viewSound Energy PLC

Sound Energy fundraiser brings in £27mln

Demand was so strong the company’s advisers had to issue more shares than they were planning, meaning the process generated £26.9mln. Sound was looking for £24.1mln.

The cash will be put to good use.

Sound Energy PLC (LON:SOU) has raked in more than it anticipated in a fundraiser that allowed private investors to participate alongside City institutions.

Demand was so strong the company’s advisers had to issue more shares than they were planning, meaning the process generated £26.9mln. Sound was looking for £24.1mln.

The cash will be used to develop the Tendrara licence in Morocco, where the results from its two gas wells have exceeded expectations.

WATCH: Analyst Sam Wahab speaks to Proactive's Andrew Scott

On Thursday, Sound its first horizontal well said flowed at 32mln standard cubic feet of gas a day and could eventually go “significantly above” 40mln standard cubic feet.

To put that into context, Sound told analysts and investors ahead of its first ever well on Tendrara that 3.5mln standard cubic feet of gas would be commercial.

The new landmark was hit during the clean-up phase and post stimulation.

TE-7 was drilled to a depth of just over 2,600 metres before going horizontally for 700 metres. In all there was 837 metres of contact with the TAGI reservoir.

"I am pleased to report the success of our second well at Tendrara and that the use of sub-horizontal drilling techniques on TE-7 has delivered a significant uplift on flow rates,” said chief executive James Parsons.

“This result further reinforces our belief in the Eastern Morocco TAGI/Palaeozoic play.”

The plan now is to carry out an extended well test. It is now planning its first outpost well, TE-8, which will test lateral extent of the TAGI reservoir.

Cantor Fitzgerald analyst Sam Wahab described the announcement as “very encouraging”.

finnCap’s Dougie Youngson added: “This is an excellent initial result for the company.

“Clearly the outcome of the extended well test is extremely important as it will help determine the commercial basis and scale of the field.”

Quick facts: Sound Energy PLC

Price: 1.42 GBX

Market: AIM
Market Cap: £18.83 m

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