TIDMSOU
RNS Number : 3276V
Sound Energy PLC
09 August 2022
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
9 August 2022
Sound Energy plc
("Sound Energy" or the "Company")
Update re Phase 2 Development Financing and Launch of Farm-Out
Process
Exploration and Appraisal Portfolio
Sound Energy, the transition energy company, is pleased to
provide an update on the Phase 2 development financing of its
Tendrara Production Concession, an update on the Company's
exploration and appraisal activities and the launch of a farm-out
process for the Tendrara Production Concession and the surrounding
Greater Tendrara and Anoual exploration permits.
Phase 2 Development Financing and Farm-Out Update
As announced on 23 June 2022, the Company mandated Attijariwafa
bank, a Moroccan multinational bank and one of the leading banks in
Morocco, to arrange a long-term project senior debt facility of up
to c.US$250 million for the partial financing (the "Phase 2 Senior
Debt") of the currently estimated approximately US$330 million
Phase 2 development costs (gross, 100%) of the Tendrara Production
Concession. Progress continues to be made with a number of external
banking advisers and data review and, as previously announced, the
parties are seeking to negotiate binding terms for the Phase 2
Senior Debt within 120 days under the 8 month exclusivity.
In addition, the Company is continuing to mature industry and
alternative financing solutions for the remaining Phase 2
development costs of approximately US$60 million net to Sound's 75%
working interest in the Tendrara Production Concession. A number of
industry counterparties capable of providing the required financing
have expressed interest in pursuing discussions in respect of both
of the Company's Tendrara Production Concession and surrounding
Greater Tendrara and Anoual exploration permits.
As a result, the Company announces that it has initiated a
formal farm-out process for the Tendrara Production Concession and
the surrounding Greater Tendrara and Anoual exploration permits and
has appointed Gneiss Energy Limited, a leading energy corporate
finance advisory firm, to manage the farm-out process.
The objective of the area-wide farm-out is to seek a
co-investing partner in each licence to both fund the expected
balance of Phase 2 development costs and also to progress an
exploration and appraisal drilling programme in the Greater
Tendrara and Anoual exploration permit areas.
Exploration Update
Following the Company's announcement on 14 April 2022, the
Company has continued to re-evaluate the extensive exploration
portfolio within the Greater Tendrara and Anoual exploration
permits surrounding the Tendrara Production Concession. The Company
had high graded several potential near term subsalt drilling
opportunities within the Trias Argilo-Gréseux Inférieur ("TAGI")
gas reservoir, the proven reservoir of the TE-5 Horst gas
accumulation within the Tendrara Production Concession.
These drilling opportunities include the exploration prospect
'M5' located on the Anoual exploration permit, together with the
SBK-1 and TE-4 structures previously drilled on the Greater
Tendrara exploration permit.
The Company has published an updated presentation detailing the
Company's planned exploration and appraisal activities which can be
accessed on our corporate website,
https://www.soundenergyplc.com/.
Both SBK-1 and TE-4, drilled in 2000 and 2006 respectively,
encountered gas shows in the TAGI reservoir. SBK-1 flowed gas to
surface during testing in 2000 at a peak rate of 4.41 mmscf/d post
acidification, but was not tested with mechanical stimulation. TE-4
was tested in 2006 but did not flow gas to the surface. Mechanical
stimulation has proven to be a key technology to commercially
unlock the potential of the TAGI gas reservoir in the TE-5 Horst
gas accumulation and, accordingly, the Company believes this offers
potential to unlock commerciality elsewhere in the basin.
Commercial discoveries in the Greater Tendrara and Anoual
exploration permits would have the potential to be commercialised
through the proposed development infrastructure centred on the TE-5
Horst, with sufficient capacity in the planned Tendrara Export
Pipeline or as standalone projects.
The Company is pleased to announce the exploration potential in
these three planned drilling targets. The table below summarises
the exploration potential, expressed as Gas Initially-in-Place.
Target name Unrisked Volume Potential Chance of
Gas Initially-in-Place (Bcf) Success
Gross (100%) basis
------------------------------------
Low Best High Mean
------- -------- -------- -------
TE-4 Horst Appraisal 153 260 408 273 36%
------- -------- -------- ------- ----------
SBK-1 Appraisal 71 130 225 140 50%
------- -------- -------- ------- ----------
M5 Exploration 332 800 1728 943 21%
------- -------- -------- ------- ----------
The Company cautions that notwithstanding its internal estimates
for the exploration potential of the three planned exploration
drilling targets, further exploration activity, including drilling,
will be required to substantiate the estimated exploration
potential and that general exploration in the oil and gas industry
contains an element of risk and there can be no guarantee that the
Company's current estimates of volumes of gas originally in place
will be substantiated by exploration drilling or that any volumes
encountered would actually be available for extraction.
Graham Lyon, Sound Energy's Executive Chairman, commented:
"We are making good progress on the senior debt facility for the
Tendrara project, which is planned to fund the majority of the
Phase 2 development costs.
In parallel, we have now commenced a farm-out process to secure
partner participation in both the development of the Tendrara
Production Concession and exploration and appraisal in the
surrounding exploration permits.
Our re-evaluation of the potential of the Greater Tendrara and
Anoual exploration permits has high-graded three drilling targets,
two of which have previously encountered gas shows. We believe
mechanical stimulation is the key to unlocking the potential of the
TAGI gas reservoir, as we have done at the TE-5 Horst discovery.
Importantly, future discoveries in this area have the potential to
be commercialised through the planned infrastructure that will be
built at the TE-5 Horst development.
We look forward to updating shareholders on progress as we move
forward."
For further information please contact:
Vigo Consulting - PR Adviser Tel: 44 (0)20 7390 0230
Patrick d'Ancona
Finlay Thomson
Sound Energy chairman@soundenergyplc.com
Graham Lyon, Executive Chairman
Cenkos Securities - Nominated Adviser Tel: 44 (0)20 7397 8900
Ben Jeynes
Peter Lynch
SP Angel Corporate Finance LLP Tel: 44 (0)20 3470 0470
- Broker
Richard Hail
Gneiss Energy Limited - Financial Tel: 44 (0)20 3983 9263
Adviser
Jon Fitzpatrick / Paul Weidman
The information contained in this announcement has been reviewed
by Sound Energy's Vice President, Geoscience, Dr John Argent, who
is a Chartered Geologist, a Fellow of the Geological Society of
London and a Member of the Petroleum Exploration Society of Great
Britain, with 25 years of experience in petroleum geology and
management and who is the qualified person as defined in the
guidance note for mining, oil and gas companies issued by the
London Stock Exchange in respect of AIM companies.
Bcf means billion standard cubic feet of gas; Tcf means trillion
standard cubic feet of gas; and best case, high case and low case
estimates are consistent with SPE (The Society of Petroleum
Engineers) 2018 PRMS (Petroleum Resource Management System)
guidelines.
Petroleum is defined as a naturally occurring mixture consisting
of, but not limited to, hydrocarbons in the gaseous, liquid, or
solid phase. Petroleum may also contain non-hydrocarbon compounds,
common examples of which are carbon dioxide, nitrogen, hydrogen
sulfide, and sulfur.
Reservoir is a subsurface rock formation that contains an
individual and separate natural accumulation of petroleum that is
confined by impermeable barriers, pressure systems, or fluid
regimes (conventional reservoirs), or is confined by hydraulic
fracture barriers or fluid regimes (unconventional reservoirs).
Resources are all quantities of petroleum (recoverable and
unrecoverable) naturally occurring on or within the earth's crust,
discovered and undiscovered, plus those quantities already
produced.
Gas Initially-in-Place (GIIP) is the total quantity of gaseous
petroleum that is estimated to exist originally in naturally
occurring reservoirs, as of a given date.
Forward looking statements
Certain statements in this announcement are forward-looking
statements which are based on the Company's expectations,
intentions and projections regarding its future performance,
anticipated events or trends and other matters that are not
historical facts. Generally, the words 'will', 'may', 'should',
'continue', 'believes', 'targets', 'plans', 'expects', 'aims',
'intends', 'anticipates' or similar expressions or negatives
thereof identify forward-looking statements. These statements are
not guarantees of future performance and are subject to known and
unknown risks, uncertainties and other factors that could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements. Factors that would cause actual
results or events to differ from current expectations, intentions
or projections might include, amongst other things, changes in oil
prices, changes in equity markets, failure to establish estimated
petroleum reserves, political risks, changes to regulations
affecting the Company's activities, delays in obtaining or failure
to obtain any required regulatory approval, failure of equipment,
uncertainties relating to the availability and costs of financing
needed in the future, the uncertainties involved in interpreting
drilling results and other geological, geophysical and engineering
data, delays in obtaining geological results and other risks
associated with exploration, development and production. Given
these risks and uncertainties, readers should not place undue
reliance on forward-looking statements.
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