.8p/share, although on success we would expect notable de-risking. Our core NAV is 42p with a full NAV (including South Disouq) of 57p/share. The well is due to take 30-45 days, so we would expect a result in mid late April.
Written by
SDX Energy |
South Disouq spuds |
Well spud |
Oil & gas |
20 March 2017 |
Share price performance
Business description
Analysts
SDX Energy is a research client of Edison Investment Research Limited |
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SDX Energy announced this morning that it has spudded the South Disouq (SD-1X) well in Egypt, targeting gas and oil across a number of intervals. This is a high impact event for SDX Energy, as current company 2P reserves of 12mmboe (post acquisition) would be dwarfed by success at South Disouq (we model a 65mmboe field of which SDX holds 55% WI), which could be developed quickly due to existing pipeline infrastructure passing through the block. Our valuation for South Disouq is 6.8p/share, although on success we would expect notable de-risking. Our core NAV is 42p with a full NAV (including South Disouq) of 57p/share. The well is due to take 30-45 days, so we would expect a result in mid late April.
Year end |
Revenue |
PBT* |
Operating |
Net (debt)/ |
Capex |
12/14 |
24.5 |
16.5 |
25.5 |
15.7 |
(13.6) |
12/15 |
11.4 |
18.8 |
(5.2) |
8.2 |
(1.2) |
12/16e |
10.1 |
(4.4) |
2.2 |
7.2 |
(14.2) |
12/17e |
44.7 |
10.6 |
29.2 |
33.4 |
(12.5) |
Note: *PBT is normalised, excluding amortisation of acquired intangibles, share-based payments. Excludes South Disouq revenues and capex which have a distortionary effect on current operations.
SDX also announced that the licence in which South Disouq sits has been extended by six months to mid-September 2017. This gives SDX and its partner (IPR) more time to evaluate the results of the well prior to any decision being made to enter into the second exploration period.
The $3.5m well is almost fully carried by IPR and is mapped as a four-way dip closure covering 1,000 acres with positive AVO response. Importantly, although the initial target is gas, there are deeper plays (Abu Roash and AEB zones) that are prolific oil producers across the Western Desert. With main trunk lines just 11km from the well site, the company indicates that production could be started just months after an initial discovery.
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Disclaimer
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Disclaimer
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Research: TMT
EMIS reported adjusted profit in line with expectations, despite NHS funding pressures causing difficult trading conditions in certain parts of the business. Cost-cutting programmes in 2016 and a planned reorganisation in 2017 are helping to counteract some of the funding pressure. There is cause for optimism in several areas of the business, where EMIS is growing market share, and a planned expansion of the Patient business could generate material incremental revenues on a five-year view.