SDX Energy : 2022 Annual Results Report

SDX Energy Plc

2022 Annual Report & Financial Statements

Supplying energy in an environmentally conscious manner to the benefit of all our stakeholders

STRATEGIC REPORT

Our Highlights

The directors assess the performance of the Group across the below key performance indicators ("KPIs"). Our KPIs provide a balanced set of metrics that give emphasis to both financial and non-financial measures.

OperationalFinancial

3,723boe/d		US$33.2m
FY 2022 average entitlement production,		FY 2022 gross profit/Netback
net of minority interest

12 wells		US$24.6m
drilled and connected during 2022		FY 2022 EBITDAX

3.6kgCO2e/boe		US$27.6m
FY 2022 carbon intensity		FY 2022 CAPEX
at SDX's operated assets

• Net Production, 3,723 boe/d (507 bbls/d and 19.3mmscf/d), marginally ahead
  of mid-point full year guidance of 3,480 - 3,795 boe/d.
• Out of 14 wells completed across SDX's portfolio in the year to date, twelve were put on production during 2022.
• Carbon intensity of 3.6kg CO2e/boe at operated assets during FY 2022.
• Gross Profit / Netback of US$33.2 million, EBITDAX of US$24.6 million and operating cash flow (before capex) of US$16.9 million.
• Capex US$27.6 million compared to full year guidance of US$26.5 - 28.0 million.
• During the year a number of Board changes were announced. The Board is now led by Jay Bhattacherjee as Executive Chairmen, with his fellow directors being Tim Linacre and Krzysztof Zielicki.
• Aleph Commodities and a group of investors acquired a strategic stake in the Company with a view to provide support and financing for growth initiatives.
• As at 31 December 2022, the Company's working interest share of audited 2P reserves was 4.9 MMboe.

Strategic Report		Financial Statements
Chairman's Statement	01	Independent auditors' report	34
Review of Operations	02	Consolidated Balance Sheet	40
Group proved plus probable reserves and contingent resources	04	Consolidated Statement of Comprehensive Income	41
Environmental, Social and Governance (ESG)	05	Consolidated Statement of Changes in Equity	42
Financial Review	08	Consolidated Statement of Cash Flows	43
Principal Risks & Uncertainties	15	Notes to the Consolidated Financial Statements	44
Directors S.172 statement	16	Parent Company Balance Sheet	66
Payments to Governments	18	Parent Company Statement of Changes in Equity	67
		Notes to the Parent Company Financial Statements	68
Corporate Governance		Corporate Information	IBC
Statement of Corporate Governance	19
Directors' Report	21
QCA Code Compliance Disclosures	22
Remuneration Committee Report	28
Audit Committee Report	30
Reserves Committee Report	31
Nomination Committee Report	31
Statement of Directors' Responsibilities	32

STRATEGIC REPORT

Executive Chairman's Review

2022 was a busy year for the Company operationally and corporately. During the summer of 2022 the shareholders rejected a takeover attempt and the Company welcomed new shareholders to support the Company's growth.

SDX enters 2023 with a renewed focus on delivering long term sustainable returns to shareholders by pursuing opportunities both within and outside our current portfolio across the wider energy space.

During 2022, SDX welcomed Aleph Commodities Limited as a new shareholder during the unsuccessful takeover process by Tenaz. This change in our shareholder register was reflected in changes to the Board: Michael Doyle stepped down as Chairman in September 2022, Krzysztof Zielicki was appointed to the Board as Non-Executive Director, and I was appointed end of October as Chairman. Both Mark Reid CEO and Nick Box CFO left the business near the end of the year, drawing a fresh start for the new Executive team to deliver on growth initiatives that will create long term sustainable value.

Looking next to our operations, in February the Company sold 33% of its holding in South Disouq for US$5.5 million, leaving SDX with a remaining 36.9% holding in the concession. The planned three well drilling campaign was completed during the year, as well as a necessary workover programme on several existing wells. Our drilling campaign targeting liquids continued at West Gharib, with eight infill wells and one exploration well drilled in the year, as well as 18 well workovers completed at the concession. Both the infill and workover campaigns at West Gharib will continue into 2023 to maximise production and recovery from the Meseda and Rabul fields.

While our Egyptian assets continue to produce, Egypt remains a difficult environment for energy companies with currency fluctuations and receivables positions posing challenges that have hampered growth. Historically, the cash generated by our Egyptian assets have funded the initiatives of SDX, and now with the flow of capital restricted due to a fiscal environment outside of our control, the Company is having to find alternative solutions to fund its growth initiatives. This is a key focus of the Board's in 2023 and shareholders will be updated in due course on our efforts to find a solution which maximises shareholder value and minimises our risk exposure.

STRATEGIC REPORT

In Morocco, SDX drilled two new wells which were put into production during the year and the Company is currently maximising recovery from our existing wells to maintain customer supply. We expect to look to an expanded drilling programme later in 2023 to continue to meet existing demand and to produce to meet any increase or additional customer. Morocco remains a core piece of the portfolio and as the country's only gas producer, we maintain an opportunity to grow into a market that is hungry for every molecule of gas we can produce.

The changes made in 2022 and the ongoing modifications we make as part of our strategic review have positioned SDX with a foundation from which to grow. We are revaluating our standing in the wider energy sector and will consider all reasonable avenues, including transition fuels and alternative energies, to deliver long term sustainable returns to shareholders. As we look ahead to 2023, the Board remains vigilant in its responsibility in the interests of shareholders, employees, and society. Thank you to everyone for your support for SDX in 2022.

Jay Bhattacherjee

Executive Chairman

28 April 2023

SDX Energy Plc / 2022 Annual Report & Financial Statements / 01

STRATEGIC REPORT

Review of Operations

SOUTH DISOUQ

South Disouq is a 115km2 concession located 65km north of Cairo in the Nile Delta region. It is on trend with several other prolific gas fields in the Abu Madi Formation.

Development leases have been granted for South Disouq (18km2), Ibn Yunus (24km2), and Ibn Yunus North (32km2), and all development leases are operated by SDX. Production is currently from the Messinian-aged Abu Madi and Pliocene-aged Kafr El Sheikh formations. In addition, SDX operates the Amendment Concession Agreement Area, which is an exploration permit of 41km2.

At the start of the year, SDX held a 55% interest in the South Disouq and Ibn Yunus development leases and a 100% interest in the Ibn Yunus North development lease. Its partner, IPR, holds a 45% interest in the South Disouq and Ibn Yunus development leases. In February 2022, it was announced that SDX sold 33% of the shares in the entity that holds its interests across its South Disouq concession to Energy Flow Global ("EFG"), a private company with upstream and oilfield services activities in Egypt, the Middle East and Asia. After this transaction, SDX Energy has a 36.9% working interest in the South Disouq and Ibn Yunus development leases and a 67.0% working interest in the Ibn Yunus North development lease.

2022 Activity

Throughout 2022, planned field management operations were carried out on several of the existing wells. SD-3X was worked-over to replace corroded / eroded tubing and packer and returned to production from the AM-III reservoir. IY-2X was worked-over to isolate the bottom perforations and perforate the upper reservoir section. Throughout 2022, the Central Processing Facility showed excellent performance with a 99% uptime.

The planned three well drilling campaign was completed during the year. The first of the wells, the SD-5X exploration well on the Warda prospect, spud on 4 March 2022 and reached TD on 16 March 2022. SD-5X encountered gas in the basal Kafr El Sheikh formation and was tied-in and brought on production on 26 April 2022. SD-5X is currently producing at around 10 MMscf/d. The second well in the campaign was the SD-

12_East development well, targeting the Kafr El Sheikh gas reservoir in the Sobhi Field within the Ibn Yunus North development lease, spud on 17 April 2022 and reached TD on 26 April 2022. SD-12_East was tied-in and brought on production on 11 June 2022 and is currently producing at around 7 MMscf/d. The third well, MA-1X, was an exploration well on the Mohsen prospect in the Amendment Concession Agreement Area. MA-1X spud on 21 May 2022 and reached TD on 31 May 2022 discovering gas in high-quality basal Kafr El Sheikh formation. The Mohsen field is currently under evaluation to determine future development options.

With the drilling campaign now complete, SDX is working on updating its plans for future drilling and identifying remaining targets in the acreage. The SD-12X well is currently shut-in as this well shares a flow-line with the SD-12_East well and the higher pressure is backing-outSD-12X. Once the pressure equilibrates, SD-12X will be brought back on-line.

SD-1X has been producing intermittently since July 2022 and IY-2X has been shut-in since August 2022 waiting on workover to take place in Q2 2023.

Production operations at the asset ended up in the expected range during the 12 months to 31 December 2022, resulting in gross production of 38.5 MMscfe/d for the year (2,720 boe/d net to SDX).

2023 Outlook

The primary work in 2023 will be around finalising the analysis of the MA- 1X well on Mohsen and defining when and where to drill appraisal wells on the discovery. Workovers of the existing wells will continue, with the wells being recompleted to shallower reservoirs as the main reservoir becomes fully depleted.

WEST GHARIB

West Gharib is 22km2 in area and is currently producing from the Meseda and Rabul fields, both of which are included in the Block-H development lease. The concession is covered by a production service agreement, which allows for lower cost operations than the traditional joint venture structure. SDX has a 50% working interest in the operation, with Dublin International Petroleum, the operator, holding the remaining 50% working interest.

The Meseda field produces 18o API oil from the high-quality Miocene- aged Asl sands of the Rudeis formation. The Rabul field produces 16o API oil from the Miocene-aged Yusr and Bakr sands, which are also part of the Rudeis formation.

In 2021, a 10-year extension for both Meseda and Rabul was agreed with GPC, extending the licence to 9 November 2031. As part of the agreement, the contractors have a minimum commitment to drill six infill development wells (four in Meseda and two in Rabul) and one water- injection well in Rabul by 31 December 2022, and up to another six wells across the concession depending on the prevailing oil price. To take advantage of low drilling costs and the current oil price environment, however, the partnership planned to drill 13 infill development wells through 2022 and into 2023.

2022 Activity

Much of the activity in the West Gharib concession during 2022 was centred around the aforementioned infill drilling campaign. During 2022, eight infill wells and one exploration well (Rabul Deep-1) were drilled. The Rabul Deep-1 well was a dry-hole but is waiting on workover to convert it to a water-injector for the Rabul Field.

Eighteen well workovers across the concession were completed during 2022.

For 2022, West Gharib average gross sales production stood at approximately 2,033 boe/d (389 boe/d net to SDX).

2023 Outlook

The infill campaign will continue in 2023, with two infill development wells in the Rabul Field and an exploration well in the area to the south-east of Rabul. The goal of the development campaign is to fully exploit the volumes in the West Gharib fields. Post these three planned wells, the partnership will review the results of all the drilling and consider additional development wells.

Workovers of the existing wells will continue throughout 2023 to maximise production and recovery from the Meseda and Rabul Fields.

02 / SDX Energy Plc / 2022 Annual Report & Financial Statements

STRATEGIC REPORT

Review of Operations continued

MOROCCO

The Company's Moroccan acreage (SDX 75% working interest and operator) consists of four concessions. All SDX's concessions are in the Gharb Basin in northern Morocco: Sebou Central, Gharb Occidental, Lalla Mimouna Sud, and Moulay Bouchta Ouest.

The Sebou Central concession is a 132km2 exploration permit with several exploitation concessions contained within it. The exploitation concessions granted under the Sebou Onshore Petroleum Agreement are:

• Sidi Al Harati SW, expiry 20 September 2023
• Ksiri Central, expiry 18 January 2025
• Sidi Al Harati W, expiry 17 October 2024

The Gharb Occidental concession is an 806km2 exploration permit with numerous prospects and leads already identified on the existing 3D seismic, which covers the southern part of the permit.

The Company has held the Lalla Mimouna Sud permit since February 2019. This permit has a duration of eight years, with a commitment to drill one exploration well and acquire 50km2 of 3D seismic within the first two- and-a-half-year period, which has been met, and started on 14 March 2019. In August 2021, the Company requested a force majeure extension of this period to September 2022 which was agreed with The Ministry of Energy with the support of ONHYM. In September 2022, Mimouna Sud, and Moulay Bouchta Ouest.

In September 2021, according to the regulations governing Petroleum Agreements, SDX relinquished 25% of the original Sebou Central acreage and entered into the extension period of 2.5 years. The Lalla Mimouna Sud concession is now a 629.9km2 permit.

The Company was awarded the Moulay Bouchta Ouest exploration concession in February 2019 for a period of eight years. The commitment to reprocess 150km2 of 2D seismic data, acquire 100km2 of new 3D seismic, and drill one exploration well within the first three-and-a-half-year period, started on 14 March 2019. SDX, with support from ONHYM, has requested a one-year force majeure extension to the permit, which is currently under review with the Ministry of Energy.

2022 Activity

During 2022, five wells were worked-over to known gas bearing horizons in the wells to maximise recovery from our wells and to maintain supply to customers. The two compressors SDX operates in Morocco have also been actively managed maximising recovery from existing wells.

During the summer/autumn of 2022, the Company completed a two well drilling campaign. The campaign consisted of the following wells:

• SAK-1spud on 6 August 2022 and reached TD at 1,196 metres MD on 24 August 2022. The well encountered two gas bearing sands at the Guebbas interval, totalling 5m of net gas pay. The well opens up a new exploration area for SDX and completed the drilling commitment for the first phase of the Lalla Mimouna Sud permit.
• KSR-20spud on 12 September 2022 and reached TD at 1,410 metres MD on 1 October 2022. In the Guebbas reservoir, the well encountered around 5 m net gas sand pay.

Both wells have been tested, connected, and are now producing into our infrastructure.

Morocco gross production averaged 4.9 MMscf/d for 2022.

2023 Outlook

Planning has started on further 2023 drilling, which will likely consist of four wells to be drilled from Q3 2023 onwards. Some of the wells will target low-risk prospects and some will target new areas, expanding the development footprint, or with be targeting new plays. All the wells will be shallow targets with biogenic gas. Gas from these wells will supply the existing customers and an additional factory that has been constructed by one of those existing customers.

Workovers of existing wells, including re-perforation and sliding sleeve operations to exploit behind-pipe reserves, will continue throughout 2023. In addition, the two compressors will be actively managed to deliver the maximum recovery from the existing well stock.

In partnership with ONHYM, SDX will be reviewing older wells that were gas discoveries but were not produced (e.g., DOB-1) and wells that were produced but have remaining gas, for the potential to connect these wells and maximise gas recovery.

STRATEGIC REPORT

SDX Energy Plc / 2022 Annual Report & Financial Statements / 03