SDX Energy Inc . Egypt focused - high margin growth opportunity September 21, 2016 Oil Capital Conference
Egypt focused production with transformational exploration upside • AIM and TSX-V listed (TSXV: SDX/ AIM:SDX) • High margin producing assets: • Cash flow positive (asset and corporate levels) • Net production 1,550 boe/d • 7.34 mmboe 2P reserves (31/12/15) • Development potential to 2X production and 3X reserves • High impact exploration program underway • Solid balance sheet: • US$8.2MM of Working Capital ($6.9MM in Cash) • No debt • Zero Egyptian receivables, being paid on time and in full • Well placed to capitalise on Egyptian distressed asset opportunities Page 2
Experienced Management Team Paul Welch, CEO (London) CEO of two public exploration and production companies, 15 years with Shell Developed Pioneer’s Tunisian portfolio from 500 boepd to a peak of over 25,000 boepd Mark Reid, CFO (London) Finance Director at AIM listed Aurelian and Chariot Oil and Gas Limited (2009-2015) Former Head of Oil and Gas in London for BNP-Paribas Fortis Ahmed Moazz, Egypt Country Manager (Cairo) Chairman of El Wastani company, JV between EGAS and Centurion Energy Former EGPC Vice Chairman for production in Egypt Cameron Snow, VP Subsurface (London) 10 years with Apache Oil Corp, four years of which were resident in Egypt Geologist with a PhD from Stanford University Page 3
Key Investment Highlights • Diverse portfolio : Producing assets combined with material exploration potential • High margin : opex <US$10/bbl, generate positive cash flow down to US$15/bbl Brent • Clear development opportunity : • Well workover program can 2X existing production • Waterflood and Infill program can 3X existing reserve volumes • Asset acquired as part of merger in October 2015, technical work recently completed • Plan to commence program end Q4 2016 and complete in Q1 2017 • Executing program while costs are low and services readily available • Improve margins by increasing production and further reducing already low opex/bbl • Near term exploration opportunity is fully carried • Providing the Company/Investors with a “free” option on the upside • Strong BOD & Management Team with skill set to capture SDX Energy full potential Page 4
Strategic Objectives • Create a profitable mid-tier E&P by focusing on an aggressive Egyptian growth strategy , delivering superior returns to shareholders • Near Term: • Development of existing high margin production base • Increase margins by further opex reductions. Target opex <US$5/bbl • Target of net 3,000 boepd • Medium Term: • Execute high impact exploration opportunities • Capture new opportunities either asset or corporate • Target of net 5,000 to 7,000 boepd • Long Term: • Material growth in Egypt gas business • Execute “Roll –Up” strategy within MENA • Target of net 25-30,000 boepd Page 5
Egypt: Highly attractive operating environment
Egypt – Geology & Operating Environment • World class hydrocarbon basins • Western Desert basin 2 nd best value creator over the last 10 years • Zohr discovery 22+TCF (4 Billion bbl equivalent) largest discovery globally in 2015 • Excellent operating environment #2 • Competitive fiscal terms, low operating costs • Decreasing costs • Service company costs still dropping (EGP denominated) • Egyptian currency depreciates against dollar • Historic pay-out backlog clearing • SDX has zero long dated receivables #10 • Paid 66% USD, 34% EGP in 2015 • Government pledged to clear balance by end 2017 #14 (before Zohr Discovery) • Economy stabilised with new cabinet and parliament • Current PM was former Petroleum Minister • Transition to full democracy completed Source: WoodMackenzie • Local gas prices increasing @ $6-$10/mmbtu) • Domestic gas market significantly underserved (importing LNG • Long term demand not satisfied by Zohr alone due to demand growth and natural declines in existing fields Page 7
High Margin Producing Assets
Assets - Egypt Page 9
North West Gemsa - Overview Working Interest 10% Avg. production (gross), June 2016 7,370 boepd 9.43 Mmboe 2P Reserves (gross), 31 Dec. 2015 22.3 Mmboe Cumulative production to Dec. 2015 5x Production Performance since acquisition in 2010 2x Reserves 3 Producing Fields Al Amir SE, Geyad, Al Ola 83km 2 onshore concession 300km from Cairo Partners: North Petroleum (50%, Operator) Circle Oil (40%) 2016 W ORK P LAN 2 development wells & 9 work-overs – Completed Maintain plateau production at 7-8 Mboepd Page 10
North West Gemsa - High Margin Producing Asset • Waterflood development essentially completed in 2 horizons • Unitisation efforts underway with offset operator. Expect to conclude Q4 2016. Additional development potential once unitisation is finalized • Low operating costs ~ $US6/bbl. Very low future Capex requirements. Significantly cash generative going forward • G&G team now focusing on: • Exploration opportunities in deeper Nubia horizons • Attractive Netbacks: NWG Netback at 2016 NWG Fiscal Terms Brent FWD Curve - $48.36 [VALU [VALUE E] ] [VALUE [VALU ] E] [VALUE [VALU ] E] $/boe % Cost Oil Profit Oil State Netback Opex Revenues Page 11
Meseda - Significant Development & Exploration Potential • 50% Working Interest (Operator: Dublin Petroleum) • Discovered: June 2011 • Production start up: November 2011 • Drilled 16 wells to date, 13 wells currently producing • 118 MMBO STOOIP (total structure) • 86 MMBO STOOIP (net to Meseda) • 2P gross reserves – 12.8 MMboe – 31/12/15 • Current Production (June 16): • Gross: 4,169 • Net to WI: 2,085 • Cumulative Production to Dec 2015: • 5.5 MMSTB • 6.3% recovery to date 2016 W ORK P LAN Subsurface mapping and modelling completed Facilities’ study underway Workover program paused until facilities’ study is completed Page 12
Meseda cont • Subsurface geologic modelling completed • Well performance review and modelling completed • Sub-surface simulation completed • Facilities’ study nearing completion • Significant improvement in well performance identified through recent studies • Potential to 2X current production with workovers Q4 ‘16/Q1 ‘17 • Potential to improve recoverable volumes by 3X with waterflood and infill program by end Q1 2017 • Attractive Netback: Meseda Revenue Meseda Netback at 2016 Brent FWD Curve - $48.36 Sharing [VALUE [VALUE] ] [VALUE] [VALUE [VALUE] ] [VALUE [VALUE] ] $/boe % Dublin WI SDX WI State Netback Tax Opex Revenues Page 13
Meseda – Well Review Results – 2X Current Production (Minimum) Gaffney Cline & Assoc (GCA) study concluded that most pumps are incorrectly sized Properly sized ESP’s can, at a minimum, double current production rates Page 14
Meseda - Development Potential Meseda Field Egypt - Production History and Forecasts 10,000 9,000 Oil Production - Barrels/Day 8,000 7,000 6,000 5,000 Base + Workovers + Waterflood Rec Eff: 35% 4,000 Base + Workovers 3,000 Rec Eff: 19% Base Case (PDP) 2,000 Rec Eff: 13% 1,000 0 03 November 2011 30 July 2014 25 April 2017 20 January 2020 16 October 2022 12 July 2025 07 April 2028 02 January 2031 Historical Production Base Case Base + Workovers Base + Workovers +Waterflood Page 15
Meseda - Exploration Potential Prospect Summaries • Both prospects have similar risk profiles and would be testing similar concepts • The main risk for both prospects is the location of the bounding fault • Yusr-1X appears to have more favourable volumetric assessment • Both prospects are within the same SHF development lease section Page 16
Exploration
South Disouq Abu-Madi – Baltim Trend Working Interest (Operator) 55% 1,275 km 2 Concession area 585 BCF (PMean) Gross Prospective Resources 6.4 TCF 100 Mmboe Rec. Volumes within Abu Madi Baltim Trend (IHS) Acquired in the 2013 bid round 65 km north of Cairo within prolific Abu Madi – Baltim trend First period work commitment: 300km 2 seismic and 1 well Partners, (IPR 45%) – carries the cost of the Exploration Well 2016 W ORK P LAN Acquire 300km 2 of 3D Seismic – Completed June 12, 2016 Processing and Interpretation of 3D seismic Drill Exploration Well – end Q4 2016/ early Q1 2017 Page 18
Seismic Processing Timeline Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Mobilization Acquisition Testing and Fast Track Processing PSTM Processing PSDM Processing Key Dates • Field tapes delivered on June 19 th • Fast Track volume received July 19 th • PSTM completion on September 29 th • PSDM completion on December 28 th Page 19
South Disouq Top Abu Maadi Structure Map Anubis-1X Abu Maadi Prospect Osiris-1X Abu Roash/AEB Prospect Page 20
Seismic Inline through Anubis-1X Prospect Well developed 4-way dip closure at top Abu Maadi interval Target Interval: Abu Maadi Osiris-1X Anubis-1X Page 21
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