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SDX - Where are the CEO interviews?

lse:sdx

#1

For months we have been told that bringing South Disouq online would be transformational for SDX. Two days ago came the big announcement by RNS that this milestone had been achieved. Following this sort of major news for the company you would expect the CEO or at least someone from the company to be giving interviews to the usual investment websites banging the drum about the company’s achievement.
Paul Welch for all his faults would at least have done this.
We now have a newly appointed CEO, so where is he and what media interviews has he done? Well as far as I can see a big fat zero.

Then they wonder why nobody is interested in buying the share. I can’t believe that people in their position cannot see this is the best opportunity of 2019 to promote the company; it is this years major achievement for SDX Energy.

You have to surmise that they don’t want to promote the company or raise awareness of the share. Surely this is exactly the moment to tell the market that they have delivered on this project.


#2

On Thursday 24th October the share price closed at 22p. The next day the drilling campaign in Morocco was announced and since then the big news of the year South Disouq is producing gas. At the time of writing the share price has rocketed to 23p.

In terms of promoting these two items of major news SDX have held an investor call.

We are still waiting for any media interview by the new CEO to promote the company. As many of these are conducted over the phone he doesn’t even need to leave his office but still nothing.

The Q3 2019 results will be released in the next couple of weeks but there will be nothing of note in them. The main bit of news will be how much cash in the bank they have left after the latest spending. I suspect these results will go out without any interviews taking place, so just how long after taking over as interim CEO and now the appointed CEO will investors have to wait to hear just one interview promoting the company?

Mark Reid took over as interim CEO June 1st 2019, so he has held the office of CEO for 5 months 2 weeks. As yet no media interviews.


#3

With the Q3 results announced today we now have had three big announcements from SDX in a short period.

  1. The commencement of a 12 well drilling campaign in Morocco. (25/10/2019)
  2. South Disouq online and producing gas (12/11/2019)
  3. The Q3 2019 Financial and Operational results (22/11/2019)

All three announcements have been announced by RNS and have had absolutely zero effect on the share price. To promote these three big events neither our CEO nor any other spokesperson for SDX has taken part in even one promotional media interview.

If any shareholder did believe that the management of SDX gave a damn about the lowly share price, surely this appalling lack of interest in promoting the company will have killed that off.

In any year a company gets a few opportunities to bang the drum about the company’s achievements. In 2019 Q4 is that period for SDX.
To just sit in their ivory towers and assume that just putting out the required reports is going to convince investors to part with their money is naive in the extreme.

I hope investors remember this when the AGM comes round and the board suggests giving the CEO and senior management excessive shares under a performance related bonus scheme to ensure they remain incentivised.
When we have seen our share price drop by a third and the management won’t get off their backsides and do anything to promote the company, I for one would be voting against any bonus being allocated.

Almost 6 months in office and our CEO has STILL not condescended to give any media interview of any kind. Any future bonus share schemes should be related to share price performance only, if we suffer then so should they.

This media silence over this crucial period convinces me more than anything else that there is something going on in the background to take this company private.
The only other explanation would have to be they have no idea how to successfully promote a company and if that is the case they shouldn’t be in charge.

This could end up being a long thread


#4

Well Mark Reid has now been the CEO of SDX Energy for 6 months and still hasn’t given even one investment media interview.

His 2018 CFO salary was US$333,700 but presumably his salary now will have increased to the same level as the previous CEO’s salary, which in 2018 was US$450,000.

A pay rise of US$116,300 or £90,000 a year!

Currently he has gone from being a fairly anonymous CFO to a fairly anonymous CEO.

Nice work if you can get it.

From the table above, Mark Reid’s pay rise on promotion is actually more than the salary of the next highest paid Director, Michael Doyle our Non-Executive Chairman

To anyone who thinks I am being harsh on our new CEO, if he had done a few investment media interviews following the announcement of the milestone announcement of South Disouq producing its first gas and the share price had remained unaffected by the news, I would not have criticised him.

In that scenario I would have said, he has tried to draw a line under the PW debacle, promote the company’s achievements and outline the prospects going forward.
If the CEO does everything he can and the market doesn’t respond, he can at least face his shareholders and say that he has tried.

Mark Reid cannot do that because he hasn’t made that effort

On the 1st August 2017 Mark Reid as CFO was awarded 555,555 shares in the company under the Long Term Incentive Plan

Under that scheme the announcement said

“It is important to note that stretching strategic, operational, financial and shareholder return performance criteria must be met for the options to vest. The Company recognizes the need to ensure that Executive Directors and key employees from its operational, commercial, technical and financial divisions, who are critical to executing SDX’s strategy over the next phase of its development, are retained and incentivized to generate long term value for shareholders.

Thankfully no award was made in 2018 but watch out at the next AGM for any vote or mention of another award for Mark Reid’s achievements in 2019. The stretching shareholder performance criteria mentioned for the options does not apply to the basic award, which they receive come what may.

Why we would want to retain and incentivize someone who has had a £90,000 pay rise yet still doesn’t fulfil the full range of duties is beyond me.

I am pleased to see investors on other boards are also now asking the question

Where are the CEO media interviews?


#5

In my opinion this company is run for the long term benefit of the two top shareholders.


#6

But where is the benefit? ESP with the sp in terminal decline!
TP


#7

As I said, long term benefit.


#8

Screenshot_2019-12-08%207%20duties%20of%20a%20company%20director

Mark Reid CEO must be grateful that SDX do not have 250 employees or he would have had to explain how he has fulfilled this duty in the 2019 Annual Report, that would have been a very brief paragraph.

The Half Yearly and Q3 Financial and Operating Results have been announced without the need to give interviews. Similarly the start of a 12 well drill campaign did not warrant a media interview.

What was really surprising though was that when the biggest news item for SDX in probably the last two years happened, first gas at South Disouq, there was again media silence.

What is strange is that on the SDX Twitter feed Mark Reid himself is quoted as saying

Mark Reid, CEO (1/2): “Achieving first gas at South Disouq earlier this month was a major milestone for SDX and it is anticipated to have a material impact on the Company’s cash generation going forward.”

Definition of milestone: a significant stage or event in the development of something.

This wasn’t just a significant event though, it was a major significant event.

If such a major event doesn’t warrant the CEO promoting the company by giving media interviews, then it is very difficult to see what in terms of company news would.

In terms of a listed UK Company what is bigger than a major significant event?

I am struggling to think of anything bigger, especially when as he says it will have a material impact on the Company’s cash generation going forward.

Perhaps he doesn’t see himself as the public face of SDX or he doesn’t think it is part of the CEO job description.


#9

Sadly another chance to promote SDX’s achievements was missed yesterday.

Having failed to promote South Disouq coming online, yesterday was a second chance to laud SDX as they have reached the 50MMscfe/d ahead of schedule.

As I have said before a lot of these media interviews can be done over the phone from the comfort of the CEO’s office.
I wrote to SDX yesterday to congratulate them on this achievement, I said I had been critical of the CEO in the past but I gave him credit for reaching the plateau this soon.
I also said I was hoping to see a media interview later in the day reminding the market that whatever happens to the oil price SDX would now get about $1m a month net from South Disouq, well it obviously fell on deaf ears.

An interview might appear today but don’t hold your breath


#10

At the least directors are buying shares. I don’t suppose they’re buying them to make a loss on them.


#11

If all is well here and things are as they are presented then this really could be a gift horse. Buy more shares I say. The whole oil and gas sector has been battered. I think this will go up if the sector goes up.


#12

Directors buying shares is always a welcome sign but it is yet another reason to give an interview. They are putting their money where their mouths are, why not explain to potential investors why they should buy into SDX.

All companies need a public face to represent them.

SDX do not have a public face since Paul Welch departed. After all this time and news it is clear Mark Reid is not comfortable in front of the camera.

If that is the case they should employ a media representative to become the public face of SDX or Mr Reid should grow some.


#13

Potential investors are always told Do Your Own Research (DYOR)

I start with the fundamentals, then I would read recent presentations on their website and then I would look at presentations the CEO has made at investor events or to the investment media to form an opinion of the top man.
Is the CEO confident, knowledgeable, do they answer difficult questions or avoid them and frankly do I believe them enough to invest in their company.

During that process, in my case, I was wrongly convinced by Paul Welch.

In February 2019 Paul Welch attended the Egypt Petroleum Show and as far as I can see that was the last presence by SDX at an organised investment event aimed at Retail and Institutional Investors.

In March 2019 Paul Welch gave an interview to Malcy on Core Finance and in April 2019 he gave an interview to Proactive Investors.

As far as I can see these were the last investment media interviews/presentations given by anyone at SDX.

I like most SDX investors would love to see an army of investors all convinced by the SDX story and keen to buy shares. However, this falls down because during their research they will discover the issues with Paul Welch and since taking office as CEO on June 1st 2019 Mark Reid CEO has not given a retail investment media interview nor has he attended and presented at any investment event aimed primarily at Institutional Investors.

The result being that potential investors cannot assess the CEO because he is invisible. If anyone can show me a presentation given by Mr Reid I would appreciate it.

Investors hoping for a change in fortune for the SDX share price may have a long wait. If I was new to the SDX story I would want to know the new management had learnt from previous mistakes and it would be up to the CEO to convnce me. With an invisible CEO I would not be convinced and I would look elsewhere to invest my money.

That is the current situation with SDX, the fundamentals are good, they are spending all their revenue on more exploration, no dividends are expected in the medium term but most importantly they do not have a visible media face to convince investors.

Until that changes potential investors will always be put off and look elsewhere for a company management they can trust.

zero


#14

When you say ‘investors’, are you referring to retail investors? Because this company is majority owned by institutional investors and a few sticky fingered private investors and none of them are selling.


#15

I am referring to both, any appetite to invest here would be welcome. The current investors who continue to hold, be they retail or institutional, are not the issue. It is new investors wherever they come from that create demand for the share and will give us a more realistic valuation


#16

Given that South Disouq producing first gas, the commencement of a 12 well drilling campaign in Morocco and an increase in South Disouq reserves of 35% failed to produce an interview from SDX, what is likely to generate one this year?

The Operations and Corporate Update is due at the end of this month. It will include the first drill results from Morocco but I wouldn’t expect a media interview, more likely another Presentation on the website.

The 2019 Year End Financial and Operating results will be released around 22nd March 2020. This will be the first set of full year results since our guide and mentor took over. I am hopeful that when these are released someone from SDX, even if it is the cleaner, gives some sort of media interview. By that time it will have been over a year of media silence.

If we don’t get one then it would probably mean the CEO goes into the AGM around 17th May 2020 never having spoken to the investment media, for most CEO’s this would be embarrassing and leave him open to criticism.
For that reason I think we may get an interview from the CEO sometime after the Annual Results are released but before the AGM.

With the AGM approaching he will also be mindful of showing he is doing an amazing job and should get even more shares under the Long Term Incentive Plan around August 2020.
Perish the thought that he isn’t incentivized and takes his silence elsewhere.

There is a chance of an interview if the more speculative wells at Lalla Mimouna find large quantities of gas in Morocco or the biggest prospective wells in Egypt Salah and Young make big discoveries. However, given what happened in 2019 in total silence I am not so sure.

If we fail to see any media interview after the 2019 Annual Results, we may go right through 2020 with the same media silence as last year, if that happens I fear the worst for our investment here.

Finally, Boris Johnson the UK Prime Minister earns £158,000 or around $207,000 salary.

If you double his salary it still falls short of our CEO’s salary of $450,000 plus any shares allocated under the Long Term Incentive Plan.

With Country Managers in both Egypt and Morocco, a relatively small workforce and no company promotion duties, it begs the question;

What does our CEO do all day?

B163


#17

The rise in the share price over the last couple of days is most welcome.
With very little volume the share price has risen impressively. Yesterday the number of shares traded was just over the average volume and today looks like it will repeat that again.

It does clearly show that IF there was a fairly large demand for the shares the share price would fly.
Even more reason to promote the company in the investment media after the January Update.


#18

As I have said before the decision to not release news on each of the wells in Morocco in turn but to bunch them together and include them with the January Update, was a mistake in my opinion.

The January Update will be judged on its merits positively or negatively.

An optimist could say that by combining all this positive news into one RNS gives the maximum impact for the company and the share price. However, if SDX want to negate the impact of the positive drilling campaign news all they have to do is ensure the January Update contains just one item of bad news in it.

That one item of negative news would be the only thing that is remembered and the update would be viewed as neutral or at worst negative.

What I fully expect them to do is announce the first few wells and hopefully the positive outcomes in the update but to cancel that out they will announce that North West Gemsa is no longer financially viable and will cease production soon or with immediate effect.

Released individually we could have had 4 or 5 positive RNS’s and one negative. Lumped together it just gives one neutral update.

I hope I am wrong but we will soon see.


#19

That all sounds a little conspiratorial Small_Holding :wink:

I don’t think the issue here is bad management and investor relations. I think it’s one of the following;

  1. They just don’t care about improving the share price short term
  2. They want the share price low - for whatever reason

#20

Unfortunately the actions of the management here leave me with little choice other than to start to believe the conspiracy theories.

If you don’t buy into these conspiracy theories, then I’m afraid I have to throw that straight back at you

Why would the management of a listed company, that has a declared strategy of looking to make acquisitions, not want a higher share price?

and

Why would they want the share price to remain low?

The benefits of a higher share price are obvious if they wish to raise finance.

The strategy of SDX from their website states;

“SDX Energy also intends to leverage its strong balance sheet, benefit from early mover advantage and its strong regional networks to grow through the acquisition of suitable high value asset opportunities in North Africa.”

I am genuinely intrigued as to what explanation you have for why a company would want a low share price, either short term or long term.