SDX Energy Inc (LON:SDX) has released the results of an independent resource audit on its South Disouq discovery. Gaffney, Cline & Associates has assigned gross 2C resources of 47bcf and 2.3mmbbls and a further 180bcf and 8.7mmbbls of gross prospective resources. The company is in discussion to get production as early as possible to generate cashflows and value. Elsewhere, progress is being made at NW Gemsa and Meseda that should see production increases by year end. In Morocco, a campaign of seven wells is planned and should start in the next six weeks. We are reviewing our model and will update our valuation (currently 76p/share) in time.
The release of the resources update confirms the significant potential that SDX unlocked at South Disouq. The report estimates that further resources (of 180bcf and 8.7mmbbls, split across four prospects and five leads) have been de-risked (GCA indicates a CoS of 40% for the prospects), indicating considerable follow-up potential. We note this does not include the deeper prospectivity encountered in the cretaceous with the SD-1X discovery. Being so close to infrastructure, the gas and condensate can be developed quickly; we would expect production in late 2017/early 2018. Before then, we would expect the company to release its plans on the appraisal and development of this exciting area.
To read the entire report Please click on the pdf File Below: