SDX Energy advances strategic exit from Egypt with sale of West Gharib assets
SDX Energy has announced a major step in its strategic realignment with the execution of a binding sale and purchase agreement (SPA) for the disposal of its West Gharib interests in Egypt. The transaction, valued at approximately US$6.6 million, involves the sale of 50% stakes in both Brentford Oil Tools LLC and the Exploration and Production Sharing Agreement for West Gharib Blocks G and H. Additionally, SDX is advancing the sale of its South Disouq assets as part of its broader strategy to exit the Egyptian market entirely.
The assets included in the sale generated unaudited profits of $0.9 million for the year ending December 31, 2023. The buyers, New Horizons LLC and NPC Petroleum Services Ltd, will pay SDX a total of $6.6 million, subject to adjustments. The payment structure is set as follows: approximately $3.5 million in immediate cash, $0.9 million upon certain escrow deposit conditions, and $2.2 million contingent on further deposits and tax settlements. These transactions will facilitate SDX’s focus on expanding its operations in Morocco and its transition into renewable energy sectors.
This divestiture marks a pivotal development in SDX Energy’s efforts to concentrate on its profitable Moroccan operations, where it stands as the sole independent gas producer. The proceeds from this sale are earmarked for further development of its Moroccan assets, including enhancing the gas supply and expanding into gas transportation, gas-to-power projects, and renewable energy generation. Additionally, the funds will allow SDX to repay in full its secured reserves-based lending facility with the European Bank for Reconstruction and Development (EBRD).
Daniel Gould, Chief Executive Officer of SDX Energy, expressed optimism about the strategic realignment, stating, “The sale of our West Gharib assets represents a milestone in the execution of our new growth strategy in Morocco. SDX will continue to deliver shareholder value and growth – re-energising and scaling the Company’s Moroccan upstream business.” Gould also highlighted ongoing due diligence efforts as SDX explores further expansion into energy verticals.
SDX Energy’s decision to divest from Egyptian assets and refocus on Moroccan operations reflects a strategic pivot towards more sustainable and profitable ventures. This move not only capitalizes on the growing demand for energy in Morocco but also aligns with global shifts towards renewable resources, positioning SDX Energy for long-term growth and stability in the energy sector.