SFX Energy provides update on drilling operations in Morocco and Egypt

Both the Upper and Lower Guebbas targets in OYF-2 were encountered and reservoir thickness and quality were better than pre-drill expectations. The Upper Guebbas was encountered at a measured depth of 1001 m, while the Lower Guebbas was penetrated at a measured depth of 1120 m.

Management estimates that approximately 1.3 to 1.9 billion ft³ of gas is recoverable from the horizons encountered by the OYF-2 well, which will be tested in February. The discovery will be tied into the Company's infrastructure when required, at an estimated cost of approximately US$2 million net to SDX. Furthermore, the discovery has de-risked a further 0.5 to 1 billion ft3 of Prospective Resources2 in the western compartment of the Lower Guebbas target which the company expects to recover with a single development well in the future.

The rig has now moved to the BMK-1 location, which is approximately 11 km to the north of OYF-2. BMK-1 will again test the extent of the northern expansion of the company's core productive area and, if successful, could de-risk a number of similar close-by prospects. After BMK-1, one more close to infrastructure well and two other potentially play-opening wells in Lalla Mimouna will be drilled to complete the campaign in March.

Egypt

South Disouq (SDX Working Interest 55%)

Preparations continue at South Disouq for two exploration wells targeting gross unrisked P50 volumes of up to 104 billion ft3 from the same horizons encountered in the company's four discoveries to date. The first well, Salah, which is expected to spud in mid/late February and complete in April 2020, is targeting a gross unrisked P50 prospect of 71 billion ft3 e (company estimate). The second well, Sobhi, which is expected to spud in late April/early May and complete in early June, is targeting a gross unrisked P50 prospect of 33 billion ft3 e (company estimate). If successful, these two wells would require short, 8 kilometre and 5.8 kilometre, tie-ins to the South Disouq Central Processing Facility with SDX's share of the tie-in cost estimated at US$2.5 million and US$1.9 million respectively.

West Gharib (SDX Working Interest 50%)

In early February the company is planning to spud an appraisal/development well in the Rabul area of its West Gharib concession. If successful, this well could add approximately gross 200 – 300 bpd of production.

Mark Reid, CEO of SDX, commented: "We have a particularly busy year ahead with the drill bit, giving us the opportunity to increase significantly the Company's reserves life. OYF-2 in Morocco is a very positive start, a discovery which is larger than pre drill expectations, and confirmation that our core productive area extends to the north. With the planned follow on development well, we now have the potential to increase our total reserves in Morocco to approximately three to four years of customer demand with our gas being sold under five and ten year fixed priced contracts at an average gas price of circa US$11/mcf.

With the imminent commencement of drilling campaigns in South Disouq and West Gharib in Egypt, together with the ongoing drilling campaign in Morocco, we have a very busy period of activity ahead of us with three rigs drilling simultaneously. I look forward to providing further updates on these campaigns in due course."

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