RABAT, July 10 (Reuters) - North Africa-focused oil and gas company SDX Energy, expects its revenues from Morocco to quadruple in the next three years as it expands gas production, its CEO said.
SDX Energy produces 6 million standard cubic feet (MMSCF) of gas a day in Morocco, piping supplies to industrial clients in the city of Kenitra and generating revenue of $12.4 million in 2017, according to its financial statements.
It plans to raise that to 8-10 MMSCF a day by the end of this year, eventually increasing output to the pipeline’s full capacity of 24 MMSCF, CEO Paul Welch said.
The company, which also operates in Egypt, has invested $30 million in a drilling project in Morocco that was concluded in May, with seven out of nine wells successful.
“In Morocco we will see revenues increase by four times over the next three years,” Welch told Reuters by phone.
“We (SDX Morocco) will likely start making small profits in 2019,” he said, adding that the company was more focused on growing its business than distributing cash to shareholders.
“At the moment, we are focusing on investing in infrastructure to connect customers to our pipeline and increase production.”
With no plans to invest in additional drilling in Morocco this year, SDX Energy will spend $6.5 million on a 3D seismic geological survey that aims to boost the chance of successful wells in the future, he said.
The company is already providing gas to industrial clients in Kenitra, and sees growth potential in the city’s ceramic industry as well as a Peugeot plant and spare part manufacturers that supply it.
SDX Energy sells biogenic gas that is “much more competitive than the fuel used by local industrials,” Welch said.
The company has a 75 percent stake in the Lalla Mimouna, Sebou, Gharb Centre concessions. The Moroccan National Office of Hydrocarbons and Mines (ONHYM) holds the remaining 25 percent stake in the projects. (Editing by Aidan Lewis and Susan Fenton)