SDX Energy Live Discussion

Small_Holding 03 Oct 2019

SDX - South Disouq Predicted Timetable A couple of points from the presentation South Disouq- When it is producing 50 MMscfe/d it gives SDX a net figure of 4,583 boed North West Gemsa- Whilst I knew that this was a mature asset and production was declining, I didn’t appreciate how rapidly that decline might be. In H1 2019 NWG contributed 1,972 boe/d to SDX total production. However, this asset may become uneconomic in early 2020 and SDX will exit. If that proves to be the case they only have about six months left of production from that site. To go from 1,972 boe/d to zero in six months so soon after South Disouq comes online would reduce the net benefit of SD to SDX to 2,611 boe/d (4,583 - 1,972 = 2611) It may be that they can reduce costs to extend the economic life of NWG but if they can’t that would be the net effect. Drilling in Morocco could greatly increase reserves but if they haven’t got any customers it will not increase production. With partner approval they expect to commence a drilling campaign at SD Q1 2020. Assuming they have further success there the capacity of the CPF can be increased but that presumably means buying additional kit from Abu Dhabi and we would have similar timelines in building, testing, transporting and fitting any additional kit. South Ramadan- Good news that this could produce 1,300 bopd but with SDX only having 12.5% their share would be small. However, any production should help to offset some of the expenditure to date. Still hoping South Disouq beats the predicted timeline.

Small_Holding 01 Oct 2019

SDX - South Disouq Predicted Timetable September Presentation on the website sdxenergy.com SDX-Corporate-Presentation-September-2019-as-at-26.9.19.pdf 2.95 MB

Small_Holding 21 Sep 2019

SDX - South Disouq Predicted Timetable I have to disagree with your opening statement “Not much of SDX’s income comes from oil, so why would the SP move?” The Company’s entitlement share of production from its operations for the six months ended 30 June 2019 was 3,539 boe/d (gross – 9,250 boe/d) split as follows: - North West Gemsa 1,972 boe/d (56% of production) Meseda 822 bbl/d (23% of production) Morocco 745 boe/d (21% of production North West Gemsa produces light (40˚ API) oil, sold at a 10% discount to Brent Meseda produces heavy (17-20˚ API) oil, sold at a 30% discount to Brent North West Gemsa plus Meseda account for 79% of SDX’s current production and all of that oil is sold at a price directly linked to the Brent price. Previous company presentations have shown tables for North West Gemsa and Meseda demonstrating how the netback increases as the Brent price rises. For example here is one for North West Gemsa from the August 2018 presentation. Screenshot_2019-09-21 Presentations - Corporate Presentation August 2018 Final pdf.jpg1193x793 266 KB The price of Brent is relevant to SDX and affects their revenue and netback figures. In time as South Disouq comes online, hopefully Morocco gas sales increase and production at North West Gemsa declines it will become less important but currently it has a direct effect on the company’s performance.

holland44 20 Sep 2019

SDX - South Disouq Predicted Timetable Not much of SDX’s income comes from oil, so why would the SP move? Also, small oil and gas and mining companies in general have been hated by the market for at least the last two years. More and more investments are moving into passive index funds, which don’t include small companies, or into large “growth” and “quality” companies, which are perceived to be more resilient in such changeable times. The result is that surprisingly few people are even looking at small companies now, especially amongst miners and O&G - at least the sort of investors who have the funds to really re-rate share prices. You could argue that this neglect is to the gain of private investors who are prepared to look at small companies, but as ever, a re-rate can take an awfully long time, so you have to be vary patient and confident in your judgement of the value of a company.

Small_Holding 19 Sep 2019

SDX - South Disouq Predicted Timetable You are absolutely right this share is definitely unloved and has been for sometime. If you have been following the story for a while you will know that the former CEO made wildly ambitious predictions for bringing South Disouq online, year end production figures and sales of gas in Morocco. As a result all confidence in the company evaporated. These are strange times as well, all investors are nervous. With Brexit, the US China trade war, global slowdown and trouble in the Gulf, there are a lot of companies with ridiculously low valuations. Even companies putting out good news have seen little or no reaction from the market. What I would say about SDX, despite the above issues, they continue to generate revenue and still have no debt. Once South Disouq comes online their revenue stream will increase significantly. If that is followed by a successful drilling campaign, and it should be, there will be a lot of positive news after a very quiet period. I hope this will restore confidence in the company and we see a re rating. A mention of a dividend next year would help as well. Regarding the recent oil price rise, SDX are cushioned to some extent from the volatility of the oil price. The gas sales in Morocco are on long fixed price contracts and the gas from South Disouq, when it comes, will also be at a fixed price. A high oil price would obviously be beneficial to SDX but it is a good thing that they have an element of stability provided by long term fixed contracts.

wizard47 18 Sep 2019

SDX - South Disouq Predicted Timetable Yeah but the market remains unimpressed and does not move the sp. Why would that be,when the price of oil has increased recently?

Small_Holding 18 Sep 2019

SDX - South Disouq Predicted Timetable Good to get another positive drill result today, anything that increases production is welcome. From the predicted South Disouq timeline “Site acceptance test Saturday 14th Sept to 21st Sept 2019” From their last update it appeared they had used two weeks of their eight weeks contingency. It is open to interpretation but from the predicted timetable “Hook up & Installation Wed 14th August to 11th September 2019” Their update said “The installation and hook-up of the CPF is scheduled to commence later in August”. By saying later in August not mid August, I take that as meaning they were around two weeks behind the earliest timeline. Assuming they have had no further delays the site acceptance test could be the first week in October 2019, with an RNS saying SD has gone live anytime after that. I appreciate this is a positive interpretation but everything should be in their hands now, with the CPF on site, the period when external contractors could have let them down should have passed.

holland44 01 Sep 2019

SDX - South Disouq Predicted Timetable I agree on Morocco: why spend millions on new drilling when SDX are nowhere near selling what they already produce? I believe Sound Energy’s enthusiasm for Morocco is based on their huge gas discoveries in eastern Morocco, which, like the fields over the border in Algeria, would be exported via pipeline to Europe and, I think, LNG. SDX has never talked about exporting gas, probably due to a lack of local export infrastructure and because its gas discoveries so far have been small fields with short expected lifespans. SDX is therefore trapped into supplying the local market, and despite PW’s warm words and the Moroccan government’s encouragement (low taxes, high set prices), finding customers has been extremely slow. I have higher hopes for the upcoming exploration drilling in Egypt: promising 3D and real prospects of actually selling the gas, even though at low prices.

Small_Holding 01 Sep 2019

SDX - South Disouq Predicted Timetable Malcy makes the point about SDX slashing guidance for Morocco and it does make you wonder why they have a 12 well campaign starting Q4 2019. PW told me that they aren’t intending to extend the pipeline to Rabat, something I thought they might consider to open up another market. If they just intend concentrating on Kenitra, where is this anticipated demand coming from. By their own admission Peugeot is not a big customer, only using gas for paint drying if my memory serves me right. As far as I am aware there is no domestic network so they are relying on industrial customers from the Atlantic Free Zone or other areas of Kenitra. Whether they believe having a positive drilling campaign, increasing reserves but not selling much at the moment will be well received by the market, I don’t know. The company (PW) did seem quite excited by Lalla Mimouna Nord and it’s potential and, for that reason, I always thought the US$10m credit facility would be used to connect Lalla Mimouna Nord with the existing network, assuming the drilling was successful. Sound Energy and more recently Predator OIl & Gas have been very enthusiastic about Morocco and I can see why given the attractive fiscal terms but I am still baffled where the demand is coming from, especially if SDX supply only Kenitra. They did talk about selling compressed gas in bottles, perhaps that is seen as an area for expansion. Concentrating on South Disouq expansion would seem a better business move as they will take as much gas as they can produce, subject to pipeline capacity obviously. As usual we have to guess because the company does not give us chance to question the management by means of an investor call Q&A session.

theprior 01 Sep 2019

SDX - South Disouq Predicted Timetable Yes, been a v disappointing year. Still holding and hoping that progress later in the year will swing sentiment, though #SDX has never been “on fire”, only ever posting slow steady gains. Even a return to that business as usual would be a bonus! TP

Small_Holding 01 Sep 2019

SDX - South Disouq Predicted Timetable Malcy has now taken SDX out of his bucket list in his 6 monthly update 30th August 2019. “SDX Energy has had a difficult time this year, a combination of missing targets on the South Disouq start-up more than once, missing out on a number of potential acquisitions, firing its CEO and then slashing guidance in Morocco has left its toll on the share price. Historically I don’t change the list between interim reports but I probably should have seen the writing on the wall, cancelling analysts visits twice should have been a sign to be taken on board, anyway the company is off the list for the time being.” Whilst I think Malcy can change his bucket list as he sees fit, it is his opinion after all, what concerns me is the fact that analysts visits have been cancelled twice. With South Disouq getting ever closer surely they should be trying to win over the analysts to convince them that things have changed at SDX. Cancelling visits twice does the opposite. I also note that Investors Chronicle, a one time supporter of SDX, said on 27th August 2019. "IC View While gas production could help SDX make up earnings ground in the coming years, the company has not shown much reason for investors to trust it with their cash. Sell at 22p. Last IC View: Sell, 39.6p, 22 Mar 2019" The current policy of silence from the temporary CEO Mark Reid won’t help. Whether they have a chosen strategy to keep quiet until they deliver South Disouq early, remains to be seen. They don’t seem to have many friends at the moment and they certainly aren’t going out of their way to try to attract new ones.

Ripley94 30 Aug 2019

SDX – M&A activity SDX… XXXX Sliced these on 22nd August for 23p . Got them all back today for 19p

Small_Holding 23 Aug 2019

SDX - South Disouq Predicted Timetable Reading the boards some people are saying after a 40% plus rise in two days the share price is now “toppy”. In reality based on the fundamentals the share price shouldn’t have fallen as far as it did but that is what happened. Fears of a cheap takeover never materialised and it now appears the TSX delist was, as stated at the time, a cost saving exercise. LTH will know that SDX compile excellent company reports to a very high standard even on a quarterly basis, this was done to comply with Canadian standards. Following the delist I asked PW if he was going to continue providing reports to this standard. He told me they would for the time being but conceded that under AIM rules they don’t have to. With the CPF now on site at South Disouq we just need the connection and testing to be completed successfully and SDX then becomes a different animal, generating more revenue than they will spend even with their ambitious exploration campaigns. MSD-19 at Meseda was spud in early August and results from that can’t be far away. South Disouq is on track and I think it will beat the timeline and go live at the end of October 2019 (the prediction including 8 weeks contingency was first gas week commencing Sunday 10th November 2019). The CPF has a capacity of 60MMscfe/d I believe but this can be increased by adding extensions to the existing CPF in 30MMscfe/d chunks. With water and power already there this can be done relatively easily or so I am told. What the ultimate capacity of the CPF is I don’t know but I believe the main pipeline that they connect to has a capacity of 120MMscfe/d and it was their intention to try to get to that capacity The 12 well drilling campaign begins in Q4 2019 and given their previous hit rate of over 80% they have shown they understand the geology and the seismic data, this bodes well for this campaign. Whether we actually need to drill 12 wells given the slow customer uptake is another matter. Taking these latest figures H1 2019 netback is US$18.5m or US$37m for the year, with production set to double in the next 3 months and a market cap after this recent rise of only around £39m, the share price has a lot further to go before we see a fair valuation. If only Mark Reid would rethink their dividend policy and pay a small maiden dividend next year, we would see a whole new set of investors start to look at this stock. (AIMO)

Small_Holding 22 Aug 2019

SDX - South Disouq Predicted Timetable Excellent day I know many LTH’s are still under water, myself included, but it does show how undervalued SDX was. Will Mark Reid do an interview to talk to the results? If he has aspirations to take over as CEO he will, my guess is a Core Finance interview with Malcy who will give him an easy ride.

Small_Holding 22 Aug 2019

SDX - South Disouq Predicted Timetable The RNS said the CPF was en route to South Disouq but from the full report “The CPF and the compressor both passed factory acceptance tests and the CPF has now arrived on site at South Disouq.” Even better