SDX Energy discusses Morocco Success Story
As part of the preparations of the 2nd Morocco Oil & Gas Summit, IN-VR had the pleasure to interview Paul Welch, CEO of SDX Energy, discuss the country’s potential, and find out more on the company and its current and future activities and priorities.
Read the interview below:
- SDX Energy is highly active in Morocco. What have you achieved in the few years operating in the country? How have these achievements helped SDX Energy develop into one of the most influential oil & gas companies in the region?
SDX Energy has been operating in Morocco since the Company acquired Circle Oil’s interests in the Sebou and Lalla Mimouna concessions in January 2017. The Company’s Moroccan acreage currently consists of three concessions; Sebou, Lalla Mimouna Nord and Gharb Centre, all of which are located in the Gharb Basin in northern Morocco. We work closely with our partner ONHYM, who have a 25% working interest in each of the licences we operate.
We recently concluded a very successful nine well drilling programme in Morocco, which saw the business achieve an 80%+ drilling success rate, seven discoveries from nine wells. We have successfully connected our gas pipeline to Peugeot’s car manufacturing plant and have started to sell gas to Peugeot on a test basis. Gas sales agreements have also been agreed with four other new customers in the Kenitra area with sales anticipated to commence prior to year-end 2018.
We continue to see significant upside across our Moroccan portfolio and plan to update the market on our next drilling campaign in the region, which we expect to commence in Q3 2019.
- You acquired the Sebou concession in January 2017. Within less than two years you drilled 31 wells, making 25 discoveries, an impressive 80% success rate. What were the key factors for this operational success?
Yes, we obtained the Sebou concession as part of the Circle Oil acquisition, which at the time was transformational for the business. Our business model is based around our idea of ‘Simplicity Made Profitable’. The Company looks to drill shallow, low cost wells, aiming at targets that are identifiable via 3D seismic.
In terms of our product, we largely produce biogenic gas which is 99.6% methane and does not need to be treated. We can therefore connect it straight to our customers.
It is important to add that our success in Morocco has only been made possible by the Moroccan Government and our partner, ONHYM.
- What are your future plans for operating in Morocco?
We firmly believe in Morocco as an oil and gas region and have an exciting period of activity planned over the coming years, to help ease the domestic constraint on natural gas supply. Following our very successful nine well drilling campaign in 2017-2018, we are currently planning for a second drilling campaign, which we anticipate commencing in Q3 2019.
In the meantime, and following our Gas Sales Agreement with Peugeot, we expect to sign more gas sales agreements in the area. We recently gas contracts with four new customers that are currently being connected, and see significant growth potential for our business in the near term. Our pipeline has spare capacity and, having identified significant demand, we initiated “Projet Vingt Quatre” (24), with our partner ONHYM, to help increase output through this line over the next three years to bring it up to capacity.
- SDX Energy has acquired several permits in Morocco. What makes Morocco such an attractive country to operate in? Is Morocco’s competitive Hydrocarbons Code a key influence?
We believe Morocco is a great place for us to do business, with its stable Government and attractive fiscal terms, which we see as one of the most competitive in the industry. However, it also comes down to the operating environment, which we see as highly favourable. Operating costs per barrel are low, sub US$1.00/MCF, and the geology is well understood.
Targets are shallow and can be identified accurately with the addition of 3D seismic. There is also significant domestic demand for gas, which local outstrips supply, so we have so we have enjoyed significant success with finding customers for our gas. It also enables us to make a healthy margin on our gas, which we can then spend bringing new developments and discoveries on line. Finally, the authorities are definitely very supportive of our business in Morocco and ONHYM are a brilliant partner, which makes Morocco an even more attractive country to operate in. - Who are you looking forward to meeting during the 2nd Morocco Oil & Gas Summit? We always look forward to meeting Ministers, in addition to potential new investors and possible gas customers. Also, as we have previously said we are well placed to capitalise on acquisition opportunities in North Africa, should they arise, so we look forward to getting an update on current trends in the region and what other operators are seeing. Find out more about operating in Morocco first-hand from Paul Welch, by attending the 2nd Morocco Oil & Gas Summit and hearing from SDX Energy, ONHYM, and all major operators. The 2nd Morocco Oil & Gas Summit is the Official Summit for the hydrocarbons industry of Morocco. The event will take place at Marrakech from 6th to 7th February 2019.
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