SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, is pleased to provide an operational update for Egypt.
South Disouq (55% Operated working interest)
Following the successful drilling of the SD-1X exploration well and resulting natural gas discovery at South Disouq, a Resources Update was prepared on behalf of SDX by Gaffney, Cline & Associates (GCA), an independent global oil & gas consultancy. The Company is pleased to announce the initial results shown below using Canadian NI-51-101 Reporting designations:
Gross(1) Contingent Resources(3) [2C]: 47.13 Bscf Gas / 2.29 MMbbl Condensate
Prospective Resources(2,3) [Best Case]: 180.08 Bscf Gas / 8.73 MMbbl Condensate
The GCA Resources Update for South Disouq is an important step in the validation of SDX’s understanding of the full potential of the field. The results are in line with management’s expectations. The Company also believes that the Gross Prospective Resources as reported above have now been significantly de-risked as a result of the SD-1X discovery, which was disclosed in its May 29, 2017 news release.
SDX believes that the understanding of the potential reserves and resources for South Disouq will continue to evolve over time as more data becomes available and further exploration activities are undertaken. The SD-1X discovery and its subsequent development allows SDX to begin unlocking the resource potential that it believes is contained within the South Disouq concession. Furthermore, given the encouraging results noted in the deeper oil prone Cretaceous horizon encountered in SD- 1X, where a working petroleum system was encountered, the Company is planning to further test this horizon during the development program planned for the SD-1X discovery.
(1) Gross volumes are unrisked,100%working interest volumes and do not represent the contractor’s actual Net Entitlement under the terms of the PSC that governs the asset.
(2) Aggregate of volumes four prospects and five Leads; aggregation performed by SDX management.
(3) For Contingent Resources, there is uncertainty that that it will be commercially viable to produce any portion of the resources. For Prospective Resources, there is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.
SDX is also pleased to announce that it is currently in constructive discussions with the Egyptian authorities, regarding bringing the field into production by way of an early production system (EPS). The initial development at SD-1X will see the field being connected to the nearby Egyptian domestic gas distribution system allowing for both early cash flow and for subsequent wells and discoveries to be connected in short order. The existing gas infrastructure within the concession area combined with the cooperative and supportive efforts of Egyptian authorities will allow SDX to bring this discovery into production in the shortest possible time frame.
North West Gemsa (50% working interest)
At North West Gemsa the workover program is set to commence in July. This program will be focused on ESP installation and maintenance of both production and water injection wells, working towards ensuring that the field target rate of 5,000 boepd is maintained throughout the year. This follows the recent technical review at North West Gemsa to determine how best to extend the economic field life through optimising field operations whilst continuing to focus on operating cost reductions.
Meseda (50% working interest)
At Meseda the fluid treating facility upgrade has now been completed. This involved the installation of a new two-phase separator, which has doubled the gross treating capacity in the field. Additionally, a tender exercise has been undertaken to select the preferred Electrical Submersible Pump (“ESPs”) vendor to supply the pumps for the remaining workovers in Meseda. The fluid treating facility completion allows the workover campaign to resume with the resulting uplift in production envisaged in the coming months.
Paul Welch, CEO of SDX, commented:
“The first half of 2017 has seen an unprecedented level of activity for SDX and today’s announcement shows that material progress continues to be made across the current portfolio.
“We are extremely upbeat on South Disouq and are pleased to be able to update the market with news of the initiation of discussions on the early production scheme, as well as the completion of the work on the CPR. The accumulation of additional production data, combined with development drilling and additional exploration activity, will enable further independent assessment of the field’s reserves and resources to be completed resulting in an additional increase in its value.
“We continue to progress our existing portfolio as aggressively as possible, whilst continuing to review opportunities for additional value accretive growth from new opportunities. With our existing team, predominantly based in North Africa; we have the internal resource and strong desire to maintain the momentum over the coming months. In addition, during Q3 we intend to update our shareholders on a start-up date for our EPS system in South Disouq.”
(SDX Energy Press Release)