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Sound Energy moves forward with plans in East Morocco

Snapshot

The East Morocco operation comprises three areas – Tendrara, Greater Tendrara and the Anoual Permit.

Gas flare

Quick facts: Sound Energy PLC

Price: 3.825 GBX

AIM:SOU
Market: AIM
Market Cap: £41.3 m
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  • Sound Energy operates in Morocco at Tendrara and Sidi Moktar

  • Deal for part sale of its operations in East Morocco announced in November

  • That would include the TE-5 discovery where it has just received a proposal for a gas sales agreement from Morocco’s state power group

 

What it does


The East Morocco operation comprises three areas – Tendrara, Greater Tendrara and the Anoual Permit.

Sound Energy PLC (LON:SOU) holds 47.5% of the area, alongside Schlumberger, which has a 27.5% direct interest and the state’s ONHYM vehicle, which retains a 25% stake.

This deal also united Greater Tendrara, the Anoual permit and TPE, the 25-year production concession for the Tendrara TE-5 gas discovery.

 

How is it doing

Greater Tendrara

Up to 20 trillion cubic feet of gas might still be present across these exploration opportunities.

Even so, Sound said a sale of the East Morocco acreage would be a preferred option ahead of the final investment decision for the TE-5 production area.

In September, Sound said it expects completion of monetisation efforts for its Eastern Morocco portfolio before the end of 2019.

Prospects for a sale received a boost in October when an outline gas sales agreement was signed with Morocco's state energy company with the aim for a final GSA to be agreed by the end of 2019.

Sound estimates gross revenues from the prices agreed in the MOU at US$84mln in year one.

In November, Sound signed a preliminary agreement to sell just over half of its stake in its Tendrara licences in East Morocco for US$113mln.

The consideration is US$54mln cash and the rest a carry for future capital expenditure

Once the sale completes, Sound's in interest drops to 23.3% with an option to sell a further 9%.

Sidi Moktar

Sound has a 75% stake in the high potential Sidi Moktar exploration area on the west coast of the country.

It spans about 4.5 square kilometres, is close to existing infrastructure and best-case estimates suggest 9trn cubic feet of undiscovered gas.

At Sidi Moktar, Sound has said it wants a new partner to fund further exploration.

Financial

As of 14 May 2019, the company had a cash balance of over £11mln, while losses for 2018 were £11.75mln, a slight reduction on the previous year.

What the boss says: James Parsons, chief executive

"Whilst clearly disappointed with the outcome of the recent well test at TE-10, the team and I are encouraged to have delivered gas to surface from another TAGI discovery and remain confident in the potential of our Eastern Morocco basin."  

Inflexion points

  • Completion of sale of 51%  of stake in East Morocco asssets
  • Final GSA for TE-5 and associated acreage
  • Exploration resumes at Tendrara with Sound carried on costs
  • Partner found and exploration plans drawn up for Sidi Moktar

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Investor Update: Sound Energy agrees deal to sell stake in East Morocco

Headlines from the Proactive UK newsroom. Sound Energy (LON:SOU) has signed a preliminary agreement to sell just over half its stake in its Tendrara licences in East Morocco for US$113mln. The consideration is US$54mln cash and the rest is a carry for future capital...

1 week, 3 days ago

3 min read