At this point, production operations in Egypt have not been impacted however given the seriousness of COVID-19, this situation may be subject to change in the future.
In Egypt, SDX sells all of its gas directly to the Egyptian state to be used primarily for electricity generation. The Company does not expect that COVID-19 will cause any material disruption to this offtake arrangement.
Following the completion of the drilling campaigns in South Disouq, the majority of planned CAPEX for 2020 has been incurred, and discretion will be exercised when considering future capital allocation.
US$10.7 million at South Disouq which is for the drilling of two exploration wells (SD-6X: SDX 55% interest and SD-12X SDX 100% interest), the tie in costs for the successful SD-12X well to the CPF (SDX 100% interest), well workovers, CPF equipment spares and a deposit on the booster compressor planned for South Disouq in 2021.
Capex incurred as at 31 March 2020 represents the full costs of the non-commercial SD-6X well, partial costs of the SD-12X well which was drilling over the period end and some equipment spares for the CPF;
US$2.0 million for up to three appraisal/development wells in West Gharib;
US$2.0 million for up to 10 workovers in North West Gemsa. As the Company is expecting to exit the concession during 2020, it does not expect to incur the full amount of this CAPEX prior to exit.
As highlighted above, the Company has a strong liquidity position and the majority of its cash flows in 2020 and 2021 are expected to come from its fixed-price gas customers in Morocco and Egypt.