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A conventional natural gas discovery has been made at SDX Energy Inc.'s (SDX.V) LMS-1 exploration well on the Lalla Mimouna permit in Morocco (SDX 75 per cent).

The LMS-1 well was drilled to a total depth of 1,158 metres. The primary target was in the H-9 sequence which is a Miocene-aged shallow marine deposit that had not been previously tested in the area. The well encountered 16.4 metres of net conventional gas pay sands which had an average porosity of 32 per cent in an overpressured section. Similar to the previously drilled LNB-1, heavier gas shows were encountered indicating the presence of a deeper thermogenic source rock charging the structure. In addition, the cuttings showed evidence of fluorescence indicating the potential presence of liquid hydrocarbons within the section encountered.

The well is now being completed as a conventional natural gas producer in the H-9 interval and once the rig has left the location the well will be perforated and tested. It is anticipated that the test will be conducted approximately 30 days after the rig has departed the location.

The drilling rig itself will now be demobilized and returned to the contractor for use with another operator as this was the last well in the company's nine-well Moroccan program.

Paul Welch, president and chief executive officer of SDX, commented: "We are very pleased with the results of this exploration well as it has significantly exceeded our predrill estimates for both reservoir quality and pay sand thickness. Similar to the LNB-1 discovery, this was a higher-risk exploration prospect into a sequence that had not been previously penetrated in a similar structural location. We were prepared for the overpressures in this area and as a result have been able to successfully log and complete this well.

"Once the rig has departed the location we will conduct an extensive test of this well. Given the deeper source rock, the heavier gas elements and fluorescence seen in the cuttings we are anticipating production of condensate during the test which could add some significant value to the production established in this area. It's an excellent way to conclude the drilling program with seven of our nine wells being successful. Most importantly, the results of our last two exploration wells have opened up a very significant new play area for us in the Gharb basin. Whilst the group is on track to double overall production in 2018, this provides us with the ability to further grow our reserves and production potential in Morocco, where we are targeting a fourfold increase in production from our current portfolio in the medium term. I look forward to updating our shareholders on the results of the LMS-1 well test in due course."

About SDX Energy Inc.

SDX is an international oil and gas exploration, production and development company, headquartered in London, England, with a principal focus on North Africa. In Egypt, SDX has a working interest in two producing assets (50 per cent Northwest Gemsa and 50 per cent Meseda) located onshore in the Eastern Desert, adjacent to the Gulf of Suez. In Morocco, SDX has a 75-per-cent working interest in the Sebou concession situated in the Rharb basin.