WTI $60.00 -$4.60, Brent $63.28 -$4.72, Diff -$3.28 -12c, NG $2.48 -5c, UKNG 43.36p -2.93p

Oil price

A sharp correction yesterday which as always was a result of a number of catalysts. The US bond yield went over 1.7% and the dollar strengthened which knobbles the oil price. Inventories are unclear, after the Texas freeze up this week for some people was meant to be the first definitive number, for most it only revealed a mish mash of unexpected crude builds and product data that was skewed.

But mainly it was about vaccines again, in particular outwith the US what is going on in terms of production, distribution and even push-back by some people to the very thought. When Dan Yergin called the US ‘out of vaccine alley’ he was right but the rest of the world, apart from the UK, is behind the 8 ball.

SDX Energy

SDX finals today and are good, as might be expected given the recent updates. The conference call is at 1500 hrs so we shall get stuff from that while the Cheltenham Gold Cup is going on!

The 2020 results were as follows:

Twelve months ended 31 December

US$ million except per unit amounts

2020

2019

Net revenues

46.1

34.8

Netback(1)

36.5

28.2

Net realised average oil service fees  US$/barrel

31.96

49.61

Net realised average Morocco gas price  US$/Mcf

10.80

10.39

Net realised South Disouq gas price – US$/Mcf

2.85

2.85

Netback – US$/boe

16.73

34.75

EBITDAX(1) (2)   

32.9

23.6

Exploration & evaluation expense(3)   

(5.8)

(11.4)

Impairment expense

(8.3)

Depletion, depreciation, and amortisation

(25.2)

(18.7)

Profit/(loss) from discontinued operations

1.8

(0.4)

Total comprehensive loss

(2.1)

(18.2)

Capital expenditure

24.7

43.0

Net cash generated from operating activities(4)

21.3

12.1

Cash and cash equivalents

10.1

11.1

 

2021 production guidance of 5,620 – 5,920 boe/d is 1–6% lower than 2020 production, excluding the assets divested, predominantly due to scheduled maintenance at the Group’s CPF at South Disouq.

Mark Reid, CEO of SDX, commented:

 “After what has been a very disruptive period for both businesses and people, I am extremely pleased to announce a set of results featuring record production, a strong balance sheet and successful drilling results.

 Operationally, 2020 was a strong year for the Group and although the COVID-19 pandemic contributed to a low oil price environment, SDX’s high fixed-price gas assets in both Egypt and Morocco demonstrated the cash-generative resilience that exists within our portfolio. While Morocco production saw demand fluctuations early in the period, we are now back to pre-lockdown levels of production with 2021 production expected to be 8-12% higher than in 2020.

 Our exploration efforts in the period were also positive in both Egypt and Morocco, with our largest discovery, the SD-12X well in South Disouq, having been brought on stream before the end of the year. As well as adding reserves through the drill bit, the Group also continued to manage its portfolio with the sale of non-core assets in North West Gemsa and South Ramadan, adding further to the Group’s cash and reducing its associated capex.

 With a 39% increase in EBITDAX from continuing operations to US$32.9 million, our strong focus on capital discipline and our balance sheet stewardship, we have ended the year with a healthy cash balance and clarity over our work programme for the next two years, funded from our cash position. This work programme includes a transformational prospect with the Hanut well having the potential to significantly increase Company reserves.  Furthermore, the recently approved ten-year extension of our West Gharib oil concession increases our share of reserves in the asset by 60% year on year and 119% taking account of 2020 production. With a breakeven Brent price of approximately US$20/bbl this is an extremely positive development given current oil prices.  We have also made excellent progress with various ESG initiatives and I am particularly proud to announce that our carbon intensity in 2020 was only 1.8kgCO2e/boe for our operated assets, one of the best performances in the industry.

 Finally, I would like to thank all of our team for their tireless work rate and commitment in what was tough period for all as we tackled challenges seldom seen before. The outlook for SDX is extremely bright and we look forward to delivering on our goals for the coming period and enhancing value for all stakeholders in the Company.”

 

Gulfsands Petroleum

The announcement that Waterford has made a move on Gulfsands is potentially of interest. At the moment the Gulfsands team can’t say a word but I am keeping my head down and will report back with anything that might help.

‘The Independent Directors of Gulfsands Petroleum plc (“Gulfsands” or the “Company“), the oil and gas company focused on the Middle East region, note the announcement today by Waterford Finance & Investment Limited (“Waterford”) that it has entered into a binding agreement to purchase 85,077,086 ordinary shares (“Shares”) in Gulfsands from ME Investments Limited (“MEI”). Waterford has also acquired rights and obligations under the 2017 Secured Financing Facility held by MEI.

In accordance with the Take-over Code, as a result of the purchase of Shares, Waterford will own approximately 52.45% of the issued share capital of Gulfsands and is required to make a mandatory cash offer for the Shares not already held by Waterford and persons acting in concert with Waterford (the “Mandatory Offer”) at a price no less than the highest price paid by Waterford (or persons acting in concert with it) for a Gulfsands share during the 12 months prior to the date of the announcement by Waterford.

Michael Kroupeev, a non-executive Director and the Chairman of the Company, through his family trust, wholly owns Waterford.  Michael Kroupeev is not considered to be an independent director of Gulfsands by virtue of his interests in Waterford. Mr. Kroupeev will not play a role in the Company’s evaluation of the terms of the Mandatory Offer.

The Independent Directors of Gulfsands are considering the terms of the Mandatory Offer and will write to shareholders in due course. Updates will be posted on the Company’s Website at www.gulfsands.com.

In the meantime, shareholders need take no further action’.

And finally…

Apologies if the sports news runs longer than the stocks, its a crowded few days.

Cheltenham finishes today with the Gold Cup, a win for Champ would be great after last year…Tomorrow is like the Lord Mayors Show but Uttoxeter, Kempton and Newcastle will all put on good cards.

The 6 Nations was due to finish tomorrow but the postponed France Scotland game, now rescheduled for 26th March will leave unfinished business. Tomorrow therefore sees the Scotland v Italy, Ireland v England and France v Wales fixtures.

The T20 cricket goes to a deciding 5th match after India won yesterday making the series 2-2, that is tomorrow at 2pm.

It makes the afternoon crowded as the Premier League has the Cottagers hosting Leeds tonight, the Seagulls entertaining the Magpies in an avian derby and on Sunday a London derby as the Gooners go to the Hammers and the Villa host the Spurs.

Not a lot of Prem fixtures as its the FA Cup Quarter finals, tomorrow is the Cherries hosting the Saints in the Riviera derby, the Toffees host the Noisy Neighbours and on Sunday the Blades go to Stamford Bridge and the Foxes host the Red Devils.

Last night in the Boropa Cup it was far from boring ironically, Rangers lost to Slavia Prague 0-2 and 1-3 on aggregate in a bad tempered game, no……Also losing were Spurs who took a 2-0 lead to Dinamo Zagreb but lost 3-0 on the night at 3-2 on aggregate. But the Gooners, despite losing 0-1 last night saw off Olympiakos 3-2 on aggregate and the Red Devils got a 0-1 away win at AC Milan and went through 1-2 overall.