The strength of SDX Energy’s financial position, resulting from its strong balance sheet and positive cash flow, is a key differentiator from many small-cap E&P companies in the sector. This stable financial position allows SDX Energy to execute its very active work programme which provides multiple catalysts for shareholders as it drills production, development and exploration wells in the coming years.
Defensive qualities and downside oil-price protection
- SDX is materially cash-generative in a low oil price environment:
- Predominantly fixed-price gas-weighted portfolio with no linkage to oil price;
- Low-cost onshore operations: Opex @ $4.2/boe (H1’20);
- At $35/bbl, SDX forecasts post-tax operating cash flows to be > 90% gas-weighted in 2020 and 2021.
Strong liquidity position and fully funded
- US$9.2 million cash (30/9/20) and US$7.5 million available under an undrawn EBRD credit facility.
- Majority of 2020 capital spend already complete. No further drilling having concluded successful Egyptian and Moroccan well campaigns.
- Together with cash generated from operations, the Company is fully funded for all of its planned activities in 2020 and 2021.
Focus on financial discipline
- SDX maintains a sharp focus on managing shareholders capital and on optimising returns for shareholders through recycling capital into NAV-accretive, growth projects. SDX continues to evaluate inorganic growth opportunities through M&A.
- Business and organisational structure set up to maintain a low cost base.
Transformational upside potential in existing portfolio
- Sobhi discovery de-risks several other prospects around South Disouq, driving an increase in estimated prospective resource to 233 bcf from 96 bcf. High-impact drilling campaign to commence in Q2/Q3’21.
- Morocco proposition enhanced by the OYF and BMK discoveries extending the existing production area and by Top Nappe exploration potential, identified as a play close to infrastructure.
- SDX Egypt CO2 footprint optimised by using produced gas as fuel in running the CPF at South Disouq.
- SDX Morocco creating c.60k tonne annual reduction in CO2 emissions by switching customers to cleaner fuel.
- Establishing an ESG policy and objectives that support the company’s strategic plan.
- Multiple world class hydrocarbon basins
- Excellent operating environment with competitive fiscal terms and low operating costs
- Stable Government focused on economic growth
- Developing as a regional gas hub, creating both internal and external gas sales potential
- Significant growth potential – 2.5 TCF of prospectivity identified in SDX acreage
- One of the best Fiscal Regimes in the industry
- Gas market significantly underserved by domestic production
- SDX owns 75% of the only private pipeline network in the country – future discoveries will have to go through SDX’s line to be commercialised
- Significant growth prospects, with 80+ Bcf of potential