SDX Energy discovers oil Egypt
SDX Energy, the MENA-focused oil and gas company announced the discovery of gas at its SD-12X well in the South Disouq Concession, Egypt.
The well was drilled to a measured depth of 7,245 feet, encountering 108 feet net of high-quality gas-bearing sands, with an average porosity of 20%, near the base of the Kafr El Sheikh (KES) formation. The top of the KES sand was encountered at a measured depth of 6,506 feet. Management's best estimate is that the well has encountered approximately 24 bcfe of recoverable gas and condensate resources which is significantly in excess of the minimum commercial volume of approximately 8 bcfe.
The drilling rig is now completing the well and preparing for testing in the coming weeks. An announcement concerning the results of the testing of SD-12X will be made in due course. Management expect that the Sobhi well will be tied in during 2021 via a 5.8 kilometre tie-in to the Ibn Yunus-1X location where an existing flow-line connects to the South Disouq Central Processing Facility.
On a gross basis, the tie-in cost is estimated at US$3.5 million. The discovered 24 bcfe of gross recoverable gas and condensate resources will potentially only require one further development well to be drilled, albeit this will not be necessary for another 2-3 years. SDX drilled the Sobhi well at a 100% working interest and the total cost of the well, including the cost to complete, is estimated at US$3.7 million.
Under Clause 8.5 of the Joint Operating Agreement, 'Premium to Participate in Exclusive Operations', if the Company's partner elects to participate in the well now that a discovery has been made, it is required to pay its full 45% share of the well cost, plus a premium of a further 300% of this amount.
Mark Reid, CEO of SDX, said, "This is an excellent result for SDX and fully justifies our confidence to drill this well on a sole risk basis. South Disouq represents our flagship asset and in the current economic climate this fixed price, low cost gas development is highly cash generative for the Group. The Sobhi discovery has the potential to extend the current South Disouq plateau production of 50 MMscfe/d through to 2023/24 with a low-cost tie in, utilising the existing gas processing plant. We look forwarding to updating the market further following the testing of the well.''