SDX commences drilling of Sohbi well at South Disouq onshore Egypt
SDX Energy, the MENA-focused oil and gas company, has provided an update on its drilling operations in Egypt.
The SD-12X (Sohbi) well at South Disouq in Egypt (SDX 55% working interest, 100% working interest in this well) has commenced drilling operations.
Sohbi is expected to a reach its targeted depth of approx. 2,300 metres in late April and is targeting gross P50 unrisked prospective resources of c.33 bcfe, as estimated by management. Sohbi’s primary target is in the same Kafr el Sheikh formation that the Company’s existing Ibn Yunus well is already producing from.
If successful, the Sohbi well would be tied in during 2021 via a 5.8 km tie-in to the Ibn Yunus-1X location where an existing flow-line connects to the South Disouq Central Processing Facility. On a gross basis, this tie in cost is estimated at US$3.5 million. The 33 bcfe gross P50 unrisked resource targeted by Sohbi would potentially only require one further development well. SDX will drill the Sohbi well at a 100% working interest for an estimated gross dry hole cost of US$2.3 million which will be paid over the coming three months. Under Clause 8.5 of the Joint Operating Agreement, ‘Premium to Participate in Exclusive Operations’, if the Company’s partner elects to participate in the well after a discovery is made, it is required to pay its full share of the well cost, plus a premium of a further 300% of this amount.
Mark Reid, CEO of SDX, commented:
‘Sohbi is an exciting well for the Company, targeting the same productive formation we are already producing from in Egypt and if successful, it has the potential to extend the current plateau production of 50 MMscfe/d to 2024.
I look forward to providing further updates on both wells and our plan for future drilling in due course.
The Company remains well funded with US$11.0 million of cash as at 31 December 2019 and US$7.5 million of debt available in our EBRD credit facility. Furthermore, even at an oil price assumption of $55/bbl, approximately 80% of 2020 and 90% of 2021 forecast cash flows are estimated to come from our fixed price gas businesses in Egypt and Morocco. Given the above, we are positioned strongly to continue to weather the current fall in oil prices.’
(Source: SDX Energy)