SDX announces gas discovery at KSR-15 well, Morocco

SDX Energy Inc. announces that a gas discovery has been made at its KSR-15 development well on the Sebou permit in Morocco (SDX 75% Working Interest).

The KSR-15 well was drilled to a total depth of 1,774 meters and encountered 17.2 meters of net conventional natural gas reservoir section across 4 intervals. The primary target, the Hoot sand, had an average porosity of 29%. This is the highest average porosity recorded for the Hoot sand in the basin.  The quality of the Hoot exceeded our pre-drill estimates and, once the drilling rig has left the location, the Company expects that the well will be connected to the existing infrastructure and on production in early December.

The previously drilled KSR-14 well has been connected to the existing infrastructure and it is anticipated that testing will commence this week. Those test results will be reported in a separate release when available.

Paul Welch, President and CEO of SDX, commented:
"We are pleased to be announcing another successful result from our Moroccan drilling campaign as we continue to build real momentum with this programme. It is also very encouraging to have connected the first well and I look forward to reporting on the test results in due course. These first two successful wells keep moving us closer to achieving our target of increasing local gas sales volumes in Morocco by up to 50% in 2018"

SDX ENERGY at a glance

On 1 October 2015, SDX Energy was formed from the merger of Sea Dragon Energy and Madison PetroGas.

SDX is an international oil and gas exploration, production and development company, headquartered in London, England, UK, with a principal focus on North Africa. In Egypt, SDX has a working interest in two producing assets (50% North West Gemsa & 50% Meseda) located onshore in the Eastern Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75% working interest in the Sebou concession situated in the Rharb Basin. These producing assets are characterised by exceptionally low operating costs making them particularly resilient in a low oil price environment. SDX's portfolio also includes high impact exploration opportunities in both Egypt and Morocco.

MOROCCO OPERATIONS

Sebou concession
The Sebou concession, located in the Rharb Basin, was acquired by SDX Energy in January 2017. 2D and 3D seismic surveys have been conducted over the majority of the Sebou Concession and sixteen wells have been drilled to date, resulting in thirteen discoveries (an 81% success rate).

Production is currently from the Miocene-aged Hoot and Guebbas Formations which are high quality reservoir intervals with favourable properties and consistent, low-impurity gas composition Methane across fields and units. Average production is at 6.2MMscf /day (1,033 boepd). SDX also acquired Circle Oil’s 75% interest in the Kenitra industrial zone pipeline and local gas distribution network, with the concessions production being delivered to this area via an 8” pipeline (25% owned by ONHYM). Pipeline capacity is up to 23.5MMscf/d, of which 6MMscf/d is currently utilised.

An extensive pre-existing 2D database provides a solid foundation for future exploration and expansion programs.

A supply and demand imbalance presents SDX with a significant opportunity to capitalise on the local gas market where demand significantly outstrips supply, and future gas price contracts are anticipated to increase throughout 2017.

Discovery
In November 2017, SDX announced a gas discovery at its KSR-15 development well on the Sebou permit.

The KSR-15 well was drilled to a total depth of 1,774 meters and encountered 17.2 meters of net conventional natural gas reservoir section across 4 intervals. The primary target, the Hoot sand, had an average porosity of 29%. This is the highest average porosity recorded for the Hoot sand in the basin. The quality of the Hoot exceeded our pre-drill estimates and, once the drilling rig has left the location, the Company expects that the well will be connected to the existing infrastructure and on production in early December.

Lalla Mimouna
The Lalla Mimouna Nord and Sud permits, located in the Rharb Basin, cover an area of over 2211 km2, of which 154 km² is covered by 3D seismic. The permit is adjacent to the producing Sebou permit and future discoveries will be tied into the existing gas sales line to the Kenitra industrial zone. The regional basin architecture is well understood from the extensive 2D seismic framework of the area, with prospectivity established in multiple horizons throughout Miocene-aged strata.

Amplitude analysis suggest the presence of several gas-filled sand bodies across the area with a similar response to the Sebou Permit. Five amplitude-supported prospects have been mapped in the 3D seismic area with 13.2 BCF of unrisked recoverable gas. There is considerable potential for material upside discoveries through 3D seismic acquisition with multiple target horizons creating potential for stacked pay.

Following its recent acquisition of certain assets in Morocco, the Company is reviewing options to accelerate the drilling campaign originally planned for 2018.  It is currently undertaking an internal review of the area's identified prospectivity and high grading the prospect portfolio.  Concurrent with this, the Company is surveying the rig market to determine timing and availability of suitable equipment for these operations.  It is the Company's objective to accelerate drilling and increase gas production in Morocco during 2017.

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