SDX Energy AIM:SDX Stock Report

Tenaz Energy Corp. (TSX:TNZ) reached an agreement to acquire SDX Energy plc (AIM:SDX) from a group of shareholders for £21 million.

Tenaz Energy Corp. (TSX:TNZ) reached an agreement to acquire SDX Energy plc (AIM:SDX) from a group of shareholders for £21 million on May 25, 2022. The Combination is to be implemented by means of a court-sanctioned scheme of arrangement. In the Transaction, SDX shareholders will receive 0.075 common shares of Tenaz for each SDX share held. Following completion of the Transaction, existing Tenaz Shareholders will own approximately 64% of the issued and outstanding shares of the combined company, and existing SDX Shareholders will own approximately 36%. On the Effective Date, SDX will become a wholly owned subsidiary of Tenaz. Upon Completion, the Combined Group will be called Tenaz Energy, headquartered in Calgary, Alberta, Canada and listed on the TSX. As part of the Transaction, Tenaz has invited two independent SDX Directors to join the board of directors of Tenaz. These Independent Directors are Michael Doyle and Catherine Stalker. Each of Marty Proctor, Anna Alderson, John Chambers, Mark Rollins, and Anthony Marino will form the remainder of the Tenaz Board as existing Tenaz Directors. It is expected that the SDX Directors will step down from the SDX Board upon Completion. The Tenaz Board has given assurances to the SDX Directors that, following the Combination becoming or being declared unconditional in all respects, the existing employment rights, including pension rights, of all employees of the SDX Group will be fully safeguarded. SDX intends to seek the cancellation of the trading of SDX Shares on AIM shortly following the Effective Date. Completion of the Transaction is subject to a number of conditions and approvals including, but not limited to, the approval of the TSX, the governments of Egypt and Morocco, approval being granted by TSX for the New Tenaz Shares to be listed for trading on TSX, the Competition Council of the Kingdom of Morocco granting relevant anti-trust clearance, approval of shareholders of Tenaz, general third party clearances and approval of at least 75% shareholders of SDX. The Combination will be conditional upon the Scheme becoming unconditional. It is expected that Tenaz will hold a shareholder meeting to approve the Transaction in late June or early July, with SDX expected to hold a shareholder meeting to approve the Transaction in July. Tenaz Board has unanimously determined that the Transaction is in the best interests of Tenaz and the Tenaz shareholders, and unanimously recommends that Tenaz shareholders vote in favour of the Transaction. SDX Directors intend to unanimously recommend the Transaction to SDX shareholders. The SDX Directors have irrevocably undertaken to vote in favour of the Transaction in respect of their own beneficial holdings (and the beneficial holdings which are under their control) of 5,020,606 SDX Shares representing, in aggregate, approximately 2.5% of SDX’s issued ordinary share capital. Tenaz Directors who are interested in Tenaz Shares, and certain Tenaz officers, have irrevocably undertaken to vote in favour of the Transaction in respect of their own beneficial holdings (and the beneficial holdings which are under their control) of 2,347,075 Tenaz Shares representing, in aggregate, approximately 8.25% of Tenaz's issued common shares. Closing of the Transaction is expected late July or early August following shareholder approvals. The Scheme is expected to be effective in April 2023, subject to satisfaction or (where applicable) waiver of the Conditions and certain further terms. The Transaction is 141% accretive to Tenaz on production per share based on the mid-points of 2022 production guidance for each of Tenaz and SDX. Henrik Persson and Charlie Beeson of finnCap Ltd acted as financial advisors and Torys LLP and Watson, Farley & Williams LLP acted as legal advisors to Tenaz Energy Corp. James McEwen of N M Rothschild & Sons Limited and Callum Stewart of Stifel Nicolaus Europe Limited acted as financial advisors and Blake, Cassels & Graydon LLP and Bryan Cave Leighton Paisner LLP acted as legal advisors to SDX Energy plc. N M Rothschild & Sons Limited also acted as fairness opinion provider to the board of SDX Energy plc. Link Group acted as registrar in the transaction.

SDX Energy Plc Announces Spudding of the MSD-24 Infill Development Well on the Meseda Field

SDX Energy Plc announced the spudding of the MSD-24 infill development well on the Meseda field. This well is the fourth in a fully funded 13-well development drilling campaign on the Meseda and Rabul oil fields in the West Gharib concession in the Egyptian Eastern Desert. The campaign is aimed at growing production to c.3,500 - 4,000bbl/d by early 2023. The MSD-24 infill development well on the Meseda Field (SDX: 50% working interest) spud on 15 May 2022 and is targeting the Asl Formation reservoir at approximately 3,300ft TVDSS. It is estimated that the well will take around six weeks to drill, complete and tie-in to the existing infrastructure. MSD-24, with an expected cost to drill and tie in of $0.9-$1.0 million (gross), is anticipated to come on-line and produce at around 300bbl/d (gross), which would immediately contribute to Group cashflow and result in a payback period of five to six months at current oil prices. The Company expects to update the market on its result in mid-June. The first two wells in the campaign, MSD-21 and MSD-25, have been successfully tied-in and are contributing to production. Operations at the MSD-20 well have been slower than expected due to the performance of the rig that was being used on this well. This rig has now been permanently replaced and the Company is confident of improved and accelerated performance in the campaign going forward. It is hoped that results from MSD-20 will be available in the next three to four weeks.

SDX Energy plc, Annual General Meeting, Jun 14, 2022

SDX Energy plc, Annual General Meeting, Jun 14, 2022, at 09:00 Coordinated Universal Time. Location: Holiday Inn London - Oxford Circus, 57-59 Welbeck Street London United Kingdom Agenda: To consider board changes.

SDX Energy plc, Annual General Meeting, Jun 14, 2022