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SDX Energy continues strong run with Morocco gas discovery (SDX)

North Africa-focused oil and gas firm SDX Energy (LSE:SDX) has announced its second gas discovery in just over a week, this time at its permit in Morocco. The business has assigned its LNB-1 exploration well on its 75pc-owned Lalla Minouna permit a mid-case preliminary recoverable gas volume of 10.2Bscf conventional natural gas and 55,000 barrels of concentrate. SDX said this is significantly larger than traps typically encountered in the Sebou area of Morocco, where its permit is based, helping shares to rise 3.7pc, or 2.1p, to 59.6p

The well was drilled to a total depth of nearly 1,900m and encountered 300m of gas bearing horizons in a significantly over-pressured section. The gas shows indicated the presence of thermogenic hydrocarbon source rock, which has not been seen in other parts of the basin to date, suggesting a new petroleum system. SDX is now completing the well as a conventional gas producer, suspending its deeper section until the right equipment can be mobilised to test and produce from its over-pressured area. SDX’s drilling rig will now move to the LMS-1 exploration well in the Lalla Mimouna Nord permit, the last well of the current drilling campaign.

Last Thursday, SDX reported its second gas discovery in South Disouq, Egypt. After spudding last month, the Ibn Ynus-1X well, where SDX is the operator and owns a 55pc working interest, was drilled to 9068ft and encountered 100.8ft of net conventional natural gas pay. SDX said the well came in as expected but with a reservoir section that was of better quality and thicker than pre-drill expectations. Shares were up 2.6pc, or 1.3p, to 50p following the news.

Paul Welch, president and chief executive of SDX, said today: ‘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.’

Author: Daniel Flynn

Disclosure: The author of this piece does not own shares in the company mentioned

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