Le Lézard
Classified in: Oil industry
Subject: ACC

SDX ENERGY INC. ("SDX" or the "Company") - Completion of US$10 million Fundraising


THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY SDX TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 ("MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

LONDON, Sept. 15, 2017 /CNW/ - SDX Energy Inc. (TSXV/AIM: SDX), the North Africa focused oil and gas company, announces that, further to its announcements on 6 and 11 September 2017 (the "Fundraising Announcements"),  completion of the Fundraising, and admission to AIM of the new common shares of the Company issued in connection with the Fundraising, took place earlier today.

Highlights

South Disouq (55 per cent. working interest)

Morocco (75 per cent. working interest)

Attractive Returns and Payback Period

Egypt ? Success case outcomes assuming a conservative two year delay between capex and revenues


IRR%

Recoverable Reserves


US$m PV12.15%

Recoverable Reserves

75 Bcf

150 Bcf

200 Bcf


75 Bcf

150 Bcf

200 Bcf

45.1%

84.6%

89.5%


10.0

35.3

48.6








Payback Period ? Years

Recoverable Reserves


MOICx

Recoverable Reserves

75 Bcf

150 Bcf

200 Bcf


75 Bcf

150 Bcf

200 Bcf

3.8

3.3

3.3


3.0x

7.4x

10.3x

 

Morocco ? Success case outcomes in assuming a three month delay between capex and revenues


IRR%

Recoverable Reserves


US$m PV12.15%

Recoverable Reserves

0.5 Bcf

1.0 Bcf

1.5 Bcf


0.5 Bcf

1.0 Bcf

1.5 Bcf

69%

199%

213%


1.27

6.72

10.36








Payback Period ? Years

Recoverable Reserves


MOICx

Recoverable Reserves

0.5 Bcf

1.0 Bcf

1.5 Bcf


0.5 Bcf

1.0 Bcf

1.5 Bcf

1.79

1.45

1.45


1.35x

2.81x

4.17x

 

Directors' Participation

Pursuant to the Fundraising, certain of the directors of the Company have subscribed for a total of 135,023 new Common Shares at the Fundraising Price. Further details of these subscriptions, and the subsequent Director shareholdings following the completion of the Fundraising, is set out in the table below.

Director

Holding of
existing Common
Shares prior to
the Fundraising

New Common
Shares
subscribed
pursuant to the
Fundraising

Holding of
Common Shares
upon completion
of the
Fundraising

Common Shares
as a % of
enlarged issued
share capital

David Mitchell

1,645,110

56,840

1,701,950

0.83%

Paul Welch

659,247

43,898

703,145

0.34%

Mark Reid

247,500

34,285

281,785

0.14%

Total

2,551,857

135,023

2,686,880

1.31%

 

Major Shareholder Subscriptions

Pursuant to the Fundraising, MEA Energy Investment Company Limited subscribed for 9,832,366 new Common Shares at the Fundraising Price. Following completion of the Fundraising, MEA Energy Investment Company Limited holds 39,051,803 Common Shares, which represents approximately 19.10 per cent. of the enlarged issued share capital of the Company.

Ingalls & Snyder LLC also subscribed for 3,500,000 new Common Shares at the Placing Price. Following completion of the Fundraising, Ingalls & Snyder LLC holds 33,847,714 Common Shares, which represents approximately 16.55 per cent. of the enlarged issued share capital of the Company.

Related Party Transaction

The subscriptions for new Common Shares by MEA Energy Investment Company Limited, and Ingalls & Snyder LLC, and certain of the directors in the Fundraising (as outlined above) are considered related party transactions under the AIM Rules for Companies and the Policies of the TSX Venture Exchange. Each of Ingalls & Snyder LLC and MEA Energy Investment Company Limited is a "related party" to the Company under Multilateral Instrument 61-101 ? Protection of Minority Security Holders in Special Transactions ("MI 61-101") by virtue of such party's existing shareholding being in excess of 10 per cent.; in addition, each director is a "related party" to the Company under MI 61-101. Accordingly, any investment by any such entity or individual is a "related party transaction" under MI 61-101. Each such investment is exempt from (i) the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsection 5.5(a) of MI 61-101 and (ii) the minority approval requirements under Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(a) of MI 61-101 because the fair market value of each of such related party's investment does not exceed 25 per cent. of SDX's market capitalization (as defined in MI 61-101).

Michael Doyle and David Richards, non-executive Directors of the Company, did not participate in the Fundraising and therefore are considered independent for the purposes of the Fundraising. Having consulted with Cantor Fitzgerald Europe (the Company's nominated adviser), they consider that the terms of the Placing and Subscription are fair and reasonable in so far as the Company's Shareholders are concerned.

Outstanding Shares

Immediately following completion of the Fundraising, the Company's issued share capital consisted of 204,459,708 Common Shares. The new Common Shares issued under the Fundraising represent approximately 8.6 per cent. of the total issued ordinary share capital in the Company as of the date hereof.

About SDX

SDX is an international oil and gas exploration, production and development company, headquartered in London, England, UK, with a principal focus on North Africa. In Egypt, SDX has a working interest in two producing assets (50 per cent. North West Gemsa and 50 per cent. Meseda) located onshore in the Eastern Desert, adjacent to the Gulf of Suez. It also has a 55 per cent. operated working interest in the South Disouq concession, located in the Nile Delta, where a gas discovery was made by the SD-1X well in 2017.  In Morocco, SDX has a 75 per cent. working interest in the Sebou concession situated in the Rharb Basin. These producing assets are characterised by exceptionally low operating costs making them particularly resilient in a low oil price environment. SDX's portfolio also includes high impact exploration opportunities in both Egypt and Morocco.

Paul Welch, President and CEO of SDX, commented:

"We are pleased to have been able to commit this additional investment into drilling programmes in both Egypt and Morocco. The proceeds of the Fundraising will be deployed into additional wells which have the potential to pay back very rapidly. We would like to thank our shareholders for their continued support as we enter a high-impact period in the Company's development."

Disclosures

Neither the TSX Venture Exchange nor its Regulation Services Provider (as such term is defined in the polices of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Unless otherwise defined, capitalised terms used in this announcement have the same meaning as set out in the Fundraising Announcements.

Cantor Fitzgerald Europe which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to Cantor Fitzgerald's clients, or for providing advice in relation to the Placing, or any other matters referred to herein.

Stifel Nicolaus Europe Limited which is authorised and regulated in the United Kingdom by the FCA, is acting for the Company and for no one else in connection with the Placing and will not be responsible to anyone other than the Company for providing the protections afforded to Stifel's clients, or for providing advice in relation to the Placing, or any other matters referred to herein. 

Inside Information

The information contained in this announcement is inside information.  If you have any queries on this, then please contact Mark Reid, the Chief Financial Officer and Director of the Company (responsible for arranging the release of this announcement) at 38 Welbeck Street, London, W1G 8DP on +44 (0) 203 219 5640.

Forward Looking Statements

Certain statements contained in this press release may constitute "forward?looking information" as such term is used in applicable Canadian securities laws. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact should be viewed as forward-looking information. In particular, statements regarding the volume of estimated resources, the risks associated therewith and the timing and nature of the commencement of the drilling campaigns in Morocco and the anticipated increase in value of South Disouq.

The forward-looking information contained in this document is based on certain assumptions and although management considers these assumptions to be reasonable based on information currently available to them, undue reliance should not be placed on the forward-looking information because SDX can give no assurances that they may prove to be correct. This includes, but is not limited to, assumptions related to, among other things, the ability to located and commercially develop resources, commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost?savings; applicable tax laws; future production rates; the sufficiency of budgeted capital expenditures in carrying out planned activities; and the availability and cost of labour and services.

Forward-looking information is subject to certain risks and uncertainties (both general and specific) that could cause actual events or outcomes to differ materially from those anticipated or implied by such forward?looking statements. Such risks and other factors include, but are not limited to political, social and other risks inherent in daily operations for the Company, risks associated with the industries in which the Company operates, such as: operational risks; delays or changes in plans with respect to growth projects or capital expenditures; costs and expenses; health, safety and environmental risks; commodity price, interest rate and exchange rate fluctuations; environmental risks; competition; ability to access sufficient capital from internal and external sources; and changes in legislation, including but not limited to tax laws and environmental regulations. Readers are cautioned that the foregoing list of risk factors is not exhaustive and are advised to reference SDX's Management's Discussion & Analysis for the three and twelve months ended December 31, 2016, which can be found on SDX's SEDAR profile at www.sedar.com, for a description of additional risks and uncertainties associated with SDX's business, including its exploration activities.

The forward?looking information contained in this press release is as of the date hereof and SDX does not undertake any obligation to update publicly or to revise any of the included forward?looking information, except as required by applicable law. The forward?looking information contained herein is expressly qualified by this cautionary statement.

Independent Resource Evaluation

The Company retained Gaffney, Cline & Associates (GCA) to conduct an independent resource evaluation to assess Contingent and Prospective resources in the Company's South Disouq asset with an effective date of May 31, 2017.  The resource assessments were prepared in accordance with NI 51-101" effective at the time thereof.  A range of Contingent resources estimates (P90 (1C), P50 (2C) and P10 (3C)) and Prospective resources estimates (P90 (low), P50 (best) and P10 (high)) were prepared by GCA using probabilistic methods.

A summary of South Disouq Contingent and Prospective resources as of May 31, 2017 contained in the Resources Reports are included in the following tables.  Please consult the 'Risks and Uncertainties', 'Definitions' and 'Glossary' sections below for all relevant resource descriptions, qualifications, risks, contingencies and cautionary language in relation to the review and interpretation thereof.   

Table 1 - Summary of Unrisked P50 Contingent Resources as of May 31, 2017



Gross Volumes
Unrisked

Resource sub-Category

 

Gas

Condensate

Total(2)

(Bscf)

(Mmbo)

(Mmboe)






Development Pending

47.13

2.29

10.15






Development on Hold

---

---

---






Development Unclarified

---

---

---






Development not viable

---

---

---






Total South Disouq

47.13

2.29

10.15

 

Table 2 - Summary of Best Estimate Prospective Resources as of May 31, 2017

 





Gross Volumes

Gross Volumes


unrisked

risked

Resource sub-Category

Gas

Condensate

Total(2)

Gas

Condensate

Total(2)


(Bscf)

(Mmbo)

(Mmboe)

(Bscf)

(Mmbo)

(Mmboe)








Prospect

164.53

7.97

35.39

66.68

3.23

14.34








Lead

15.55

0.76

3.35

7.49

0.37

1.61








Play

---

---

---

---

---

---








Total South Disouq(1)

180.08

8.73

38.74

74.17

3.59

15.95


1.

Aggregate of volumes four prospects and five Leads; aggregation performed by SDX management.

2.

BOEs may be misleading, particularly if used in isolation. The BOE column is the sum of the light and medium oil, conventional natural gas and natural gas liquids columns with the conversion of gas to liquids using a BOE conversion ratio of 6 Mmscf:1 bbl, based on an energy equivalency conversion method primarily applicable at the burner tip. This conversion does not represent a value equivalency at the wellhead.

 

Risks and Uncertainties

There is still a +/-50% uncertainty concerning the volume of the encountered section at Abu-Madi due to:

1)

the lateral extent of the accumulation

2)

the quality of the reservoir section that would be encountered away from the current location

3)

The thickness of the reservoir section away from the current location

4)

The hydrocarbon composition of the natural gas encountered and its resulting liquid yield

 

Additional wells will need to be drilled and tested to reduce the levels of uncertainty required to properly classify the discovered hydrocarbons under NI 51-101.

SDX will continue to work towards developing a more detailed development program in respect of South Disouq, but given the current stage of development, is unable to provide a specific timeline or cost estimate in respect of obtaining commercial development in respect of the resources contained therein.  There has not been a conceptual or pre-development study prepared in respect of the South Disouq asset.

Contingent resources are assigned to the SD-1x Discovery because of the uncertainties surrounding aspects of the well data, notably the position of the gas water contact (GWC) in the Abu Madi 1 Zone, gas composition and detailed petrophysical response.


SOURCE SDX Energy Inc.


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