SDX Energy: Strong Netback; Active 2019 Well Programme

 | Aug 30, 2018 06:24AM ET

The acquisition of Circle Oil assets, strong oil prices and cost discipline drove up group operational netbacks from US$22.5/boe in H117 to US$32.9/boe in H118, with the group generating net cash from operations of US$20.3m. Funds from operations helped SDX Energy Inc (LON:SDX) to support an active H118 drilling programme while maintaining a strong balance sheet position, ending the half-year with US$25.2m of cash and an undrawn credit facility of US$10m. As highlighted in our recent research note, Looking ahead at 2019 work programme, SDX remains on track to double production in 2018, while investing in an active E&A programme and development drilling in both Egypt and Morocco. Our valuation remains broadly unchanged at 92.7p/share (from 92.5p/share) as we include a slightly higher capex estimate for delivery of first gas at South Disouq.