Edison Issues Initiation on SDX Energy (SDX)
Our analysis indicates the shares are supported by existing production. Successful re-invigoration at Meseda/NW Gemsa should lead to unlocking further (low-risk) value. Our core NAV of 41p/share includes risked value for the reinvigoration programme but could see further upside (to 56p/share) if the water flood programme is effective (not including risked exploration value at South Disouq). Value from any acquisition(s) will hinge on the size/price and possible upside of the targets, but SDX should be well placed to take part in consolidation within Egypt given the large number of opportunities in-country. Its policy of accepting payments in Egyptian pounds reduces payment risk and funds internal growth in the mid-term, but could limit potential for dividends/other corporate activity in the longer term.
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Edison Investment Research
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Edison Investment Research
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