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.
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
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%.
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.
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."
- 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