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Sound Energy strikes deal with Moroccan fund to consolidate its stake in Tendrara

Published: 07:54 19 Jan 2017 GMT

deal agreed, handshake
The deal will see OGIF take a 29% shareholding in Sound Energy

Sound Energy PLC (LON:SOU) has agreed a deal to acquire an extra 20% of the Tendrara gas project onshore Morocco, taking its stake in the successful project to 75%.

The company has announced a non-binding agreement to acquire all of Oil & Gas Investment Fund's (OGIF) assets in Eastern Morocco – that includes 20% Tendrara, 75% of the Meridja project and a 75% stake in acreage close to Tendrara.

In return the AIM quoted company offers OGIF some 272mln new Sound Energy shares, notionally worth nearly £200mln based on Sound’s present market price. It will mean that OGIF – a fund owned by seven Moroccan financial institutions – will own around 29% of Sound Energy’s enlarged share capital.

James Parsons, Sound Energy chief executive, told investors that the proposed deal gives the company a “hugely attractive, material and consolidated portfolio” across Eastern Morocco as well as significant additional upside ahead of drilling the TE-8 well – which spuds next month and aims to show that Tendrara extends a further 12 kilometres from the successful TE-7 well.

IMPRESSIVE RESULTS - latest Morocco well flowed close to a bln cubic feet of gas in tests

“We are pleased to have entered into heads of agreement with OGIF following the successful extended well test and I look forward to welcoming them to our shareholder register,” Parsons added.

“I have worked closely with the OGIF team for over 18 months now and their access to Moroccan debt capital and their relationship and influence in country are second to none."

Meanwhile, OGIF chief executive Mohammed Benslimane said: “Sound Energy has already played a critical role in unlocking the Eastern Moroccan gas promise over the last eighteen months and we remain hugely impressed by James and his team. 

“This new partnership aligns the interests of OGIF and Morocco's largest financial institutions with those of Sound Energy. We see huge short term upside potential in the equity of Sound Energy and look forward to what will certainly be a successful future together."

Sound Energy and OGIF have also agreed that they will together identify and secure a low cost and high quality solution for the Tendrara infrastructure, which may include using OGIF's shareholders to fund the pipeline.

Sound Energy shareholders will be asked to approve the proposed transaction at a general meeting, the details of which have yet to be disclosed.

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