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Research: Energy & Resources
SDX Energy has reported FY17 results, which reflect the positive impact of the late January 2017 acquisition of Circle Oil’s Egyptian and Moroccan business, strong netbacks and Egyptian receivable recovery. Netback, defined as sales net of operating expense and government royalties, stood at $28.9m and compares with our estimated $26.4m. Cash at year-end 2017 stood at $25.8m and has since grown to $30.6m as at 28 February 2018 after a further $6m in backdated receivables was recovered. 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 |
Strong operational netback |
FY17 results |
Oil & gas |
23 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 reported FY17 results, which reflect the positive impact of the late January 2017 acquisition of Circle Oil’s Egyptian and Moroccan business, strong netbacks and Egyptian receivable recovery. Netback, defined as sales net of operating expense and government royalties, stood at $28.9m and compares with our estimated $26.4m. Cash at year-end 2017 stood at $25.8m and has since grown to $30.6m as at 28 February 2018 after a further $6m in backdated receivables was recovered. 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 |
Net 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, share-based payments. *Includes Circle acquisition ($28.1m).
13.5mmboe 2P reserves: A 45% increase in 2P reserves includes the revision of South Disouq contingent resource to reserves (net 21.3bcf and 0.11mmbbls). We would expect a further upwards revision for Morocco in 2018, on completion of SDX’s nine-well programme, which has delivered five commercial discoveries from seven wells to date.
2018 production guidance: SDX delivered pro forma (including Circle Oil assets from 1 January 2017) entitlement production of 3,457kboed. Production in 2018 will be to a large extent driven by the timing of first gas at South Disouq, which is earmarked for H218, slightly later than we had forecast. Timing of South Disouq will affect 2018 revenue forecasts, but is unlikely to have a material impact on NAV. Gas prices for South Disouq are still under negotiation – we assume $3.5/mcf in our valuation. Net capex guidance for 2018 stands at c $40m (lower than our c $50m forecast) and is fully funded through cash and cash flow. As previously outlined, we see potential for SDX to expand its 2018 Moroccan drilling programme as gas demand materialises.
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