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Small cap is targeting more than 100 million barrels of oil equivalent in Nile Delta

SDX Energy (SDX:AIM) 48.3p

Gain to date: 26.3%

Original entry point:  Buy at 38.23p, 2 February 2017

Our positive call on North African oil and gas producer SDX Energy (SDX:AIM) is already off to a positive start. It has now commenced drilling a well which could act as a further catalyst for the share price.

The SD-1X well on the South Disouq concession in Egypt’s Nile Delta is targeting up to 100 million barrels of oil equivalent. Results are expected within 45 days.

SDX ENERGY (LON) - Comparison Line Chart (Rebased to first)

SDX has a 55% interest and is fully carried on the drilling costs by its partner IPR.

The company’s focus is on low-cost and low-risk production growth but this exploration activity adds some fizz to the investment case.

The company has received a six-month extension from the Egyptian authorities to its first exploration period out to 19 September 2017. This will allow time to interpret the results of the well.

Broker Cantor Fitzgerald, which has a 78p price target on the stock, values SD-1X at 11.9p per share based on a 10% chance of success.

Despite recent strength in the shares they still trade on an ultra-low price-to-earnings ratio of 2.4 for the year to January 2018.

Keep buying at 48.3p. (TS)

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