Sound Energy PLC (LON:SOU) operates in Morocco at Tendrara and Sidi Moktar
A review is underway that might result in the sale of its operations in East Morocco
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.
In August 2018, 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 permit and TPE, the 25-year production concession for the Tendrara TE-5 gas discovery.
How is it doing
Recent exploration here has already seen Sound hit substantial additional quantities of gas at Tendrara through the TE-6 and TE-7 wells.
A programme at the A1 prospect 19km from Tendrara was disappointing, however.
The TE-9 and TE-10 wells proved uncommercial with further exploration suspended while the company reviews its options.
Even so, Sound said it was confident about the potential of the Tendrara acreage
'After five wells it sees a number of remaining high impact plays in the region – including the TE-5 discovery and production concession, as well as additional upside in TAGI and Palaeozoic plays across multiple leads and prospects.'
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.
If it finds a buyer for East Morocco, that will leave it with 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."
A buyer for East Morocco
Final GSA for TE-5
Partner and exploration plans for Sidi Moktar