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Sound Energy receives gas sales proposal from Morocco’s state power firm

The offer envisages a variable price linked to Brent plus a fixed element to cover gas transportation costs.

oil and gas operations
Negotiations to seal a binding deal are now underway

Sound Energy PLC (LON:SOU) shares rose on Wednesday after it told investors that talks are continuing over the gas sales agreement for the Tendrara project, and, an offer has now been received from the Moroccan government.

The non-binding offer envisages Tendrara’s gas being purchased by the Office National de l'Electricité et de l'Eau Potable (ONEE), Morocco’s state power firm.

READ: Sound Energy set to test TE-10 after key equipment arrives

It anticipates gas pricing from 2022 based on a structure that includes a variable element linked to the Brent oil price along with a fixed element to fully cover transportation costs (capped at US$12.2mln per year).

Sound provided an example, based on current Brent pricing at US$70-75 per barrel, which would see it receive between US$8.50 and US$9 per million British thermal units. It also assumed the pipeline fee to be US$1 per mln BTU.

Prior to 2022, the gas would be bought at prices in line with what the Moroccan state sells gas to ONEE.

The company said it will now continue negotiations to close out a binding gas sales agreement which would represent an important milestone in taking the TE-5 field into commercial production.

In afternoon trade, shares in Sound Energy were 4.5% higher at 18.50p.

 -- Adds share price --

Quick facts: Sound Energy PLC

Price: 1.856 GBX

Market: AIM
Market Cap: £21.46 m

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