SDX Energy announces gas discovery at LNB-1 well, Morocco

April 20, 2018

LONDON -- SDX Energy Inc. announced that a conventional natural gas discovery has been made at its LNB-1 exploration well on the Lalla Mimouna permit in Morocco (SDX 75 %).

The LNB-1 well was drilled to a total depth of 1,861 m. The primary target was in the Lafkerena sequence, where 300 m of gas bearing horizons were encountered in a significantly over-pressured section. The mudlog obtained through the section showed elevated gas readings of more than 20% with multiple sections above 50%. This section could not be logged using conventional methods due to hole conditions.

The gas shows in this section contained heavier hydrocarbon components throughout, which is indicative of a thermogenic hydrocarbon source rock. These types of shows have not been seen to date in other parts of the basin and indicate that a new petroleum system has been encountered in this area.

Based on the mudlog shows, reservoir quality information from the formation cuttings, analogue fields (outside the Gharb basin), and the size of the feature as currently mapped, a preliminary recoverable gas volume has been estimated by management.

This results in an un-risked mid-case volume of 10.2 Bscf of conventional natural gas and 55,000 bbl of condensate. This is significantly larger than the traps typically encountered in Sebou and would exceed the size required to justify development and connection to the existing infrastructure in the Sebou area.

Additionally in the secondary target, the Upper Dlalha, 2.6 m of net conventional natural gas pay sands were encountered with average porosity in the pay section of 33%. This pay section is similar to the Guebbas targets, from which SDX successfully produces on the Sebou permit.

The well is now being completed as a conventional gas producer in the Upper Dlalha with the deeper Lafkerena section being suspended until the appropriate equipment can be mobilized, to test and produce from this over-pressured section. The timetable to test this section has not been finalized and will be the subject of a future update.

The drilling rig will now move to the LMS-1 exploration well in the Lalla Mimouna Nord permit, which will be the last well of the current drilling campaign.

Paul Welch, President and CEO of SDX, commented, "We are very excited about the results of this exploration well. It was a higher risk exploration prospect than previous drilling in Sebou, as it was a sequence that had not been previously penetrated in a similar structural location. We had anticipated a higher-pressure section, based upon offset drilling in the area, but the actual pressures encountered, the thickness of the section, and the type and amount of shows significantly exceeded our expectations."

"We are currently in the early planning phases of determining how best to complete and test this section. The estimated volume potential is very encouraging and I look forward to updating the market further on our activities in due course. Meanwhile, we have one more exploration well to drill on the permit in this campaign and I am looking forward to some more positive results based upon our success in LNB-1."

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