SDX Energy PLC (LON:SDX) described 2019 as a successful year as it provided a trading update ahead of its financial results, revealing a 12% rise in production.
For the year, production averaged 4,020 barrels of oil equivalent per day (boepd) and the company noted that, at asset level, it had either exceeded or reached the upper end of guidance.
Looking to 2020, the company’s guidance is pitched at 6,750 to 7,000 boepd, 68-74% higher, as operations continue to ramp-up.
Albeit, SDX noted that some 1,000 to 1,050 boepd of 2020 guidance includes the North West Gemsa asset which has an uncertain future in the portfolio – the company has said it might exit the project at some point in the year if sufficient cost savings cannot be achieved.
"2019 was a successful year for SDX, with all key metrics being ahead of expectations, success with the drill bit and our key South Disouq development project completing on time and on budget,” said Mark Reid, SDX chief executive in a statement.
“We have entered 2020 in a strong position with production at record levels, good monthly cash generation, a strong balance sheet and a busy work programme of drilling ahead of us, which is all fully funded,” he added.
SDX said it ended 2019 with around US$11mln of cash, plus its US$10mln European Bank for Reconstruction and Development (EBRD) credit facility remains undrawn.
In 2020, the company is advancing well-drilling programmes in Morocco and Egypt to grow production.
To date, SDX has drilled seven ‘close to infrastructure’ wells in Morocco - all either appraisal or development wells – as part of a twelve well campaign. So far, this has work has significantly increased the company’s reserve base, adding 2bn to 2.5bn cubic feet to take gross reserves to 4bn to 4.5bn in Morocco.
All wells have low connection costs and based on results to date the company expects that the reserves unlocked to date will satisfy customer contracts for the next 30 to 36 months.
Five remaining wells are expected to add incremental reserves, and, the remaining campaign includes two ‘play-opening’ appraisal wells.
In Egypt, the company is preparing two new exploration wells in the South Disouq project area to build on the asset which achieved ‘first gas’ in 2019.
The two new wells will target the same horizons that have yielded four discoveries to date.
Salah is the first of the two new wells. It is set to spud in mid-to-late February, and, is expected to complete in April. The second well, Sobhi, is expected to spud in late April to early May, completing in early June.
Salah is targeting 71bn cubic feet of gas resources and Sobhi is targeting 33bn cubic feet.
Both wells are located close to infrastructure and would cost US$2.5mln to US$1.9mln respectively to tie-in to the South Disouq production facility.
A third South Disouq well could be added to the campaign, subject to a partnering process.
“With eight wells planned for H1 2020, six of which are exploration/appraisal in nature, we are moving into a very exciting period of activity and I look forward to providing further updates in due course," SDX boss Reid added.