SDX Energy Inc. - Admission to AIM and First Day of Dealings

LONDON, England, May 20, 2016 /CNW/ - SDX Energy Inc. ("SDX" or the "Company") (TSX-V / AIM: SDX), an oil & gas exploration and production company with assets in Egypt & Cameroon, is pleased to announce that admission of its ordinary shares to trading on the AIM market ("AIM") of the London Stock Exchange will take place and dealings will commence at 8.00am today. The Company's ticker is "SDX".

The Company successfully raised approximately £7.6 million (approximately US$11 million) through a placing and subscription (the "Placement") of 42,201,835 common shares in the capital of the Company (the "Placement Shares") at 18 pence (C$0.33) per Placing Share.  3,910,000 of the Placement Shares ("Conditional Placement Shares") have been placed conditionally upon the filing by one of the investors with the TSX Venture Exchange (the "TSX-V") of a Personal Information Form (as defined in the policies of the TSX-V) and the receipt from the TSX-V of final acceptance of the subscription for the Conditional Placement Shares. Such filing and acceptance are required under the policies of the TSX-V because the investor will become an Insider (as defined in the policies of the TSX-V) upon the subscription for the Conditional Placement Shares. As at 20 May 2016, this condition has not been satisfied and the Conditional Placement Shares have not been issued and allotted.

For the purposes of the Disclosure and Transparency Rules, the total number of voting rights in the Company with effect from 20 May 2016 will be 75,933,902. This figure may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or a change of their interest in, the Company under the FCA's Disclosure and Transparency Rules.

Cantor Fitzgerald Europe is Nominated Adviser and Joint Broker and FirstEnergy Capital LLP is Joint Broker.

COMPANY HIGHLIGHTS

• SDX is a UK based, Egypt focused oil and gas company with a dual listing on TSX-V and AIM.
• SDX's portfolio consists of two production concessions onshore Egypt, and exploration and development licences in Egypt and Cameroon.
• SDX reported net production of 1,519 boepd in 2015.
• Independent audit confirmed 2P Reserves net to SDX of 7.34MMboe (North West Gemsa and Meseda) and gross Mean Prospective Resources of 585 bcf (322 bcf net to SDX) at South Disouq.
• SDX benefits from high margin production capable of generating positive cash flow down to US$15/bbl Brent.
• Active work programme in 2016 consisting of workover and development drilling and a carried exploration well.
• Near-term strategy to ramp-up production through a workover programme on the Meseda concession.
• SDX has a stable financial position with no debt, positive cash flows and a fully covered work programme.

Commenting on today's announcement, SDX CEO Paul Welch said:

"Our admission to AIM is a significant milestone and represents another transformational event for the Company following the creation of SDX Energy through our merger in October 2015.   

We believe that AIM will provide a supportive platform to help us achieve our ambitious growth objectives. The new funds raised will enable us to significantly increase production in Meseda, our resilient, high-margin producing asset and also complete the work program on South Disouq, our high impact exploration opportunity in Egypt.  We believe that we are uniquely placed to thrive in this low oil price environment and look forward to the next chapter in our story with confidence."

ABOUT SDX

SDX is an international oil and gas exploration, production and development company, headquartered in London, England, UK, with a principal focus on Egypt. In Egypt, SDX has an interest in two production concessions: NW Gemsa and West Gharib (Meseda) both located in the Eastern Desert. SDX's portfolio also consists of South Ramadan, a development asset in the Gulf of Suez; South Disouq, an exploration asset in the Nile Delta; and Bakassi West, an exploration block in Cameroon within the prolific Niger Delta Basin. For further information please see the website of the Company at www.sdxenergy.com or the Company's filed documents at www.sedar.com.

REGULATORY INFORMATION

Ingalls & Snyder LLC ("Ingalls"), an existing significant shareholder of the Company, has subscribed for 5,750,000 Placement Shares and, upon completion of the Placement, owns an aggregate of 11,544,902 common shares in the capital of the Company, representing approximately 14.46% of issued and outstanding common shares of the Company (assuming issuance of the Conditional Placement Shares).

In addition, certain directors and officers have subscribed for an aggregate of 1,793,889 Placement Shares.

Ingalls is a "related party" to the Company under Multilateral Instrument 61-101- Protection of Minority Security Holders in Special Transactions ("MI 61-101") by virtue of its existing shareholding being in excess of 10%.  Accordingly, the Placement is a "related party transaction" under MI 61-101.  The Placement is exempt from (i) the formal valuation requirements under Section 5.4 of MI 61-101 pursuant to Subsection 5.5(g) of MI 61-101 and (ii) the minority approval requirements under Section 5.6 of MI 61-101 pursuant to Subsection 5.7(1)(e) of MI 61-101 because the board of directors of the Company, acting in good faith, has determined, and at least two-thirds of the Company's independent directors, acting in good faith, have determined, that the Company is in serious financial difficulty, that the Placement is designed to improve the Company's financial position and that the terms of the Placement are reasonable in the Company's circumstances.

DIRECTORS

Michael Doyle - Non-Executive Chairman

Michael Doyle is a Professional Geophysicist and Certified Corporate Director (ICD.D) with over 40 years of wide-ranging experience in the finance and development of international energy and resource projects. Mr. Doyle is a principal of privately-held CanPetro International Ltd. He is also a director or officer of a number of companies, principally in the petroleum sector. His previous experience includes acting as Chairman of NYSE listed Equal Energy, and as principal and Chief Executive of Petrel Robertson Ltd. where he was responsible for providing advice and project management to clients in Canada and numerous other parts of the globe. Mr. Doyle was a founding director and Chairman of SDX predecessor company, Madison Petrogas, from its inception in 2003.

Paul Welch - President, Chief Executive Officer and Director

Mr Welch is an international energy executive with over 25 years of industry experience having worked for Shell Oil Company and several large independents including Hunt Oil Company, Pioneer Natural Resources and most recently as CEO of AIM listed explorer Chariot Oil and Gas. Mr Welch graduated from the Colorado School of Mines with both a Bachelor and Master's degrees in Petroleum Engineering. He also holds an MBA in Finance from the Southern Methodist University in Dallas, Texas. Mr Welch was appointed CEO of Sea Dragon Energy in April 2013 and became a CEO of SDX Energy following the merger with Madison PetroGas in October 2015.

David Mitchell - Director

Mr. Mitchell, aged 63, is a successful oil and gas executive with more than 35 years proven track record in the International arena, including with BP and Nexen. During this time, Mr. Mitchell discovered and built projects with his teams in the Middle East, West Africa, Latin America and the North Sea. He has lived and worked in a number of countries including a year with BP Egypt. Mr. Mitchell received his BSc Honours Geology from the University of London and his MPhil Mining Engineering from the University of Nottingham, UK. Mr. Mitchell was appointed CEO of Madison PetroGas on joining in 2008, building the company prior to the merger with Sea Dragon Energy in 2015.

David Richards - Director

Mr Richards is a Fellow of the Institute of Chartered Accountants of Alberta. He founded Network Capital Inc., a successful Calgary based investment management company focused on private equity, in 1997 and currently serves there as Managing Director.  Mr Richards formerly served as a senior tax partner with both PricewaterhouseCoopers and Arthur Andersen and Co. He is a Past President of the Alberta Chamber of Commerce and a past Vice President of the Calgary Chamber of Commerce. Mr Richards is currently a director of Parkbridge Lifestyle Communities Inc. and a director of Realex Properties Corp. Previously public board experience includes Boardwalk Equities, Alliance Atlantis Movie Distribution Income Fund, Forte Energy and Bonnetts Energy Services Trust.

Barrie Wright – Director

Mr Wright is the CEO of Sea NG Corporation. He has 30 years of experience that covers all aspects of exploration, production and management in the oil and gas business throughout Western Canada. Mr Wright has built several successful oil and gas companies including Boundary Creek and Coyote Creek.  He has extensive contacts in the Canadian, US and Far East financial communities. Mr Wright graduated from Queens University with a BSc Honours, Applied Science-Geophysics.

Paul Moase - Director

Mr. Moase has had more than 25 years' experience in the Financial and Capital Markets. Currently an independent consultant he was formerly the Managing Director to MGI Securities in Toronto responsible for Capital Markets. Prior to this he was with HSBC Securities as Managing Director Investment Banking and Mergers and Acquisitions as well as a number of other senior executive positions with other large investment and brokerage firms. Mr. Moase holds an MBA from University of Western Ontario (1987) and a Bachelor of Commerce from Mount Allison University (1981).

DISCLOSURE OF SIGNIFICANT INTERESTS IN SHARES

When acquiring Common Shares in the Company, shareholders are entitled under Canadian securities laws to categorise themselves as "objecting" ("Obos") or "non-objecting" ("Nobos"). By registering as such, which they usually do through the entity through which they acquired their Common Shares, Obos are noting that they object to their interest and their details being disclosed to the Company, up to ten per cent. at which level Canadian securities law makes disclosure mandatory. Nobos on the other hand are noting the fact that they do not object to their shareholdings and their details being disclosed to the Company.

Rule 17 of the AIM Rules requires, inter alia, that shareholders notify an AIM listed company once their holding is three per cent. or more, and changes thereto (movements through a percentage point upwards or downwards).

The Company has agreed with Cantor Fitzgerald that it will put a resolution to its Shareholders at the next annual general meeting (anticipated to be held in July 2016) to change the Company's constitution and require that Shareholders holding three per cent. or more of the Company's Common Shares notify the Company thereof and of subsequent changes thereto. In the interim, Shareholders are requested to notify the Company in accordance with Rule 17 of the AIM Rules.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this press release constitute "forward-looking statements" as such term is used in applicable Canadian and US securities laws. These statements relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. In particular, statements concerning the 2016 drilling and capital expenditure programs of the NW Gemsa, Meseda and South Disouq Concessions and the results referenced or implied herein should be viewed as forward-looking statements.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or are not statements of historical fact and should be viewed as "forward-looking statements". All reserves and resources information contained herein should be considered as forward looking statements. Such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such risks and other factors include, among others, costs and timing of exploration and production development, availability of capital to fund exploration and development and political, social and other risks inherent in carrying on business in Egypt and Cameroon. There can be no assurance that such statements will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements contained in this news release.

Forward-looking statements are made based on management's beliefs, estimates and opinions on the date the statements are made and the Company undertakes no obligation to update forward-looking statements and if these beliefs, estimates and opinions or other circumstances should change, except as required by applicable law. Although SDX has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. Investors are cautioned that such forward-looking statements involve risks and uncertainties. Actual results may differ materially from those currently anticipated. SDX's Annual Information Form for the year ended December 31, 2015, filed on the Company's SEDAR profile on April 29, 2016, has a full description of the risks and uncertainties associated with the Company's business, including its exploration activities and these risk factors and uncertainties should be referred to and read in their entirety. The forward-looking statements contained herein are expressly qualified by this cautionary statement.

Reserves and Resources Data

The determination of oil and natural gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. Categories of proved, probable and possible reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgment combined with geological and engineering knowledge to assess whether or not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk,  probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions.

The recovery and reserve estimates of oil reserves provided herein are estimates only. Actual reserves may be greater than or less than the estimates provided herein.

Terms related to reserves classifications referred to herein are based on definitions and guidelines in the Canadian Oil and Gas Evaluation Handbook ("COGE Handbook") and are in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.

"Proved reserves" are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

"Probable reserves" are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Possible Reserves" are those additional reserves that are less certain to be recovered than probable reserves. It is unlikely that the actual remaining quantities recovered will exceed the sum of the estimated proved plus probable plus possible reserves.

The qualitative certainty levels referred to in the definitions above are applicable to "individual reserves entities", which refers to the lowest level at which reserves calculations are performed, and to "reported reserves", which refers to the highest level sum of individual entity estimates for which reserves estimates are presented. Reported reserves should target the following levels of certainty under a specific set of economic conditions:

• at least a 90 percent probability that the quantities actually recovered will equal or exceed the estimated proved reserves. This category of reserves can also be denoted as 1P;
• at least a 50 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves. This category of reserves can also be denoted as 2P; and
• at least a 10 percent probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable plus possible reserves. This category of reserves can also be denoted as 3P.

Additional clarification of certainty levels associated with reserves estimates and the effect of aggregation is provided in the COGE Handbook. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties, due to the effects of aggregation.

Use of the term "boe" may be misleading, particularly if used in isolation. A "boe" conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Certain volumes provided in this news release represent a pro forma arithmetic sum of multiple estimates of proved plus probable reserves, which statistical principles indicate may be misleading as to volumes that may actually be recovered. Readers should give attention to the estimates of individual classes of reserves and appreciate the differing probabilities of recovery associated with each class as explained in the annual oil and gas disclosure filings of SDX (available on www.sedar.com) and the effects of arithmetic aggregation. Factors that could affect the accuracy of the reported pro forma aggregated reserves estimates include company level differences in evaluation effective dates, reservoir characteristics and pricing assumptions.

Reserves information in this press release are based on the independent reserves and resources evaluation of DeGolyer and MacNaughton (the "DeGolyer and MacNaughton Report"), dated December 31, 2015, evaluating SDX's crude oil, natural gas liquids and natural gas reserves and resources between January 1, 2015 and December 31, 2015.

Resources are petroleum quantities that originally existed on or within the earth's crust in naturally occurring accumulations, including discovered and undiscovered (recoverable and unrecoverable) plus quantities already produced. Total resources is equivalent to total petroleum initially-in-place.

"Contingent Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies.

"Prospective Resources" are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Resources information in this press release is based on the DeGolyer and MacNaughton Report.

SOURCE SDX Energy Inc.

SDX Energy Inc.: Paul Welch, President and Chief Executive Officer, Tel: [phone]; Mark Reid, Chief Financial Officer, Tel: [phone]; Cantor Fitzgerald Europe (Nominated Adviser & Joint Broker): Sarah Wharry/Craig Francis, Tel: [phone]; FirstEnergy Capital LLP (Joint Broker): Jonathan Wright/David van Erp, Tel: [phone]; Buchanan (PR): Ben Romney/Madeleine Seacombe, Tel: [phone]