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SDX Energy starts drilling SAH-2 well onshore Morocco

The oil and gas firm is deep into a drilling campaign, and the next well could quickly deliver additional production

oil and gas operations
The SAH-2 well is expected to take between 15 and 20 days to drill.

SDX Energy Inc (LON:SDX, CVE:SDX) has told investors that it has begun drilling operations for the SAH-2 development well on the Sebou permit, onshore Morocco.

The company said that the SAH-2 well is expected to take between 15 and 20 days to drill.

WATCH: SDX Energy confirms latest successful well in Morocco drill programme

If it is successful, the well will undergo a phase of testing before it is brought online for production, via nearby infrastructure.

The company is now deep into a nine-well drilling programme, onshore Morocco, where analysts reckon recent well successes are delivering resource and revenue growth.

“SDX is embarking on its most active drilling programme to date, with fifteen wells, seven workovers and a new 3D seismic shoot planned across the portfolio,” Cantor Fitzgerald analyst Ashley Kelty said in a note this week.

“This should see both production and reserves grow, whilst also offering transformational upside from the exploration wells, targeting 150bcf (83bcf net) at South Disouq in Egypt.” Kelty added: “Production is projected to nearly double in 2018 to 8-10mmcfd, and we would also expect reserves to be increased following the recent success.

“With an active drilling programme in 2018 across Egypt and Morocco, we believe the market has yet to wake up to the near term growth potential from the asset base.”

The Cantor analyst sees the company’s valuation as “unchallenging” and believes there is potential for a re-rating to the share price. The broker rates SDX as a ‘buy’ and has a price target of 64p.

Quick facts: SDX Energy Inc

Price: 17 GBX

AIM:SDX
Market: AIM
Market Cap: £34.91 m
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on 04/08/2019

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