SDX makes a play opening discovery in Morocco – Lalla Mimouna

SDX has made a gas discovery in Morocco at the LNB-1 well on its Lalla Mimouna licence.

The well successfully drilled into two targets:

• Lafkerena (deeper)
• Upper Dlalha (shallower)

The well is being completed as a producer in the Upper Dlalha and the deeper Lafkerena is being suspended until the appropriate equipment can be mobilised.

The Lafkerena target is significantly larger than previously encountered on the nearby Sebou licence. Management estimate unrisked mid-case volumes of 10.2bcf of gas and 55,000bbl of condensates.

Full press release below:

SDX Energy Inc. the North Africa focused oil and gas company, is pleased to announce that a conventional natural gas discovery has been made at its LNB-1 exploration well on the Lalla Mimouna permit in Morocco (SDX 75 %).

The LNB-1 well was drilled to a total depth of 1861 meters. The primary target was in the Lafkerena sequence, where 300 meters of gas bearing horizons were encountered in a significantly over-pressured section. The mudlog obtained through the section showed elevated gas readings of more than 20% with multiple sections above 50%. This section could not be logged using conventional methods due to hole conditions.

The gas shows in this section contained heavier hydrocarbon components throughout, which is indicative of a thermogenic hydrocarbon source rock. These types of shows have not been seen to date in other parts of the basin and indicate that a new petroleum system has been encountered in this area. Based on the mudlog shows, reservoir quality information from the formation cuttings, analogue fields (outside the Gharb basin), and the size of the feature as currently mapped, a preliminary recoverable gas volume has been estimated by management. This results in an un-risked mid-case volume of 10.2 Bscf of conventional natural gas and 55 thousand barrels of condensate. This is significantly larger than the traps typically encountered in Sebou and would exceed the size required to justify development and connection to the existing infrastructure in the Sebou area.

Additionally in the secondary target, the Upper Dlalha, 2.6 meters of net conventional natural gas pay sands were encountered with average porosity in the pay section of 33%. This pay section is similar to the Guebbas targets, from which SDX successfully produces on the Sebou permit.

The well is now being completed as a conventional gas producer in the Upper Dlalha with the deeper Lafkerena section being suspended until the appropriate equipment can be mobilized, to test and produce from this over-pressured section. The timetable to test this section has not been finalized and will be the subject of a future update.

The drilling rig will now move to the LMS-1 exploration well in the Lalla Mimouna Nord permit, which will be the last well of the current drilling campaign.

Paul Welch, President and CEO of SDX, commented:

“We are very excited about the results of this exploration well. It was a higher risk exploration prospect than previous drilling in Sebou, as it was a sequence that had not been previously penetrated in a similar structural location. We had anticipated a higher-pressure section, based upon offset drilling in the area, but the actual pressures encountered, the thickness of the section, and the type and amount of shows significantly exceeded our expectations.”

“We are currently in the early planning phases of determining how best to complete and test this

section. The estimated volume potential is very encouraging and I look forward to updating the market further on our activities in due course. Meanwhile, we have one more exploration well to drill on the permit in this campaign and I am looking forward to some more positive results based upon our success in LNB-1.”

Source: http://www.sdxenergy.com/~/media/Files/S/Seadragon-Corp/press-release/press-release-2018/20180420_SDX%20Press%20Release.pdf

Read More

Kurdistan E&Ps get paid for January sales

Genel has announced that the Tawke and Taq Taq partners have received payment from the KRG for January oil sales.

• The Tawke partners (DNO 75% and Genel 25%) have received USD56 million and will also share in a USD13 million overriding payment

• The Taq Taq partners partners received USD8 million this month

The continuing payments by the KRG is constructive for sentiment and critical in bringing interest and investment back into the region. Many E&Ps have held off investing in the country with payments being a big concern. While the continuing payments are clearly positive, questions remain on the longer term ability of the KRG to pay producers given loss of crucial income following the referendum with the taking back of the Kirkuk area by Baghdad. For now the KRG is managing, largely with the help of investment/cash injection by Rosneft at the end of large year.

Read More

SDX has made a gas discovery on its South Disouq licence

SDX made a gas discovery with the Ibn Yunus-1X well on its South Disouq licence. The well is planned to be tied into nearby infrastructure being constructed to commercialise the original gas on the block (SD-1X). First gas on the licence, which will now be from both wells, is targeted for H2 2018.

SDX has a 55% operated stake in the licence, having farmed out 45% to IPR in February 2015. SDX made the SD-1X discovery in 2017 which tested successfully and now being developed through an Early Production System. The gas price is understood to be under negotiation which could be above the country’s historical domestic price of USD2.65/mmbtu.

Further exploration on the licence is now planned targeting the estimated 1.3tcf of resource potential (P10).

Press announcement

SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, is pleased to announce
that a gas discovery has been made at its Ibn Yunus-1X exploration well at South Disouq, Egypt (SDX 55%
working interest and operator).

The Ibn Yunus-1X well was drilled to a total depth of 9068 feet and encountered 100.8 feet of net
conventional natural gas pay in the Abu Madi horizon, which had an average porosity in the pay section of 28.5%. The well came in on prognosis but with a reservoir section that was of better quality and thicker than pre-drill expectations.

The well will be completed as a producer in the Abu Madi section and then tested after the drilling rig has moved off location. The testing is anticipated to commence between 30 and 45 days after the rig departs, depending on the availability of testing equipment. After a successful test, it is anticipated that the well will be connected to the infrastructure located adjacent to the original SDX discovery in the basin, SD-1X, where production start-up is anticipated in the second half of 2018.

Paul Welch, President and CEO of SDX, commented:
“We are extremely encouraged with today’s discovery, our second consecutive discovery at South Disouq.

This highly positive drilling result further demonstrates the very significant natural gas potential the
licence holds. Combined, these two successful wells confirm our views of the subsurface geology and
demonstrate that we are on course to realise the full potential of the licence. We look forward to updating shareholders on future developments at South Disouq in due course.” 

Read More

Tamar: Win one contract, lose another

Following Noble Energy and Delek Drilling’s announcement in February that it would be selling gas to Egypt’s Dolphinus Holdings from the Tamar and Leviathan fields, Egypt is ditching a previous agreement to import gas from Tamar.

Madrid’s Union Fenosa Gas had signed a non-binding letter of intent in May 2014 with the Tamar field partners to buy gas for the supply of the Damietta LNG plant in Egypt. The LNG plant is operated by Segas, a JV between Union Fenosa Gas, Eni and the Egyptian state. This arrangement has been cancelled as at the end of March, citing that it was “no longer relevant”.

This suggests that Eni, one of the partners of Segas, will supply Damietta with gas from its Zohr field.

Last month, Dolphinus Holdings had agreed to import 3.5bcm from each of Tamar and Leviathan for a period of 10 years under a contract wortg USD15 billion.

Tamar is owned by Isramco Negev (28.75%), Noble Energy (25% operator), Delek Drilling (22%), Tamar Petroleum (16.75%), Dor Gas (4%) and Everest Infrastructures (3.5%) – this reflects the ownership post the recent sale of 7.5% by Noble Energy to Tamar Petroleum as reported previously (Tamar Petroleum to raise bonds to finance acquisition of Tamar from Noble and Israel capital cycle: Noble sells down Tamar to fund Leviathan).

Read More

Bidders pull out of Alba sale by Statoil and Mitsui

Deloitte has launched the sale of Endeavour Energy UK. The US parent company of Endeavour Energy UK is going through bankruptcy proceedings and Deloitte has been appointed to monetise the company’s UK unit.

Endeavour Energy UK owns a 25.7% in Alba amongst other North Sea assets. This is larger than Statoil’s 17% or Mitsui’s 13.3% stake which is being marketed.

Although Statoil and Mitsui have been trying to sell their stakes since the end of last year, the unusually lengthy process signals the challenges with the asset.

The sale being run by Deloitte will be a bankruptcy sale which will allow buyers to pick up the asset on the cheap. As a result, sources involved in running the Statoil and Mitsui sale say that the Endeavour Energy UK route presents a much cheaper way to pick up the same asset, as well as it being a larger, more meaningful stake.

Challenges which bidders had come to appreciate with Alba include:

• Limited upside
• Expensive and near-term decommissioning
• Bankruptcy of Endeavour Energy which would have left the buyer with larger exposure to future costs

Being able to pick up Alba through the Endeavour Energy proceedings at a lower price therefore makes the risks and challenges of owning Alba much more palatable, another bidder said.

Challenges raised by a number of parties who looked at Alba are discussed in depth here: 

Endeavour endangers Alba sale for Statoil and Mitsui

Related links:

• Endeavour Energy kicks off North Sea assets sale (external – Reuters)
• Chevron shuts in Alba platform as Mitsui and Statoil try to sell the field

Read More

The oil market is recovering

Oil inventories have been worked down and beginning to return to historical normalised levels, driven by a mix of robust demand growth on the one hand and concerted efforts by OPEC plus friends to cap production on the other.

While 12-18 months ago heightened geopolitical tensions and operational outages barely moved oil prices, such events are now needle moving news. The outage of Forties at the end of last year and intermittent headline grabbing conflicts in Libya which cause temporary spikes in oil prices are case in point.

However, RBC argues that understanding the breakdown of the inventory story is critical. Data shows that Asian inventories have been worked down which is key for “pulling” crude out of the Atlantic Basin. On the other hand European storage remains in surplus but the clearing of the Atlantic Basin will support drawdowns of European inventory.

Source: RBC Capital Markets, March 2018

It is therefore clear that while the global picture is moving in the right direction, there remains pockets of over and under supply in different regions. The clearing of North Sea crudes, which will be demonstrated by stronger pricing of regional blends such as Ekofisk vs. benchmark is therefore a secondary data point to monitor together with inventory levels for the next step of the global rebalancing story.

Read More

Double success for Energean – IPO and FID

Energean put the East Med on the map this week propelling the region into the headlines.

Energean debuted on the London Stock Exchange at the beginning of this week with its Initial Public Offering and USD460 million of new money putting the company’s market capitalisation at just under USD1 billion. The company’s flagship asset is its 70% stake in the Karish & Tanin gas fields offshore Israel which contain 2.4tcf of gas and 33mmboe of light hydrocarbon liquids. First gas is targeted for 2021. The company also has producing assets in Greece and an exploration portfolio throughout the Aegean region.

In the same week Energean reached Final Investment Decision on the Karish & Tanin development giving the green light to commence the USD1.6 biliion project. USD405 million from the IPO proceeds will be used to fund Energean’s 70% share of the project and partner Kerogen will fund its 30% stake. A USD1.275 billion bank facility will also be used to fund this ambitious project.

Energean has secured long-term gas agreements with some of the largest private power producers and industrial companies in Israel. To date it has contracted for the purchase of a total of 61bcm over a period of 16 years, at an annual rate of c.4.2bcm p.a..

The East Med has become a hot play for gas and Karish & Tanin follow in the footsteps of giant gas fields in the region including Leviathan, Zohr and Aphrodite. Energean is set to become an exciting story to follow as industry interest in the East Med grows and the demand for its gas becomes increasingly important being in the centre of short gas MENA countries and the doorstep of Europe.

Read More