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Sdx - operations and financial update

lse:sdx

#1

The big one for me, they still had US$11m in cash at the year end. This is very good as it should be as low as the cash falls, the big expenditure of South Disouq CPF purchase and installation has now been paid.
SDX should be generating more than enough to pay the capex and have some left over to build their cash reserves/war chest.

Edison, in their note on the 12th December 2019 estimated that SDX would finish the year 31st December 2019 with only US$5.1m, in the event they had more than double that.

No real bad news, North West Gemsa is still on borrowed time but who knows they might still get a good few months out of it.

Seven wells drilled, five successes, adding 2 to 2.5 bcf or 50% to the existing reserves. This will satisfy the existing customer’s demands for the next three years.
Anything found in the next five wells could be sold elsewhere, a big result in Lalla Mimouna North could go to the Maghreb-Europe Gas Pipeline.

South Disouq drilling mid/late February and great to hear only 8 kilometre and 5 kilometre pipelines required to link to the CPF, if successful.

In short, a very good update and we haven’t even touched the exciting wells yet.
This update should give a lift to the share price but if it doesn’t there can only be one reason why not, silence from the company.

I hope we see an interview from our CEO later in the day, there is no reason not to.
This update contains a lot of good information that he could talk to, it is a perfect opportunity to break the silence


#2

I agree. A very nice update. 50% increase in Morocco reserves with the ‘play-opening’ drills yet to come.

There could be a very decent amount of cash on the balance sheet come the end of 2020.


#3

And, yet, the sp languishes. Wonder when the market will realise the potential here. Agree the CEO could do much more to promote the company but the facts are there for all to see. One day, my friends, one day!
TP


#4

I don’t think retail really knows about this stock and certainly isn’t interested. The stock is over 65% held by strong institutional/HNW hands. Likely even more than that with >3% holdings not reported.


#5

As you say the latest presentation gives the significant shareholders, holding more than 3% as 75.57%. They show in the small print that that is made up of 64.21% Institutional and 11.36% Retail Investors.

That at least clarifies that the significant holders of Hargreaves Lansdown AM 6.9% and Interactive Investor 4.46% are the significant retail investors ((6.9 + 4.46 = 11.36)
In other words those holdings are the total sum of all the SDX shares held by their retail account holders.

With 204,723,041 shares in issue that 11.36% equates to 23,256,537 shares

With 75.57% total holdings of the significant shareholders, that leaves 24.43% or 50,013,838 shares not accounted for on that table.

There will obviously be institutional investors who own below the 3% threshold who have no requirement to declare their holding. In addition, the total holding of all the board members is also taken out of that figure.

The bottom line is we do not know exactly how many shares are held by retail investors. With so many companies offering share dealing accounts and just two between them holding 11.36% of the shares in issue, I think it is reasonable to assume that at least 20% of the shares in issue are held by retail investors, possibly more.

Liquidity is important in a share and although institutional investors are welcome, we don’t want them to hold too many, it just reduces the number of shares in free float.


#6

SH, those ii and HL holdings could also be made up of some large sub-3% holdings too, and I would expect they are.

HL and ii are two big brokers in the UK but there are plenty of others.

The trend has been for retail to dump their shares and they’ve been taken up by strong hands. It does explain the slow trading and low volumes.


#7

If there are no buyers the share price will stay at this level until SDX sells the company to a bigger oil/gas company.
The volumes are pathetically low so most investors must believe institutional investors are not currently buying.
If it is to be retail investors we want to attract then even more reason for the SDX Roadshow to leave the garage and start promoting the business.
Retail investors are scared by the silence, I wouldn’t invest another £1 here until we hear from the management.


#8

Today just sums up the utter frustration of being an SDX share holder.

A positive RNS giving the operations and financial update, giving confirmation that SDX have no debt, money in the bank, five successful wells drilled adding 50% to the Morocco reserves and potentially transformational drilling prospects in the next few months in both Morocco and Egypt.

The market reacts by the share price remaining static and only 335,500 or 0.16% of the shares in issue traded on the day.

We may get updated broker notes over the next couple of days but my perception is they are disillusioned with SDX as well. We get very little coverage and what we get seems to be indifferent to the company or the share price.
Rightly or wrongly I get the impression that the brokers have also lost interest.

Surely even the most passionate of investors here can see that something is very wrong with the total silence from the company, in terms of interviews and promotion.

During the course of the year a CEO gets a few opportunities to promote the company, today was one of those for SDX.

Given our CEO has been the invisible man for nearly eight months one would have hoped that he might have granted an interview but no he decided against it.

As I have said before some of the interviews can be conducted over the phone without the need to leave home but still our CEO, for some reason, does not want to speak to the investment public .


#9

I see SDX retweeted Malcy’s Blog as though it is a postive

"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."

Interestingly he makes no comment whatsoever on whether he considers the shares good value, poor value or whether he would steer clear.
I still sense they aren’t on his Christmas Card List.