SDX Energy, the MENA-focused energy company, issues the following trading and operations update in advance of the Company's AGM today at 10.00 am BST. The information contained herein has not been audited and may be subject to further review and amendment. All monetary values are expressed in United States dollars net to the Company unless otherwise stated.

Mark Reid, CEO of SDX, commented:
"I am very pleased to report a strong operational and financial performance update ahead of this year's AGM.  Our drilling results in South Disouq and West Gharib over the past five months have been excellent with six successful wells and with operations ongoing on another well at West Gharib. A one hundred percent success rate to date. Our drilling success in South Disouq in particular has enabled us to identify further material prospectivity in and around our leases. Production continues to be above guidance and we have further grown our cash balance to US$15.2 million as at 31 May 2022."

Year to date 2022 Operations Highlights

• Average entitlement production as at 31 May 2022 of 3,778 boe/d was 10% higher than mid-point 2022 market guidance of 3,425 boe/d.
• Production in Morocco and at South Disouq was above 2022 guidance, with West Gharib below due to mechanical issues with a previous rig that is now being replaced. West Gharib production is expected to increase in the second half of the year.
• In South Disouq, the planned three-well campaign has been successfully completed with three discoveries being made. SD-5X has been brought online ahead of schedule and is now contributing to production and cash flow. SD-12 East is undergoing a pressure build up test with MA-1X testing expected to commence in the coming days.
• Condensate production from SD-5X is also better than expected at gross 100-110 bbld/d compared to pre-drill expectations of 25-30 bbl/d.
• Based upon the results of the recent South Disouq drilling campaign, Management has reassessed the remaining prospectivity in South Disouq and has identified gross unrisked P50 prospectivity of 145 bcf of which c100bcf is in acreage that requires re-award by the Egyptian state.
• In West Gharib three wells have been successfully completed with production already commenced from the MSD-21 and MSD-25 wells. The recently completed MSD-24 well is expected to commence production in the next four weeks and operations are continuing at the MSD-20 well.
• In Morocco, preparations continue for the recommencement of the drilling campaign that was suspended in December 2021. The first of up to seven wells to be drilled in the next year is expected to spud in July 2022
• In February 2022, the Company announced the disposal of 33% of the shares in the entity that holds its interests across its South Disouq concession for US$5.5 million which has been fully received.

Year to date 2022 Financial Highlights

• Closing cash as at 31 May 2022 was US$15.2 million
• Capex as at 31 May 2022 of US$8.3 million, reflects:
• US$5.2 million for the three-well drilling campaign at South Disouq split between: US$1.8 million for the drilling and completion of the SD-5X well, US$2.2 million for the drilling and completion of the SD-12 East well and US$1.2 million for the drilling of the MA-1X well.
• US$1.2 million of pre-drilling and standby costs associated with the re-commencement of the Moroccan drilling campaign, US$0.3 million on the SAH-4 workover as well as US$0.3 million of infrastructure works; and
• US$1.3 million of West Gharib drilling costs across the MSD-20, MSD-21, MSD-24, and MSD-25 wells.

First disbursement of EBRD credit facility

The Company has submitted a disbursement application for the first draw down of its credit facility with the European Bank of Reconstruction and Development ("EBRD") for an amount of US$2.5 million reimbursing some of the Moroccan capex that was originally funded from the Company's cash resources.  One of the drivers for the proposed draw down is that global macroeconomic circumstances in recent months have made it more challenging to repatriate cash from the Company's Egyptian operations, and at present, restrictions have been placed on outgoing US dollar transfers by the Central Bank of Egypt. The interest rate at this level of draw down on the credit facility is LIBOR plus 4%. As at 31 May 2022, the Group's reported cash balance was US$15.2 million and all ongoing and planned operations in Morocco and Egypt remain fully-funded from in-country cash flows and existing cash balances.

Following the initial draw down, the Company expects to have an additional US$3.2 million of available liquidity under the EBRD facility as per the last redetermination completed as at end of April 2022.

KeyFacts Energy: SDX Energy Morocco country profile   l   SDX Energy Egypt country profile