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Sound Energy moves swiftly on to second well at A1 exploration programme in Morocco

A1 is some 19 kilometres from the Tendrara production concession area and seen as a potential major expansion of its existing discoveries
oil rig
OVERVIEW: SOU The Big Picture
Rig has shifted to the TE-10 location

Sound Energy PLC’s (LON:SOU) TE-9 exploration well in Morocco was a rare setback for the ambitious junior.

Drilled to a depth of 2,925 metres, no producible gas was found and the rig has now shifted on to TE-10, the second of a three well programme targeting the A1 prospect.

READ: TE-9 WELL FINDS NO PRODUCIBLE GAS PRESENT

A1 is some 19 kilometres from the Tendrara production concession area and seen as a potential major expansion of its existing discoveries in Eastern Morocco.

East Morocco is the primary focus for Sound. Here, the portfolio essentially comprises three areas, of which the Tendrara discoveries (47.5% owned by Sound) represent the most advanced of the three components.

The area that the market has known as Tendrara spans some 9,000 square kilometres and it is made up of eight permit areas.

Tendrara itself can be separated into two distinct ventures. One is a field development project and the other is very much focused on exploration.

The A1 prospect is one of the main exploration objectives and ahead of the TE-9 well, was estimated to contain 278bn to 1.25 trillion cubic feet – from the low case to the high.

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

Greater Tendrara spans some 14,500 square kilometres surrounding the Tendrara gas discovery. Sound will hold 47.5% of the area, alongside Schlumberger, which has 27.5% and the state’s ONHYM vehicle, which retains a 25% stake.

This united Greater Tendrara was in addition to the Anoual petroleum agreement and the separate production concession for the Tendrara gas discovery.

Development work at TE-6, TE-7 discoveries

In its previous drilling programme, Sound hit substantial quantities of gas at Tendrara with its TE-6 and TE-7 wells.

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

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

First gas is expected after around two years with production volumes projected to be around 60mln cubic feet per day over a 10-year period.

Sidi Moktar presents another opportunity, subject to a deal

Quite separately, the group also owns a 75% stake in the high potential Sidi Moktar exploration area.

It spans about 4.5 square kilometres, and it is close to existing infrastructure and end-user demand (Sound highlights that it is close to a state-owned phosphate plant).

Here too there is an awful lot of potential – Sound estimates nearly 9trn cubic feet of undiscovered gas in its ‘best case’.

Some relatively shallow discoveries have been made in the area previously, which have some development potential, though the big hypothetical resource numbers are seen in deep targets – deeper than 3kms below surface.

At Sidi Moktar, Sound wants a new partner to share the burden with further exploration expected in 2019.

Sound says it has one “potentially drill ready” prospect in the deep play, and it expects additional wells will require additional insights from seismic work. 

Sidi Moktar is essentially a secondary project to Tendrara, contingent upon some form of partnership or funding deal.

Focus switches to TE-10

Shares fell back following the TE-9 result and attention will now focus on TE-10, which will target a TAGI structural-stratigraphic play containing estimated volumes of 2.6Tcf mid-case gross gas in situ.

Cash balances at 14 November were more than US$30mln.

At 16.5p, Sound is valued at £188mln.

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