SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, announces its financial and operating results for the three months and year ended December 31, 2017

Reserves

As at December 31, 2017 the Company’s working interest share of audited 2P reserves was 13.5 mmboe(1). This represents a 45% increase on the combined 2P reserves of the Company and the Egyptian and Moroccan businesses of Circle Oil PLC (“Circle Oil”) as at December 31, 2016. The Company’s audited 2P reserves estimate has been audited in accordance with the COGE Handbook by ERC Equipoise Limited an independent qualified reserves evaluator and auditor.

Corporate and Financial

The main components of SDX’s comprehensive income of US$28.3 million for twelve months ended December 31, 2017 are;

• US$28.9 million netback for the period;
• US$29.6 million gain on acquisition of the Egyptian and Moroccan businesses of Circle Oil;
• US$17.8 million of DD&A – (increased as a result of the Circle Acquisition from US$3.3 million in twelve months ended December 31, 2016); and
• US$2.4 million of transaction and restructuring costs relating to the above acquisition.

Netback for the twelve months December 31, 2017 was US$28.9 million, up from US$7.6 million for the twelve months to December 31, 2016, as the Company benefited from the high margin Moroccan business acquired from Circle Oil and a recovery in oil prices over the year.

Cash position of US$25.8 million as at December 31, 2017 reflects strong netbacks and a reduction in receivables of US$4.9 million, which primarily came from Egyptian receivables inherited with the Circle Acquisition.

Since December 31, 2017, a further US$6.0 million has been received from backdated receivables which has helped the cash position to grow to US$30.6m as at February 28, 2018. As economic conditions continue to improve in Egypt, the Company is hopeful that further meaningful reductions will be made to the Egyptian receivables position during 2018.

• US$21.1 million of capital expenditure has been invested into the business during the 12 months ended December 31, 2017;
• US$13.9 million in Morocco, US$12.8 million of which related to the ongoing nine well drilling programme and customer connection projects;
• US$3.2 million on the SD-1X discovery well and the 3D seismic programme at South Disouq;
• US$2.0 million in Meseda on the two successful Rabul exploration wells and a nine well workover programme covering pump and tubing maintenance and the Meseda facility upgrade; and
• US$2.0 million on the twelve well workover programme at North West Gemsa.

Operational Highlights

The Company’s share of production from its operations for the twelve months ended December 31, 2017 was 3,237 barrels of oil equivalent per day (boepd) analysed as follows, and which includes production from the Circle Acquisition with effect from January 27, 2017;

• North West Gemsa 2,046 boepd
• Meseda 595 boepd
• Morocco 596 boepd

On a pro forma basis, assuming that the Circle Oil Acquisition had completed on January 1, 2017, the Company’s share of production from its operations for the twelve months ended December 31, 2017 would have been 3,457 boepd analysed as follows;

• North West Gemsa 2,220 boepd
• Meseda 595 boepd
• Morocco 642 boepd

Paul Welch, President & CEO of SDX Energy, commented:
“2017 was an exceptional year for SDX, with the acquisition of Circle Oil’s assets, enabling us to substantially increase production, and cash flow, over the course of the year.

We continued to see strong operational performance throughout the year across our portfolio. In North West Gemsa we are seeing the results of our twelve successful workovers, and in Meseda we successfully drilled two exploration wells in 2017 followed by the successful Rabul-5 appraisal well earlier this month. The remainder of 2018 will see a second appraisal well, Rabul-4, followed by two development wells on the Meseda area of the concession. Our nine well drilling programme in Morocco has seen five discoveries from seven wells drilled to date and we look forward to continuing this drilling success throughout the rest of 2018.

As a company, we continue to focus on low cost, high margin production, thereby creating further value for our shareholders. Our strong funding position means we are well placed to capitalise on any suitable, value enhancing asset opportunities that may arise going forward.”