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Sound Energy PLC: DEEP DIVE
OVERVIEW

Sound Energy sees strands coming together in East Morocco

The group is in the middle of a three well programme to explore the A1 prospect, close to the original Tendrara discovery
Gas flare
OVERVIEW: SOU The Big Picture
TE-10 flowed to surface without being stimulated

 

  • Sound Energy PLC (LON:SOU) operates in Morocco at Tendrara and Sidi Moktar

  • The group is in the middle of a three well programme to explore the A1 prospect, close to the original Tendrara discovery

  • In May, Sound reported that tests from TE-10, the latest well at A1, showed gas flowed to surface unstimulated

  • Next steps will see the well’s most prospective zones undergo mechanical stimulation before being tested to determine their commercial merits

  • Sound has just received a proposal for a gas sales agreement from Morocco’s state power group for the TE-5 discovery

  • Talks are ongoing for a final agreement, which will trigger a development decision at TE-5

 

What it does

East Morocco is the primary focus for Sound.

Here, the portfolio comprises three areas – Tendrara, Greater Tendrara and the Anoual Permit.

Tendrara (47.5% owned by Sound) is the most advanced of the three components, as it includes the TE-5 field development area.

Greater Tendrara, an exploration area, spans some 14,500 square kilometres surrounding the Tendrara gas discoveries.

In August, Sound signed an eight-year petroleum agreement that pulled together the Tendrara and Matarka exploration areas into one licence and also brought long-term partner Schlumberger in with a direct interest.

Sound 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 prmit and the 25-year production concession for the Tendrara TE-5 gas discovery.

 

How is it doing

 

Greater Tendrara

Recent exploration here has already seen Sound hit substantial additonal quantities of gas at Tendrara through the TE-6 and TE-7 wells.

Development of these  is expected to comprise five new horizontal wells along with the re-engineering of the wells.

First gas is expected after around two years with production volumes projected to be around 60mln cubic feet per day.

 

A1 prospect

The A1 prospect is 19km from Tendrara and one of Sound’s main exploration objectives.

Ahead of the latest drill programme, the prospect was estimated to contain between 278bn to 1.25 trillion cubic feet of gas.

TE-9 was a dry hole but unstimulated tests on TE-10 over a 153-metre zone successfully flowed gas to surface from within the well’s primary zone.

Next steps will see the well’s most prospective zones undergo mechanical stimulation, before being tested to determine their commercial merits.

Sound says 1.5mln to 2mln cubic feet of gas per day would be likely to be commercial via a tie-back development connecting to the TE-5 Horst discovery.

Environmental approval, meanwhile, for future drilling activity has been granted across a large 9,400 square kilometre area.

The area is located in the northern portion of Greater Tendrara and spans the majority of the Anoual permit.

This will give ‘maximum flexibility’ for the selection of future wells, including the pending TE-11 well, the third leg of the A1 programme currently underway.

 

TE-5

First production is likely to come from the earlier TE-5 well.  An engineering and design agreement has been signed with a Spanish consortium for an export pipeline and gas processing facility.

Sound has also just received a proposal for a sales agreement (GSA) from Morocco’s state power group for gas from the TE-5 discovery.

Talks are ongoing for a final GSA agreement, which will trigger a development decision.

 

Sidi Moktar

Sound also owns a 75% stake in the high potential Sidi Moktar exploration area.

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 wants a new partner to fund further exploration.

 

Financial

Cash at the end of 2018 was £20.5mln, while losses for 2018 were £11.75mln, a slight reduction on the previous year.

 

What the boss says: Richard Liddell, chairman

“The company remains in a strong financial position for 2019 with cash balances remaining at 31 December 2018 of US$26 million.

In June, the company successfully completed an equity placing of US$15 million before expenses”

 

Inflexion points

  • More results of flow tests from TE-10
  • Spud of TE-11
  • Final GSA for TE-5
  • Partner and exploration plans for Sidi Moktar
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