Sound Energy PLC Partial Divestment Update & LNG Strategy (1266D)
17 Febbraio 2020 - 8:00AM
UK Regulatory
TIDMSOU
RNS Number : 1266D
Sound Energy PLC
17 February 2020
17 February 2020
Sound Energy plc
("Sound Energy" or the "Company")
Partial Divestment Transaction Update
Early Production Development Plan with First LNG delivery
targeted for 2021
Sound Energy, the Moroccan focused upstream gas company,
announced on 6 November 2019 that the Company had entered into
non-binding heads of terms agreement (the "HOT") with a
privately-owned UK registered company specialising in energy asset
development and investment (the "Purchaser") in relation to a
proposed sale of a substantial proportion of the Company's interest
in the Eastern Morocco Portfolio (the "Proposed Transaction").
Under the terms of the HOT, the Company had granted to the
Purchaser an exclusivity period expiring on 14 February 2020 to
complete due diligence on the Eastern Morocco Portfolio and to
finalise a binding sale and purchase agreement for the Proposed
Transaction.
The Company announces that, whilst the Purchaser has confirmed
the satisfactory conclusion of its technical and commercial due
diligence to the Company, the Purchaser has not yet demonstrated to
the Company's satisfaction the proof of funds required in order to
advance the Proposed Transaction and nor has a sale and purchase
agreement been finalised. Accordingly, discussions continue with
the Purchaser but these discussions are no longer exclusive and
there can be no certainty that the Proposed Transaction will
proceed or will successfully conclude.
Whilst the Company has continued to pursue the full Field
Development Plan underpinning the Tendrara Production Concession
(the "Concession") award centred around a 120 km pipeline
infrastructure, as announced on 6 September 2018, the Company
announces that it now plans to prioritise early first cash flows
from the Concession and consequently plans to pursue a micro
liquified natural gas ("LNG") production plan for the TE-5 Horst
field within the Concession ahead of the full Field Development
Plan being implemented. The implementation of the micro LNG
production plan will require, inter alia, the agreement of the
Company's joint venture partners in the Concession.
The Company will, therefore, seek to advance development of the
TE-5 Horst field through an innovative, fast-track, cost efficient,
micro LNG scheme targeting first LNG delivery during 2021. The
proposed micro LNG production plan, which will be advanced
alongside workstreams related to the full Field Development Plan
(including ongoing negotiations with Morocco's Office National de
l'Electricité et de l'Eau Potable in relation to a gas sales
agreement and discussions in relation to full Field Development
Plan funding solutions), will involve the processing and
liquification of the gas produced at the field with the resulting
LNG being transported to industrial customer sites in Morocco.
This micro LNG production plan for the TE-5 Horst is viewed by
the Company as an attractive route to generating early cash flows
from the Concession. The larger full pipeline led development plan
can then be added to this initial plan at a later date, given the
inherently longer timescales involved in its implementation.
The Company is in discussions with industrial customers and
distributors in Morocco regarding the long-term offtake of LNG from
the Concession and negotiations with equipment providers and
potential funding partners for the micro LNG production plant are
in progress. Subject to the Company's joint venture partners in the
Concession agreeing to the micro LNG production plan, the Company
expects that it would be in a position to take a final investment
decision on this development solution during Q2 2020, which would
enable first LNG delivery during 2021.
As at 31 January 2020 the Company had unaudited cash balances of
approximately US$7.3 million and the Company expects that its
existing cash resources are sufficient to meet the Company's
working capital requirements through to a micro LNG production plan
final investment decision before the end of Q2 2020.
The Company intends to hold an investor event in late
March/early April 2020 details of which will be announced in due
course.
Further announcements will be made, as appropriate, in due
course
Mohammed Seghiri, Sound Energy's Acting Chief Executive Officer,
commented:
"While discussions with the potential Purchaser continue, the
Board has been active in considering and refining in parallel other
options to monetise its asset at Tendrara. We continue to believe
that we have a valuable position in the Moroccan energy sector
encompassing a significant discovery in Tendrara with exciting
additional exploration upside potential. The micro LNG development
plan has been identified as an initial and rapid development
strategy to prioritise early monetisation of the existing gas
discovery, which can in turn facilitate a larger ultimate
development. I look forward to reporting further on our progress in
due course."
For further information please contact:
Vigo Communications - PR Adviser Tel: 44 (0)20 7390 0230
Patrick d'Ancona
Chris McMahon
Sound Energy questions@soundenergyplc.com
Cenkos Securities - Nominated Adviser Tel: 44 (0)20 7397 8900
Azhic Basirov
Ben Jeynes
RBC - Joint Broker Tel: 44 (0)20 7653 4000
Matthew Coakes
Martin Copeland
Macquarie Capital (Europe) Limited Tel: 44 (0)20 3031 2000
- Joint Broker
Alex Reynolds
Nick Stamp
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to constitute inside information as stipulated under the Market
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END
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