SDX Energy PLC on Wednesday said it agreed on a non-binding gas prepayment heads of terms with Dika Morocco Africa, which it intends to use towards gas supplies in the fourth quarter.
The London-based energy company, which currently has a portfolio of exploration, development and production assets in Egypt and Morocco, said the initial terms envisage a drawdown of around $2 million by the end of the month, which it intends to use towards the drilling costs of the Ksiri-21 well in Morocco.
SDX Energy said a further heads of terms for a larger prepayment amount is currently under negotiation with Dika Morocco Africa and is expected to be agreed by early 2024, with funds drawn at that point.
Dika Morocco Africa is a 100% owned subsidiary of automobile part manufacturer Citic Dicastal, which in turn is a subsidiary of Chinese holding company Citic Group.
SDX Energy said it plans to direct this second prepayment towards funding a further multi-well back-to-back drilling programme. On Monday last week, SDX Energy said that this type of drillings allows development of gas behind pipe, i.e. booked reserves, and ‘further increases operational efficiency, reduces costs and ensure that immediate and future demand’ can be met.
SDX Energy on Wednesday also said it has drawn down a further US500,000 from the convertible loan, as announced in late July.
‘These heads of terms testify to the deepening of the long-standing partnership between SDX and DMA, as well as Citic Dicastal more broadly,’ said SDX Energy Managing Director Daniel Gould.
‘SDX has been supplying gas to DMA in Morocco for over five years and is committed to continuing to be a sustainable partner for its energy needs. This partnership is mutually beneficial for SDX, DMA, and supports the growth of industry in Morocco.’
Shares in SDX Energy were up 1.0% to 3.99 pence each in London on Wednesday late morning.
Earlier this month, SDX Energy said it began drilling the Ksiri-21 well, which it plans to drill to a planned total depth of around 1,950 metres.
‘Using existing 3D seismic, the well is targeting a well-defined prospect within the main Hoot formation, which is the main producing sand in the area. SDX has drilled over 20 production wells in the same basin. As such, this new well presents a low-risk step-out location,’ SDX said at the time, adding that the well can be immediately brought into production.
On Monday, SDX Energy confirmed that its operations have not been affected by an earthquake in Morocco last Friday.
AFP reported that at least 2,901 killed and 5,530 injured in the 6.8 magnitude quake that struck late Friday, according to the most recent toll on Tuesday.
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