SDX Energy (SDX)

Business description

SDX Energy is a North African onshore player listed in Toronto and London. It has oil and gas production in Egypt, and gas production in Morocco. A large gas discovery was recently made at South Disouq.

Stock data

Market cap.£135.2m
Last close66.10p
High / Low (52 weeks)66.5p / 43.5p
Stock market listingLN, CN
Forecast net cash (US$m)25.5
Forecast gearing ratio (%)N/A
TeamResources - Oil & Gas
SectorOil & Gas

Price performance

Relative *24.135.8(5.9)

* % Relative to local index

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Company news

Y/E Dec Revenue (US$m) EBITDA (US$m) PBT (US$m) EPS (c) P/E (x) P/CF (x)
2015A 11.4 2.7 11.1 30.6 3.0 N/A
2016A 12.9 5.7 (26.7) (8.9) N/A N/A
2017E 36.3 21.1 6.0 3.2 28.8 7.0
2018E 65.2 47.6 31.2 15.1 6.1 3.8

Last updated on 23/03/2018

Investment summary

SDX Energy has discovered gas at the LNB-1, Morocco with 300m of gas-bearing horizons discovered in an over-pressured section in the Lafkarena sequence. Heavy hydrocarbons contained in gas indicate a thermogenic hydrocarbon source rock, indicative of a new petroleum system that has previously not been encountered at Sebou. Preliminary estimates of recoverable gas at LNB-1 are un-risked mid-case volume of 10.2bcf with 55kbbls of condensate. This is significantly larger than the traps encountered at Sebou and exceeds the threshold for commerciality for a processing facility and pipeline to Sebou area. LNB-1 awaits logging and testing which will be carried out in due course once suitable equipment can be mobilised. We see this a material discovery for SDX, should flow tests confirm productivity, for two reasons: 1) well costs are marginally higher than at Sebou at c $2.7m but with un-risked recoverable volumes five times greater, per-well returns are likely to be significantly superior. In addition, once de-risked, the new play at Lalla Mimouna has the potential to rapidly de-risk SDX’s ability to meet projected gas demand in Kenitra. 2) liquids discovered at LNB-1 open up a new play fairway with potential to provide SDX with an additional revenue stream in Morocco that is not constrained by demand.

Last updated on 20/04/2018

Industry outlook

SDX remains open to adding to its portfolio and sees Egypt as a natural market for consolidation, given the large number of small players. Its acquisition of Circle Oil's Egyptian and Moroccan assets in early 2017 shows that it is able to negotiate and complete transactions efficiently.

Last updated on 06/04/2018

Key management

Paul Welch, CEO
Mark Reid, CFO

Company address

38 Welbeck Street
United Kingdom
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