SDX Energy Inc (SDX)

 

The Oil Man: SDX Energy

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The Oil Man: SDX Energy

SDX Energy

Yet again SDX Energy (SDX) has come good with a well. Today they announce a gas discovery at the LNB-1 exploration well on the Lalla Mimouna permit in Morocco.

The well looks like a proper barnburner as in the primary target, the Lafkerena sequence 300m of gas bearing horizons were encountered in a significantly over pressured section. Mud logs show 'elevated gas readings of more than 20% with multiple sections above 50%' and the well could not be logged using conventional methods.

Indeed, the gas shows here contained heavier HC components throughout, which is indicative of a thermogenic HC source rock, and this would mean a likely new petroleum system has been encountered in this area.

A preliminary recoverable gas volume estimate of un-risked, mid-case volumes of 10.2 Bscf of conventional gas and 55/- barrels of condensate can be made, which is significantly larger than the Sebou traps and justify development and connection to infrastructure on its own merit.

As an add-on, the secondary target in the Upper Dlalha encountered gas with a porosity of 33%, similar to what the company already produces from the Sebou permit. It will be completed as a gas producer and, with regard to the Lafkerena, it will be suspended waiting for additional kit to be mobilised. The rig now moves to drill the LMS-1 exploration well in the Lalla Mimouna Nord permit.

To try and paraphrase management here would be foolish, CEO Paul Welch sums this well up as follows..

"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."

As mentioned above, things are clearly going from strength to strength for SDX and it is good to see the shares having a well deserved rally this week. They are still, however, considerably undervalued.

And finally…

The MotoGP circus moves to the grandly named Circuit of the Americas in Austin Texas this weekend. The penalty dished out in Argentina to Marquez for ramming Valentino Rossi can only increase their intense rivalry, which certainly adds an early spark to the season and, of course, a Brit, Cal Crutchlow, leads the Championship.

The major news this morning was the resignation of Arsene Wenger which the Gooner fans will mainly like, but the rest of the Premiership will think might strengthen the side, who knows?

This weekend is FA Cup Semi-Finals with the Red Devils v Spurs and Chelski v the Saints.

Netty marathon - One final plug for a hot Sunday…

Our most sincere thanks to all who have donated to Netty's Marathon effort, it is massively appreciated. Here is your last chance if you havent, yet wanted to give, you lovely people.

Netty is running the Virgin London Marathon on 22nd April 2018 in aid of the Lords Taverners, giving disabled and disadvantaged children a sporting chance.

Malcolm Graham-Wood is an independent oil industry expert and freelance contributor, not a direct employee of Interactive Investor.

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