SDX company announced that it has received the final approval from the Egyptian authorities to extend its Production Services Agreement (PSA) for oil production from Meseda and Rabul oil fields in West Gharib concession until 2031, according to a statement on SDX website.
The terms of the extension include drilling six development wells by the end of December 2022 in addition to one water injection well.
The extension resolution also provided if oil price reaches $55 for 12 consecutive months during the extension period, the company should drill four further development wells, and if the oil price reaches $60 for 12 consecutive months during the extension period, the company will drill more two development wells.
On the other hand, the Egyptian authority required the company to pay a deferred signature bonus of $2 million, half of which will be paid in monthly installments in the next 12 months while the remaining $1 million will be paid in two installments of $0.5 million each, on 31 December 2022 and 31 December 2023.
On this occasion, Mark Reid, CEO of SDX, said “We are very pleased to have secured this ten-year extension to the Production Services Agreement which we estimate increases SDX’s share of reserves in our core West Gharib oil asset, certified at 2.2 million barrels in our 31 December 2019 CPR, by 60%. With a breakeven price of approximately $20 Brent and to take advantage of the current strong oil price.”
“We plan to commence in Q2 of this year, a drilling program of up to twelve wells over the next three years with the goal of growing gross production back to around 3,000bbl/d. This drilling program is in line with the capex guidance provided to the Market in our 26th January 2021 update.” added Reid