Proactive Investors - Run By Investors For Investors

Sound Energy’s focus is now entirely on Morocco

Sound Energy is stripping out its Italian assets as it continues to focus on new Moroccan programmes
oil and gas operations
A new three well programme is in the works

It became clear following the disappointment of the Badile exploration well that Sound Energy PLC’s (LON:SOU) future would be in Morocco rather than Italy.

Sound had already seen material successes in Morocco, most notably at the Tendrara project, and earlier this week, the company announced plans to accelerate new exploration drilling.

READ: Sound Energy to spin Italian assets into Saffron Energy reboot

Thursday brought the definitive milestone in the company’s focussing on Moroccco, as it unveiled plans to spin-out the entire Italian portfolio.

Chief executive James Parsons is to chair Coro Energy, a reboot of AIM-peer Saffron Energy, which is absorbing the Italian assets from Sound as well as the portfolio of Saffron associate Po Valley Energy.

Such is Sound’s intent to focus on Morocco, the company won’t even keep the new shares it will receive for the Italian assets – instead, the 33.3% stake in the new enlarged will be redistributed to Sound’s shareholder base.

“This transaction will provide an elegant exit from our Italian activities thereby delivering strategic focus for our province opening activities in Morocco and enabling Sound Energy shareholders the opportunity to continue their participation in an early stage consolidated but growth focused Italian E&P company," Parsons said in a statement.

Advancing Morocco assets

On Wednesday, Sound detailed a new three-well drill programme planned in Eastern Morocco, where it intends to follow up recent successes at the Tendrara project.

At Tendrara, the company sees just over 1 trillion cubic feet of gas resources while the broader eastern Morocco acreage is estimated to host some 17 trillion cubic feet and a new accelerated drill programme will target ‘high impact’ locations.

READ: Sound Energy unveils plans for new three-well exploration campaign in Morocco

The aim is to unlock more of the areas that contribute to the wider estimate.

It will kick off with a well on the ‘A structure’, located some 25 kilometres north-west of Tendrara’s TE-5 well, where the company is targeting between 0.4 and 1.2 trillion cubic feet of gas.

Sound’s second new well will be positioned 20 kilometres north-east of TE-5, at a location named North East Lakbir. This larger target is an extension of the TAGI play and it is estimated between 1.2 TCF and 5 TCF, with the mid-case estimate set at 2.6 TCF. Less detail is given for the third target which is described as “a Paleozoic test beneath the TE-5 Horst”.

Sound expects each of the three wells in programme will cost around US$10mln.

Parsons, in a statement, said: "Sound Energy is now approaching another exciting period of back to back drilling in Eastern Morocco.”

“The three well exploration programme we are announcing today has the potential to significantly increase the core value of our Moroccan acreage and to establish Eastern Morocco as a prolific but low cost gas province, on the doorstep of large and growing energy markets."

View full SOU profile View Profile

Sound Energy PLC Timeline

Related Articles

offshore oil rig
May 08 2018
Life has been tough in the oil sector in recent years, but things started to pick up towards the end of 2017
oil and gas operations
June 04 2018
“I believe that the ENEO issue will be solved as VOG management has prioritised this matter and is focused on achieving a result in the shortest possible timeframe,” chief executive Ahmet Dik
oil well
June 18 2018
A cash flow model - assuming one new IOsorb plant is added each year between 2019 and 2021 - gives a price target of 35p/share

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use