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'Exciting times' for Sound Energy; broker remains bullish on the stock

The City is now waiting for a new, updated competent persons report, analysts said
'Exciting times' for Sound Energy; broker remains bullish on the stock
The company's assets are in Morocco and Italy

Cantor Fitzgerald has repeated its ‘buy’ recommendation on Sound Energy PLC (LON:SOU) following an upgrade to internal estimates for its Tendrara acreage in Morocco.

Earlier, Sound increased its gas initially in place (GIIP) figure to just over 1 trillion standard cubic feet (TCF) from 800bn initially.

The number refers only to that part of Tendrara covered by a 3D seismic survey and was published following drilling and testing of TE-8, the latest well on the property.  

It was drilled 359 metres into the Paleozoic horizon and identified the “full series” of productive sandstones seen in the wells in neighbouring Algeria.

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Crucially, the sandstones lie in a separate pressure regime to the overlying TAGI play in a large tilted fault block beneath the horst and the Lakbir High horizons targeted by the earlier TE-5 well.

Gas shows were encountered and petrophysical analysis suggests the sandstones may be permeable and likely to be producible with mechanical stimulation, Sound told investors.

“Further wells targeting the Paleozoic on the Tendrara permit are being planned, but are not likely to be drilled prior to the completion of reprocessing of existing 3D seismic, which is currently underway,” it added.

In earlier afternoon trade the shares were changing hands for 72p each, up 2p on the day. Cantor Fitzgerald reckons they are worth 76p.

“A competent persons report will be conducted pre-FID [final investment decision],” said analyst Sam Wahab.

“We will therefore leave our volumes unchanged until they are confirmed through this third party analysis later this year.”

He reckons the next ‘catalysts’ will come in the form of results from the Sidi Moktar re-entry wells [click here for our earlier story], and Badile in Italy [click].

'Exciting time' for Sound as it drills at Sidi Moktar

Sound’s back-to-back drill programme at Sidi Moktar in Morocco offers potential both in the shallow levels and deeper, according to independent oil and gas analyst Malcolm Graham-Wood.

Drilling has started, said Graham-Wood, and if successful just in the shallows that would still be 'extremely good' as there are lots of local customers for the shallow gas.

If the wells are successful it could go on to deeper levels and would be very exciting news for the oil and gas explorer, he told Proactive.

The two wells were originally drilled some time ago, but the re-entries mark Sound’s second potentially major project in Morocco after the gas find at Tendrara.

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