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, Aug. 22, 2019 /CNW/ - SDX Energy Plc (AIM: SDX), the North Africa-focused oil and gas company, announces its financial and operating results for the three and six months ended 30 June 2019. All monetary values are expressed in United States dollars net to the Company unless otherwise stated.
Summary
Operations
Egypt
Morocco
Financial
Mark Reid, CFO and Interim CEO of SDX, commented:
"The Company continues to make good progress toward achieving its three medium-term strategic objectives of securing first gas at South Disouq in Q4 2019, executing an efficient and successful 12-well drilling campaign in Morocco in 2019/20, and continuing with our potential exploration drilling campaign in South Disouq in 2020.
Production and capex from our operations remains within our guided ranges and we look forward to updating the market on the results of our drilling activities in Meseda and Morocco in the coming months. Our cashflow generation, liquidity position, and balance sheet remain strong and continue to provide us with the necessary funding to complete all of these medium-term strategic objectives.
Achieving first gas at South Disouq in Q4 will be transformative for the Company, as we will benefit from our 55% share of the expected production plateau of 50 MMscfe/d from Q1 2020."
Corporate and financial
Three months ended 30 June | Six months ended 30 June | |||
US$ million, except per unit amounts | 2019 | 2018 | 2019 | 2018 |
Net revenues | 12.7 | 13.5 | 25.4 | 24.4 |
Netback(1) | 9.1 | 10.3 | 18.5 | 19.3 |
Net realised average oil/service fees - US$/barrel | 60.62 | 64.23 | 57.44 | 61.97 |
Net realised average Morocco gas price - US$/mcf | 10.31 | 10.51 | 10.28 | 10.27 |
Netback ? US$/boe | 29.84 | 33.00 | 28.80 | 32.91 |
EBITDAX(1) (2) | 7.3 | 8.6 | 15.1 | 16.2 |
Exploration & evaluation expense ("E&E") | (0.4) | (2.1) | (0.6) | (5.3) |
Depletion, depreciation, and amortisation ("DD&A") | (6.0) | (3.7) | (11.9) | (6.2) |
Total comprehensive(loss)/income | (0.5) | 0.6 | (0.4) | 1.0 |
Net cash generated from operating activities | 5.8 | 9.4 | 12.8 | 20.3 |
Cash and cash equivalents | 11.2 | 25.2 | 11.2 | 25.2 |
Note: | |
(1) | Refer to the "Non-IFRS Measures" section of this release below for details of Netback and EBITDAX. |
(2) | EBITDAX for each period presented includes non-cash revenue relating to the grossing up of Egyptian Corporate Tax on the North West Gemsa PSC, which is paid by the Egyptian State on behalf of the Company (Q2 2019: US$0.9 million, Q2 2018: US$1.2 million, H1 2019: US$1.9 million, H1 2018: US$2.2 million) |
Operational highlights
Egypt
Morocco
2019 production and Capex guidance:
Gross production | Capex (net to SDX) | ||
Asset | Six months ended | FY19 Guidance | FY19 Guidance |
NW Gemsa - WI 50% | 3,944 boe/d | 3,000 - 3,200 boe/d | US$2.0 million |
Meseda ? WI 50% | 4,313 bbl/d | 4,000 - 4,200 bbl/d | US$2.7 million |
South Disouq ? WI 55% | N/A | First gas by Q4'19. | US$19.5 million |
Morocco ? WI 75% | 6.0 MMscf/d* | 6.0 - 6.5 MMscf/d 2019 annual | US$12.0 million |
* Reflects stabilised consumption from four out of eight customers. The remaining four customers consumed low volumes of gas in H1 2019 and are expected to increase consumption in H2 2019. |
Corporate
KEY FINANCIAL & OPERATING HIGHLIGHTS
Unaudited interim condensed consolidated financial statements with Management's Discussion and Analysis for the three and six months ended 30 June 2019 are now available on the Company's website at www.sdxenergy.com and on SEDAR at www.sedar.com.
Prior Quarter | Three months ended 30 June | Six months ended 30 June | |||
$000s except per unit amounts | 2019 | 2018 | 2019 | 2018 | |
FINANCIAL | |||||
Gross revenues | 16,690 | 16,491 | 18,123 | 33,181 | 32,887 |
Royalties | (4,009) | (3,759) | (4,651) | (7,768) | (8,455) |
Net revenues | 12,681 | 12,732 | 13,472 | 25,413 | 24,432 |
Operating costs | (3,374) | (3,589) | (3,168) | (6,963) | (5,162) |
Netback (1) | 9,307 | 9,143 | 10,304 | 18,450 | 19,270 |
EBITDAX (1) | 7,808 | 7,307 | 8,585 | 15,116 | 16,208 |
Total comprehensive income/(loss) | 132 | (489) | 640 | (354) | 971 |
Net income/(loss) per share - basic | 0.001 | (0.002) | 0.003 | (0.002) | 0.005 |
Cash, end of period | 11,354 | 11,195 | 25,234 | 11,195 | 25,234 |
Working capital (excluding cash) | 10,069 | 6,409 | 11,121 | 6,409 | 11,121 |
Capital expenditures | 13,041 | 8,777 | 14,742 | 21,818 | 24,690 |
Total assets | 137,630 | 140,122 | 143,419 | 140,122 | 143,419 |
Shareholders' equity | 116,491 | 115,346 | 116,246 | 115,346 | 116,246 |
Common shares outstanding (000's) | 204,723 | 204,723 | 204,493 | 204,723 | 204,493 |
OPERATIONAL | |||||
NW Gemsa oil sales (bbl/d) | 1,586 | 1,326 | 1,665 | 1,455 | 1,586 |
Block-H Meseda production service fee (bbl/d) | 826 | 818 | 706 | 822 | 633 |
Morocco gas sales (boe/d) | 761 | 729 | 656 | 745 | 660 |
Other products sales (boe/d) | 542 | 493 | 403 | 517 | 355 |
Total sales volumes (boe/d) | 3,715 | 3,366 | 3,430 | 3,539 | 3,234 |
Realised oil price (US$/bbl) | 58.22 | 64.98 | 68.41 | 61,32 | 65.77 |
Realised service fee (US$/bbl) | 47.58 | 53.56 | 54.37 | 50.57 | 52.45 |
Realised oil sales price and service fees ($/bbl) | 54.58 | 60.62 | 64.23 | 57.44 | 61.97 |
Realised Morocco gas price (US$/mcf) | 10.26 | 10.31 | 10.51 | 10.28 | 10.27 |
Royalties ($/boe) | 11.99 | 12.27 | 14.90 | 12.12 | 14.44 |
Operating costs ($/boe) | 10.09 | 11.72 | 10.15 | 10.87 | 8.82 |
Netback ($/boe) (1) | 27.84 | 29.84 | 33.00 | 28.80 | 32.91 |
(1) Refer to the "Non-IFRS Measures" section of this release below and the Company's MD&A for the three and six months ended 30 June 2019 and 2018 for details of netback and EBITDAX. |
Consolidated Balance Sheet | |||||
(US$'000s) | As at 30 June 2019 | As at 31 December 2018 | |||
Assets | |||||
Cash and cash equivalents | 11,195 | 17,345 | |||
Trade and other receivables | 21,764 | 24,324 | |||
Inventory | 3,741 | 5,236 | |||
Current assets | 36,700 | 46,905 | |||
Investments | 3,479 | 3,394 | |||
Property, plant and equipment | 41,652 | 48,680 | |||
Exploration and evaluation assets | 56,374 | 39,128 | |||
Right-of-use assets | 1,917 | - | |||
Non-current assets | 103,422 | 91,202 | |||
Total assets | 140,122 | 138,107 | |||
Liabilities | |||||
Trade and other payables | 16,018 | 14,418 | |||
Deferred income | 491 | 495 | |||
Decommissioning liability | 1,125 | 1,125 | |||
Current income taxes | 938 | 1,458 | |||
Lease liability | 524 | - | |||
Current liabilities | 19,096 | 17,496 | |||
Deferred income | - | 240 | |||
Decommissioning liability | 4,080 | 4,042 | |||
Deferred income taxes | 290 | 290 | |||
Lease liability | 1,310 | - | |||
Non-current liabilities | 5,680 | 4,572 | |||
Total liabilities | 24,776 | 22,068 | |||
Equity | |||||
Share capital | 2,593 | 88,899 | |||
Share-based payment reserve | 6,521 | 6,860 | |||
Accumulated other comprehensive loss | (917) | (917) | |||
Merger reserve | 37,034 | - | |||
Retained earnings | 70,115 | 21,197 | |||
Total equity | 115,346 | 116,039 | |||
Equity and liabilities | 140,122 | 138,107 | |||
Interim Consolidated Statement of Comprehensive Income | ||||
Three months ended 30 June | Six months ended 30 June | |||
(US$'000s) | 2019 | 2018 | 2019 | 2018 |
Revenue, net of royalties | 12,732 | 13,472 | 25,413 | 24,432 |
Direct operating expense | (3,589) | (3,168) | (6,963) | (5,162) |
Gross profit | 9,143 | 10,304 | 18,450 | 19,270 |
Exploration and evaluation expense | (380) | (2,064) | (615) | (5,314) |
Depletion, depreciation, and amortisation | (6,047) | (3,657) | (11,945) | (6,190) |
Share-based compensation | 658 | (324) | 339 | (656) |
Share of profit from joint venture | 355 | 292 | 724 | 526 |
Release of historic operational tax provision | - | 300 | - | 300 |
Inventory write-off | - | (490) | - | (490) |
Gain on sale of office asset | - | 23 | - | 23 |
General and administrative expenses | ||||
- Ongoing general and administrative expenses | (2,083) | (1,520) | (3,293) | (2,765) |
- Transaction costs | (766) | - | (1,104) | - |
Operating income | 880 | 2,864 | 2,556 | 4,704 |
Net finance expense | (105) | (33) | (246) | (54) |
Foreign exchange gain | (18) | (452) | (5) | (438) |
Loss on acquisition | - | - | - | (174) |
Income before income taxes | 757 | 2,379 | 2,305 | 4,038 |
Current income tax expense | (1,246) | (1,739) | (2,659) | (3,067) |
Deferred income tax expense | - | - | - | - |
Total current and deferred income tax expense | (1,246) | (1,739) | (2,659) | (3,067) |
Total comprehensive (loss)/income for the period | (489) | 640 | (354) | 971 |
Net (loss)/income per share | ||||
Basic | $(0.002) | $0.003 | $(0.002) | $0.005 |
Diluted | $(0.002) | $0.003 | $(0.002) | $0.005 |
Consolidated Statement of Changes in Equity | ||
Six months ended 30 June | ||
(US$'000s) | 2019 | 2018 |
Share capital | ||
Balance, beginning of period | 88,899 | 88,785 |
Share-for-share exchange - old | (88,899) | - |
Share-for-share exchange - new | 51,865 | - |
Capital reduction | (49,272) | - |
Balance, end of period | 2,593 | 88,785 |
Share-based payment reserve | ||
Balance, beginning of period | 6,860 | 5,666 |
Share-based compensation for the period | (339) | 656 |
Balance, end of period | 6,521 | 6,322 |
Accumulated other comprehensive loss | ||
Balance, beginning of period | (917) | (917) |
Balance, end of period | (917) | (917) |
Merger reserve | ||
Balance, beginning of period | - | - |
Share-for-share exchange | 37,034 | - |
Balance, end of period | 37,034 | - |
Retained earnings | ||
Balance, beginning of period | 21,197 | 21,085 |
Capital reduction | 49,272 | - |
Total comprehensive (loss)/income for the period | (354) | 971 |
Balance, end of period | 70,115 | 22,056 |
Total equity | 115,346 | 116,246 |
Consolidated Statement of Cash Flows | ||||
Three months ended 30 June | Six months ended 30 June | |||
(US$'000s) | 2019 | 2018 | 2019 | 2018 |
Cash flows generated from/(used in) operating activities | ||||
Income before income taxes | 757 | 2,379 | 2,305 | 4,038 |
Adjustments for: | ||||
Depletion, depreciation, and amortisation | 6,047 | 3,657 | 11,945 | 6,190 |
Exploration and evaluation expense | - | 1,783 | - | 5,033 |
Finance expense | 105 | 33 | 246 | 54 |
Share-based compensation | (658) | 324 | (339) | 656 |
Loss on acquisition | - | - | - | 174 |
Foreign exchange loss/(gain) | (73) | 269 | (190) | (58) |
Gain on sale of office asset | - | (23) | - | (23) |
Release of historic operational tax provision | - | (300) | - | (300) |
Inventory write-off | - | 490 | - | 490 |
Amortisation of deferred income | (122) | (365) | (243) | (489) |
Tax paid by state | (921) | (1,192) | (1,901) | (2,167) |
Share of profit from joint venture | (355) | (292) | (724) | (526) |
Operating cash flow before working capital movements | 4,780 | 6,763 | 11,099 | 13,072 |
(Increase)/decrease in trade and other receivables | (112) | 1,070 | 2,317 | 8,342 |
Increase in trade and other payables | 2,701 | 2,819 | 1,543 | 778 |
Payments for inventory | (227) | (180) | (854) | (769) |
Cash generated from operating activities | 7,142 | 10,472 | 14,105 | 21,423 |
Income taxes paid | (1,303) | (1,091) | (1,303) | (1,091) |
Net cash generated from operating activities | 5,839 | 9,381 | 12,802 | 20,332 |
Cash flows generated from/(used in) investing activities: | ||||
Property, plant, and equipment expenditures | (3,007) | (7,726) | (4,811) | (13,203) |
Exploration and evaluation expenditures | (3,430) | (5,946) | (14,494) | (8,311) |
Dividends received | 639 | 525 | 639 | 525 |
Net cash used in investing activities | (5,798) | (13,147) | (18,666) | (20,989) |
Cash flows used in financing activities: | ||||
Payments of lease liabilities | (243) | - | (418) | - |
Finance costs paid | (30) | (8) | (58) | (11) |
Net cash used in financing activities | (273) | (8) | (476) | (11) |
Decrease in cash and cash equivalents | (232) | (3,774) | (6,340) | (668) |
Effect of foreign exchange on cash and cash equivalents | 73 | (269) | 190 | 58 |
Cash and cash equivalents, beginning of period | 11,354 | 29,277 | 17,345 | 25,844 |
Cash and cash equivalents, end of period | 11,195 | 25,234 | 11,195 | 25,234 |
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% North West Gemsa & 50% Meseda) located onshore in the Eastern Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75% working interest in the Sebou concession, situated in the Gharb 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.
For further information, please see the Company's website at www.sdxenergy.com or the Company's filed documents at www.sedar.com.
Competent Persons Statement
In accordance with the guidelines of the AIM Market of the London Stock Exchange the technical information contained in the announcement has been reviewed and approved by Rob Cook, VP Subsurface of SDX. Dr. Cook, has over 25 years of oil and gas industry experience, is the qualified person as defined in the London Stock Exchange's Guidance Note for Mining and Oil and Gas companies. Dr. Cook holds a BSc in Geochemistry and a PhD in Sedimentology from the University of Reading, UK. He is a Chartered Geologist with the Geological Society of London (Geol Soc) and a Certified Professional Geologist (CPG-11983) with the American Institute of Professional Geologists (AIPG).
Glossary
"bbl" | stock tank barrel |
"boepd" & "boe/d" | barrels of oil equivalent per day |
"bopd" & "bbl/d" | barrels of oil per day |
"Mcf" | thousands of cubic feet |
"MMscf/d" | million standard cubic feet per day |
"MMscfe/d" | million standard cubic feet equivalent per day |
Forward-Looking Information
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 Company's plans, the timing of completion of the South Disouq CPF, the timing of completion of the export pipelines and well tie-ins, production targets, future drilling, seismic work, new gas sales customers, ESP replacement, field facility upgrades, well workovers, and the timing and costs thereof, as well as capital expenditures, operational expenditures, the reduction in Egyptian receivables, prospective opportunities, and business development activity, should all be regarded as forward-looking information.
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, commodity prices and interest and foreign exchange rates; planned synergies, capital efficiencies and cost-savings; applicable tax laws; future production rates; receipt of necessary permits; the sufficiency of budgeted capital expenditures in carrying out planned activities and the availability and cost of labour and services.
All timing given in this announcement, unless stated otherwise is indicative and while the Company endeavours to provide accurate timing to the market, it cautions that, due to the nature of its operations and reliance on third parties, this is subject to change, often at little or no notice. If there is a delay or change to any of the timings indicated in this announcement, the Company shall update the market without delay.
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; permitting risks; the 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 refer to SDX's Management's Discussion & Analysis for the three and six months ended 30 June 2019, 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.
Non-IFRS Measures
This news release contains the terms "Netback," and "EBITDAX", which are not recognised measures under IFRS and may not be comparable to similar measures presented by other issuers. The Company uses these measures to help evaluate its performance.
Netback is a non-IFRS measure that represents sales net of all operating expenses and government royalties. Management believes that netback is a useful supplemental measure to analyse operating performance and provide an indication of the results generated by the Company's principal business activities prior to the consideration of other income and expenses. Management considers netback an important measure as it demonstrates the Company's profitability relative to current commodity prices. Netback may not be comparable to similar measures used by other companies. See Netback reconciliation to operating income/(loss) in the Company's Interim Consolidated Financial Statements for the three and six months ended 30 June 2019 and 2018.
EBITDAX is a non-IFRS measure that represents earnings before interest, tax, depreciation, amortisation, exploration expense and impairment. EBITDAX is calculated by taking operating income/(loss) and adjusted for the add-back of depreciation and amortisation, exploration expense and impairment of property, plant and equipment (if applicable). EBITDAX is presented in order for the users of the financial statements to understand the cash profitability of the Company, which excludes the impact of costs attributable to exploration activity, which tend to be one-off in nature, and the non-cash costs relating to depreciation, amortisation and impairments. EBITDAX may not be comparable to similar measures used by other companies. See EBITDAX reconciliation to operating income/(loss) in the Company's Interim Consolidated Financial Statements for the three and six months ended 30 June 2019 and 2018.
Oil and Gas Advisory
Estimates of reserves have been made, assuming the development of each property in which the estimate is made will actually occur, without regard to the likely availability to the Company of funding required for the development of such reserves.
Certain disclosure in this news release constitute "anticipated results" for the purposes of National Instrument 51-101 ? Standards for Oil and Gas Activities of the Canadian Securities Administrators because the disclosure in question may, in the opinion of a reasonable person, indicate the potential value or quantities of resources in respect of the Company's resources or a portion of its resources. Without limitation, the anticipated results disclosed in this news release include estimates of volume, flow rate, production rates, porosity and pay thickness attributable to the resources of the Company. Such estimates have been prepared by management of the Company and have not been prepared or reviewed by an independent qualified reserves evaluator or auditor. Anticipated results are subject to certain risks and uncertainties, including those described above and various geological, technical, operational, engineering, commercial, and technical risks. In addition, the geotechnical analysis and engineering to be conducted in respect of such resources is not complete. Such risks and uncertainties may cause the anticipated results disclosed herein to be inaccurate. Actual results may vary, perhaps materially.
Prospective Resources
The prospective resource estimates disclosed herein have been prepared by an independent qualified reserves evaluator, ERC Equipoise Limited, in accordance with the Canadian Oil and Gas Evaluation Handbook. The prospective resources disclosed herein have an effective date of 1 January 2019. Prospective resources are those quantities of gas, estimated as of the given date, to be potentially recoverable from undiscovered accumulations through future development projects. As prospective resources, there is no certainty that any portion of the resources will be discovered. The chance that an exploration project will result in a discovery is referred to as the "chance of discovery" as defined by the management of the Company. There is no certainty that it will be commercially viable to produce any portion of the resources discussed herein; though any discovery that is commercially viable would be tied back to the Company's pipeline in Morocco and then connected to customers' facilities within 9 to 12 months of discovery. Based upon the economic analysis undertaken on any discovery, management has attributed an associated chance of development of 100%. Anticipated results are subject to certain risks and uncertainties, including various geological, technical, operational, engineering, commercial and technical risks. In addition, the geotechnical analysis and engineering to be conducted in respect of such resources is not complete. Such risks and uncertainties may cause the anticipated results disclosed herein to be inaccurate. Actual results may vary, perhaps materially.
There are uncertainties associated with the volume estimates of the prospective resources disclosed herein, due to the level of information available on prospective resources, but ranges are defined based on data from the Company's nearby existing analogous wells. Some of the risk and uncertainties are outlined below:
Use of the term "boe" or the term "MMscf" may be misleading, particularly if used in isolation. A "boe" conversion ratio of 6 Mcf: 1 bbl and a "Mcf" conversion ratio of 1bbl: 6 Mcf are based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
SOURCE SDX Energy Inc.
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