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SDX – M&A activity

lse:sdx

#1

The BP deal is dead but another smaller acquisition will be coming soon.

Why do I say that?

By the year end PW will be faced with a nice problem to have, what to do with all the revenue being generated by SDX.
Producing in excess of 8,000 boepd SDX will have enough revenue to fund the 2019 drilling campaign and still have too much cash left over.

As they have no intention of paying a dividend, what do they do with it?

It would be easy to say bank it but that could create problems.

If the share price stays at these low levels we have the ridiculous situation where in 2019 SDX could generate revenue that is over 50% of the current market cap.

(Current market cap £114m or $148m – currently generating $4m a month or $48m a year and that could double in 2019 to circa $96m)

I think PW said the other night that they have $25m in cash now and around that level has been maintained for some time now.

With the assets that SDX have, the revenue they are generating and the cash in the bank, they are in danger of becoming a takeover target themselves.
Add to that a cash balance in the bank that begins to grow quite rapidly and the attractiveness to a prospective buyer increases. All assets have a value but cash is king.

Just as PW is looking around at smaller companies to acquire, some of the larger players may also be looking at SDX and its progress.
PW has joked on a few occasions that SDX are the Exxon Mobil of Morocco and to anyone seeing the potential market there and the large margins, what better way to move into the market than by buying the largest producer.

If I am right then PW will not want the cash balance to grow too high and that is why an acquisition is almost inevitable.

AIMO


#2

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Read the very good report…

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It has gone up recently with what will be a long gain over the next few years.
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.


#3

SH: yes, and there must be a limit on the amount of extra drilling and 3D that could be done, unless SDX spends money on acquiring more drilling acreage in Morocco, Egypt or perhaps another north African country with a degree of stability, such as Tunisia.

A cheeky option, given SDX’s existing good relationships in Morocco, would be to buy Sound Energy, or go into a JV with them to develop SOU’s very large apparent gas discoveries in east Morocco. Sound has been very quiet over the last year, but if they ever do firm up their discoveries and secure funding to move into full production, I don’t think SDX’s margins will stay so high for long; a takeover or JV would firm up SDX’s profits via securing volume, and entrench it as a major producer in Morocco and exporter to the EU.

I have good confidence (from the Circle Oil deal and their willingness to walk away from BP) that PW and the BOD will make a wise takeover choice, and not let the upcoming cash go to their heads.


#4

H, I don’t think SDX could afford SOU if they can’t complete a 500m deal (though it’s not over till it’s over), and some SOU holders expecting £5 ps when the LE happens! And JP seems pretty certain he wants to sell the lot.
More likely to go for some of the smaller operators in the area.
TP


#5

SDX…
XXXX
Last 19th August , 19th Nov 17,… 7th Sept private placing 43.75p
Another new one for me i have picked up lol.
Tried to get it for 52p yesterday put limit in today at a reduced 51.5 and it lifted @ 50p
Id say that is not a good sign.
I see loads above is inviting another to Drainpipe !!! suggesting PHE.


#6

SDX…
XXXX
This dropped to 35p 2nd January 2019 , nice start to new year first day trading .
Improved since to today’s 40p .


#7

SDX…
XXXX
5% fall this morning looks like giving up the Canada listing ?? talk on lse of some sort of takeover ?


#8

SDX…
XXXX
Ramp from Gary Newman yesterday ( SP/ Five Free )
35p one week ago 40p now.
Maybe they trade between those prices ?


#9

SDX…
XXXX
RNS… big fall down 17.5% , now 26.5p
Malcy sportive a few days back other chat sites claim hes paid buy them .
Top up limit on big days fall lifted, doubled up on shares 1/2 price of first go 26p ( D )


#10

SDX…
XXXX
I could of waited and got cheaper ( G ) likes it today.
Directors have bought as posted in below post .
Can buy for 24p maybe.


#11

SDX…
XXXX
RNS …SDX gave up Canada listing Tuesday two days ago .
Topped up in ( Wi ) on Tuesday live 22.86p ( approx 60% ) , after ( D ) limit not lifting on fall to 23p and no dealing available on ( S ).
Funds from LMI. sale.


Todays limit lifted @ 21.40p ( D ) Friday 31st


#12

SDX…
XXXX
Dropped back but not as far as last Thursday .


#13

SDX…
XXXX
Something odd with history ( D ) looks like ( isin change ) all holding sold and bought back 28th may 2019 ) on 31st May made a recent low of 20.75p… today droped back to 22p


#14

SDX…
XXXX
Trying to top up for weeks @ 18.5p lifted today .


#15

SDX…
XXXX
Sliced these on 22nd August for 23p .
Got them all back today for 19p


#16

SDX…
XXXX
Just noticed i sliced the last tranche ( 53% deal lifted it appeasers ) on 24th September at 24p around today’s improved price .
It fell back to 20.5p by 9th October … wish id got them back .


#17

SDX…
XXXX
Been trying to slice here all week @ 26.5p did not lift yesterday despite chart showing above 27p.
5.5% spread .
Went through when replaced this morning.

MALCY HAD THIS UP THIS MORNING.

SDX Energy
Delayed from yesterday but SDX in a detailed statement updated the market on production, capex and added some guidance for this year. 2019 production was 4,020 boe/d, up 12% and at the upper end of guidance. 2020 guidance is 6,750-7000 boe/d obviously not like for like particularly after the delayed South Disouq came onstream and also includes 1,000-1,050 from NW Gemsa which is potentially for sale.

2019 capex was $40.7m, $4.5m higher due to two extra wells in Morocco whilst for 2020 the number falls to $25.5m as the 12 well program in Morocco completes but with 2 in Egypt and up to 3 appraisal/development wells in the West Gharb concession. The company is fully funded from cash internally generated from operations, in the balance sheet and the EBRD facility which could be increased. Finally the company has warned about non-cash impairments of some $18m at the final stage.