Wednesday, July 5, 2017

SDX Energy, Operational Update - SDX ENERGY

JULY 5, 2017

SDX Energy Inc. (TSXV, AIM: SDX), the North Africa focused oil and gas company, is pleased to provide an operational update.

South Disouq (55% Operated working interest)
Following the successful drilling of the SD-1X exploration well and resulting natural gas discovery at South Disouq, a Resources Update was prepared on behalf of SDX by Gaffney, Cline & Associates (GCA), an independent global oil & gas consultancy. The Company is pleased to announce the initial results shown below using Canadian NI-51-101 Reporting designations:

                                                                Gas        Condensate         

                                                                Bscf       MMbbl
Gross1 Contingent Resources (2C)                47.13     2.29
Gross1 Prospective Resources (Best Case):   180.08   8.73

The GCA Resources Update for South Disouq is an important step in the validation of SDX’s understanding of the full potential of the field. The results are in line with management’s expectations. The Company also believes that the Gross Prospective Resources as reported above have now been significantly de-risked as a result of the SD-1X discovery, which was disclosed in its May 29, 2017 news release.

SDX believes that the understanding of the potential reserves and resources for South Disouq will continue to evolve over time as more data becomes available and further exploration activities are undertaken. The SD-1X discovery and its subsequent development allows SDX to begin unlocking the resource potential that it believes is contained within the South Disouq concession. Furthermore, given the encouraging results noted in the deeper oil prone Cretaceous horizon encountered in SD-1X, where a working petroleum system was encountered, the Company is planning to further test this horizon during the development program planned for the SD-1X discovery.

SDX is also pleased to announce that it is currently in constructive discussions with the Egyptian authorities, regarding bringing the field into production by way of an early production system (EPS).
The initial development at SD-1X will see the field being connected to the nearby Egyptian domestic gas distribution system allowing for both early cash flow and for subsequent wells and discoveries to be connected in short order. The existing gas infrastructure within the concession area combined with the cooperative and supportive efforts of Egyptian authorities will allow SDX to bring this discovery into production in the shortest possible time frame.

North West Gemsa (50% working interest)
At North West Gemsa the workover program is set to commence in July. This program will be focused on ESP installation and maintenance of both production and water injection wells, working towards ensuring that the field target rate of 5,000 boepd is maintained throughout the year. This follows the recent technical review at North West Gemsa to determine how best to extend the economic field life through optimising field operations whilst continuing to focus on operating cost reductions.

Meseda (50% working interest)At Meseda the fluid treating facility upgrade has now been completed. This involved the installation of a new two- phase separator, which has doubled the gross treating capacity in the field. Additionally, a tender exercise has been undertaken to select the preferred Electrical Submersible Pump (“ESPs”) vendor to supply the pumps for the remaining workovers in Meseda. The fluid treating facility completion allows the workover campaign to resume with the resulting uplift in production envisaged in the coming months.