London, UK, 19 July 2017

Edison issues outlook on SDX Energy (SDX)

SDX Energy is a North Africa-focused E&P with production in Egypt and Morocco. The company benefits from strong cash flow generation from its oil production (Egypt) and high value gas production in Morocco, which is being re-invested to increase production markedly in H217. The company added to its portfolio in early 2017 and continues to seek other opportunities. We have adjusted our valuation, which sees the core NAV increase to 55p/share (from 40p/share) but RENAV fall to 67p/share. With further success in exploration at South Disouq this could grow further.

We have adjusted our valuation to account for the success of the South Disouq well and the early development potential. The result is an increase in our core NAV (from 40p/share to 55p/share), but a reduction in our RENAV from 76p/share to 67p/share, as we now account for lower prospective gas resources at South Disouq than before following the July independent reserve report. Importantly for this junior E&P, the vast bulk of the value is backed by production and cash flows that will see imminent increases as the capital programme in H217 bears fruit.

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