SDX Energy, the UK-based oil and gas exploration, production, and development company with working interests in natural gas fields in Egypt and Morocco after a string of discoveries in 2017 and 2018, is facing a takeover battle and may have to bring more cash to the table for existing shareholders.
UK Stock Exchange-listed SDX Energy has been informed by London-headquartered Aleph Commodities Limited that it now commands over 25 percent of the share capital of the company and intends to block an all-share takeover proposed by Canadian company Tenaz Energy Corp. of Calgary, Alberta.
“Through public disclosures and communication with SDX, we have been informed that a shareholder intends to vote against the proposed Scheme of Arrangement to amalgamate Tenaz and SDX,” said a Tenaz Energy statement.
SDX's portfolio includes high impact exploration opportunities in both Egypt and Morocco as well as producing assets in Morocco’s Gharb Basin and the Egyptian Nile Delta.
Natural gas assets in Egypt are the focus of possible LNG or pipeline gas exports and in the case of Morocco domestic gas projects.
Tenaz Energy explained that the takeover required, among other things, that 75 percent of the shares voted by SDX shareholders support the combination for it to become effective.
The Canadian company has now said that it reserved the right to elect to implement the transaction by way of a takeover offer in compliance with the UK Takeover Code and through a co-operation agreement with SDX.
“We are evaluating all available options with respect to the transaction and will provide a further update when appropriate,” stated Tenaz Energy.
A statement from Aleph Commodities by way of explanation made several points on behalf of itself and other parties, who together hold 25.65 percent of the shares.
It stated that the group of shareholders led by Aleph Commodities intended to vote against the recommended all-share combination.
“The shareholder meetings relating to the Scheme of Arrangement are due to be held on 29 July 2022,” noted Aleph Commodities.
“Aleph welcomes the opportunity to engage with management and the Board of Directors to explore opportunities to provide financial, commercial and technical support to SDX to ensure the growth of the company and its production base, with minimal dilution,” it stated
SDX Energy has a working interest in two producing assets in Egypt, a 36.9 percent operated interest in the South Disouq and Ibn Yunus gas fields and a 67.0 percent operated interest in the Ibn Yunus North gas field in the Nile Delta.
It additionally holds a 50 percent non-operated interest in the West Gharib concession, which is located onshore in Egypt’s Eastern Desert, adjacent to the Gulf of Suez.
In Morocco, SDX has a 75 percent working interest in four development and production concessions, all situated in the Gharb Basin.
The producing assets in Morocco are characterised by “attractive gas prices and exceptionally low operating” costs.