SDX Energy Plc (LON:SDX) has secured final approval from the Egyptian authorities to extend its Production Services Agreements for the Meseda and Rabul oil fields, both part of the West Gharib concession.
The agreements will now remain valid until at least November 2031.
“We are very pleased to have secured this ten-year extension to the Production Services Agreement which we estimate increases SDX’s share of reserves in our core West Gharib oil asset, certified at 2.2 million barrels in our 31 December 2019 CPR, by 60%,” said Mark Reid, chief executive.
“With a breakeven price of approximately US$20 Brent and to take advantage of the current strong oil price, we plan to commence in Q2 of this year, a drilling programme of up to twelve wells over the next three years with the goal of growing gross production back to around 3,000bbl/d.
“This drilling programme is in line with the capex guidance provided to the Market in our 26th January 2021 update.”
In extending the agreements, SDX commits – irrespective to crude oil prices – to the drilling of six development wells by December 2022, plus one water injector.
It also commits to drilling a further four wells if Brent crude prices reach US$55 or above for twelve consecutive months during the contract period, similarly another two wells are necessary if Brent stays above US$60 for twelve consecutive months.
Payment of a US$2mln signature bonus will be deferred, with US$1mln spread over monthly payments and the remaining US$1mln split across two scheduled payments of US$500,000 in December 2022 and 2023 respectively.
Further bonus payments, of up to US$2mln, will be subject to crude oil prices