LNG

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.

Strategy change

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.

Italian energy company Eni and UK major BP announced a new natural gas discovery in the “Great Nooros Area” of the Abu Madi West Development lease in the Nile Delta offshore Egypt and coupled with other finds in the block there is potential for LNG production.

Eni said that there could be more than 4 trillion cubic feet of gas in place in the Great Nooros Area where there have been other discoveries since 2015.

The latest exploration and production success for Eni is making the East Mediterranean Basin a potential world-class gas province with other nations such as Israel and Cyprus also making discoveries in recent years.

The Nile Delta Block operator Eni said the new discovery, achieved through the Nidoco NW-1 exploratory well, is located in 16 metres of water depth and is four kilometres north from the Nooros field discovered in July 2015.

The Nidoco NW-1 exploratory well discovered gas-bearing sands for a total thickness of 100 metres.

“In the Abu Madi formations a new level, which was not yet encountered in the Nooros field, has been crossed proving the high potential of the Great Nooros Area and the further extension of the gas potential to the North of the field,” explained the Italian company.

“The preliminary evaluation of the well results, considering the extension of the reservoir towards north and the dynamic behaviour of the field, together with the recent discoveries performed in the area, indicates that the Great Nooros Area gas in place can be estimated in excess of 4 Tcf,” stated Eni.

Eni said that together with its partner BP and in coordination with the Egyptian petroleum sector, it would begin screening the development options of this new discovery and available synergies with the area's existing infrastructure.

Eni holds a 75 percent stake in the license of Abu Madi West lease, while BP owns the remaining 25 percent stake.

The Italian company’s title of operator is in conjunction with Petrobel, an equal joint venture between Eni and the state company Egyptian General Petroleum Corp. (EGPC).

Eni signed a series of agreements in March 2020 with the government of Egypt and state-owned companies to re-open the nation’s Damietta LNG export plant east of Alexandria.

The plant, a joint venture called Segas, is 40 percent-owned by Eni through Union Fenosa Gas (50 percent Eni and 50 percent Naturgy).

The facility has a nameplate capacity of 5.5 million tonnes per annum of LNG, but has been idle since November 2012 when Egypt suffered natural gas shortages.

In addition to Damietta LNG, Egypt has a second export plant, the Idku facility operated by Royal Dutch Shell and which has been back in commercial operation since 2017.

Eni’s discovery of the huge Zohr gas field in the East Med in 2015 helped transform the Arab nation’s LNG and domestic gas fortunes.