-- adds broker target, detail, share price --
Sound Energy (LON:SOU) has taken an option over 55% of the permit neighbouring its licence at Tendrara in Morocco, where it is preparing to drill its first well.
The new permit, Meridja, covers a 9,000 sq km area adjacent to the Tendrara licence and has the same fundamental geology.
James Parsons, Sound's chief executive, said given Meridja’s position the option would become significantly more valuable if the first well at Tendrara was as successful as hoped.
The company brought its stake in Tendrara and in another Morocco field, Sidi Moktar, over the past six months to broaden its operation away from just Italy.
The well at Tendrara will be drilled in the coming weeks through its three-well collaboration with Schlumberger,
The US oilfield services giant has agreed to fund 80% of the investment in the first hole and 75% of the second and third. After that the partners will bankroll further field development on a 50-50 basis.
At Meridja,,Oil & Gas Investment Fund (OGIF) has a 75% interest in a reconnaissance permit with the remaining 25% held by Morocco's Office National des Hydrocarbures des Mines.
Sound will pay OGIF US$100,000 for its option and spend US$200,000 on early stage exploration. A further US$150,000 is payable if the option is taking up while Sound will have to pay all of the costs of a first well.
“The transaction further demonstrates our strong partnership with OGIF and further consolidates our position as a leading onshore operator in Morocco," said Parsons.
House broker Cantor reiterated its 'buy' view and 31p target price.
Sound shares nudged higher, up 0.68% to 18.5p.