SDX Energy provides Q2 2017 update on Egypt operations
SDX Energy, the North Africa focused oil and gas company, has announced its operating results for the three and six months ended June 30, 2017.
The Company’s share of production from its operations for the six months ended June 30, 2017 was 3,351 boepd analysed as follows;
- North West Gemsa 2,170 boepd
- Meseda 635 boepd
- Morocco 546 boepd
On a pro forma basis, assuming the acquisition of the Egyptian and Moroccan businesses of Circle Oil PLC completed on January 1, 2017, the Company’s share of production from its operations for the six months ended June 30, 2017 would have been 3,812 boepd analysed as follows;
- North West Gemsa 2,538 boepd
- Meseda 635 boepd
- Morocco 639 boepd
In North West Gemsa in Q2 2017, the Company and the operator undertook a tender to secure a work-over rig and associated services for a work over program covering up to 12 wells. A local rig was secured and post period end, the work-over program, which is focused on Electrical Submersible Pump (“ESP”) installation and maintenance, commenced with the objective of maintaining average production at c. 5,000 boepd for 2017. Unitization talks with the offset operator are temporarily on hold and are expected to recommence in Q4 2017.
In Q2 2017, two wells in the Meseda field had workovers performed consisting of tubing and pump maintenance aimed at ensuring future production uptime. In addition, the expansion of the central processing facility commenced with the arrival of a new two-phase separator. Installation is anticipated to complete during Q3 2017 allowing treating capacity to increase from 10k bfpd to 20k bfpd. Once completed, additional well work-overs will be undertaken to upgrade existing ESPs which are anticipated to increase well production rates. The tender for the ESP provider has been undertaken and the award is expected in Q3 2017. The production increase related to the facilities and ESP upgrades is expected in Q4 2017.
In South Disouq in Q2 2017 the Company drilled the SD-1X discovery well, conducted well test operations and successfully flowed natural gas at a stabilised rate of 25.8 Mmcf/d on a 48/64″ choke. This flow rate significantly exceeded initial expectations and was limited by the surface facilities. The well was subsequently shut in for an initial build-up, after which a series of additional flowing and shut-in periods were undertaken and fluid samples taken. The results of the well testing activity were used as input to a Resources Update prepared by Gaffney, Cline & Associates (“GCA”), an independent, global oil and gas consultancy and subsequent to the quarter end, the Company announced the initial results shown below using Canadian NI-51-101 Reporting designations:
- Gross Contingent Resources (2C): 47.13 gas (bscf) 2.29 condensate (mmbbls)
- Gross Prospective Resources (Best Case): 180.08 gas (bscf) 8.73 condensate (mmbbls)
The Company believes that the Gross Prospective Resources as reported above have now been significantly de-risked as a result of the SD-1X discovery. During the quarter, the Company also entered into constructive discussions with the Egyptian authorities, regarding bringing the field into production during Q1 2018 by way of an early production system (“EPS”).
In the South Ramadan development concession in Q2 2017, the Company, along with its partners, conducted an extensive review of the prospectivity of the block’s potential. A commercial review of development options was then initiated which is anticipated to conclude during Q3 2017. Results of this exercise, combined with a response from the Egyptian authorities on the extension request to complete the drilling commitment in 2018, will determine the way forward in this concession for the remainder of 2017.
North West Gemsa
- Complete up to 12 well workovers focused on ESP installation/maintenance and tubing maintenance to ensure production uptime; and
- Complete unitization arrangement with offset operator and prepare for any additional development activities.
- Drill two development wells (pending government approval) and two exploration wells;
- Replace up to six ESPs; and
- Continue with waterflood program and facility capacity upgrade.
- Complete development planning on the SD-1X discovery with a view to achieving commercial production during Q1 2018; and
- Prepare for entering into the second exploration phase to continue the targeting of the deeper oil potential confirmed in SD-1X and the additional prospective gas resources outside of the SD-1X discovery area.
- Continue to explore opportunities to expand asset base in the North Africa region; and
- Continue to minimise costs and crystallise synergies post-completion of the acquisition of Circle Oil PLC’s businesses in Egypt and Morocco.
Paul Welch, President & CEO of SDX Energy, commented:
‘We continued to make strong operational progress across our North African portfolio in the second quarter and we are also pleased to see the positive impact that the Circle acquisition is having on our business with improving Netbacks and a strong cash and working capital position as at the end of H1 2017.
Following a successful tendering process, we are ready to undertake an exciting drilling campaign in Morocco. We have significantly de-risked a portfolio of exploration and development prospects in these recently acquired concessions and we anticipate that positive drilling results will enable us to bring additional high margin gas production online in a timely manner.
In Egypt, the Company’s Meseda and North West Gemsa licences continue to perform in line with expectations. We have commenced the 12 well workover programme on NW Gemsa and following the ESP installation and maintenance work we anticipate maintaining gross production in the field at c.5,000 boepd for the remainder of 2017. We completed two well workovers on Meseda during the period and will now turn our attention towards completing the facility upgrade, replacing ESPs and increasing production. Following the discovery at South Disouq, SDX is targeting first gas during Q1 2018, with preparations for both the development activities and the second exploration phase now significantly advanced. In due course, I am looking forward to updating the market with our plans to develop the existing discovery on South Disouq, to add additional gas resources to the reserve base and on how we propose to exploit the deeper oil potential within the concession.’
(Source: SDX Energy)