SDX Energy PLC has received final approval from the Egyptian authorities to the production services agreements governing its producing Meseda and Rabul oil fields in its West Gharib concession in Egypt until Nov. 9, 2031. In this year’s second quarter, the company plans to begin to a drilling program of up to 12 wells over the next 3 years with the goal of growing gross production back to around 3,000 b/d.
The 10-year extension to the production services agreement is estimated by SDX to increase its share of reserves in the core West Gharib oil asset, certified at 2.2 million barrels in December 2019, by 60%.
License extension terms include a commitment, irrespective of Brent price, to drill six development wells by Dec. 31, 2022 and one water injection well.
If Brent reaches $55 for 12 consecutive months during the extension period, four further development wells will be drilled during the extension period. If Brent reaches $60 for 12 consecutive months during the extension period, two further development wells will be drilled during the extension period.
Payment of a deferred signature bonus of $2.0 million (SDX share $1.0 million). Half will be paid in monthly installments in the next 12 months and the remaining $1.0 million will be paid in two installments of $500,000 each, on Dec. 31, 2022, and Dec. 31, 2023. A further contingent bonus of up to $2.0 million (SDX share $1.0 million) would be payable dependent upon higher oil prices.
SDX holds a 50% working interest in the license. Partners are The General Petroleum Co., a wholly owned subsidiary of the Egyptian General Petroleum Corp., and Dublin Petroleum Ltd.