SDX Energy - FY20 guidance reflecting increased production

SDX Energy provided new production guidance of 6,750–7,000boepd for 2020, representing an increase of c 70% on 2019 rates as the company expects to see the benefit of full year production from South Disouq. The field continues to deliver at a stabilised rate of c 50mmscfed. Meanwhile the Moroccan drilling campaign has added 3.3–4.4bcf of management estimated gross reserves from six successful wells, with the remaining wells including a number of higher risk/reward options. SDX will now focus on South Disouq’s exploration campaign, with up to three wells to be drilled in 2020 which, if successful, have the potential to increase reserves and be quickly tied into the South Disouq central processing facility (CPF). Our valuation moves from a RENAV of 50.3p/share to 53.9p/share (+7%), while our core NAV increases from 45.7p/share to 49.3p/share (+8%).