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Sound Energy shares in demand ahead new Morocco drill programme

Sound is simultaneously advancing a field development project and a new wave of exploration
oil and gas operations
Drilling is set to start iimminently

Rallying more than 20% in recent sessions Sound Energy PLC (LON:SOU) shares are in favour in the run-up to new drilling at the Tendrara project.

Sound is advancing Tendrara on two fronts. It is working to develop already discovered gas resources towards production, whilst starting new exploration drilling to unearth new finds.

READ: Sound Energy seals new eight year deal for Tendrara exploration

On Tuesday, the company received ministerial approval for an eight-year petroleum agreement for the Greater Tendrara project area.

It confirms the security over the Greater Tendrara area which spans some 14,500 square kilometres and is 47.5% held by Sound, alongside partners Schlumberger and Morocco’s state oil and gas firm ONHYM which own 27.5% and 25% respectively.

"I am delighted to announce receipt of approval from the Moroccan Energy and Finance Ministries for the Greater Tendrara petroleum agreement and that, as a result, the Greater Tendrara petroleum agreement has now become effective - securing Sound Energy's rights to this potentially transformational acreage up to 2026,” said James Parsons, Sound chief executive.

“We look forward to commencement of our exploration drilling programme in the near future."

The new agreement lines up a series of four commitment wells over the eight-year period.

Sound's first new well, TE-9, is expected imminently and, targeting some 624bn cubic feet of gas in the mid-case (1.25trn in the high case), it promises “significant and potentially transformational” potential.

Pathway to production

In a statement last week, Sound told investors that it continued to make ‘strong progress’ towards a gas sales agreement for the already discovered gas at Tendrara. It had been attending meetings with local officials to discuss the proposed development.

The meetings followed the award of a production concession for the discovery which edged the project closer to a final investment decision.

Sound, in its previous drilling programme, unearthed some … of gas, and, the envisaged development is expected to comprise five new horizontal wells along with the re-engineering of the TE-6 and TE-7 wells.

The project would also require a gas treatment and compression facility, as well as a 120-kilometre pipeline.

Presently, it is anticipated that first gas would come after around two years.

Production volumes are projected at around 60mln cubic feet per day over a 10-year period in the ‘mid-case’ scenario, though some 10-13 additional production wells would be required over the coming years to maintain rates over the term.

Sound will need to finalise the gas sales agreement and secure funding facilities before it can greenlight the development project.

Plainly, there’s plenty going on for Sound over in Eastern Morocco so it should be no surprise that trading is picking up in one of London’s more popular oil and gas growth shares.

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