Eastern Morocco

Eastern Morocco Licences

Tendrara Production Concession

The development of the Tendrara Production Concession is centred around the TE-5 Horst gas discovery and has continued to progress during 2026. Phase 1, the mini-LNG (“mLNG”) production scheme provides gas to industrial consumers via the trucking of LNG (carried out by Afriquia Gaz). The planned Phase 2 pipeline development provides gas to power the state energy power stations. Phase 2 is centred around the installation of a 120km gas export pipeline to unlock the gas potential of this region fully and lower the cost of development for future discoveries.

Progress of the Phase 1 Development Project mLNG

This first phase focused on the existing TE-6 and TE-7 wells of the TE-5 Horst gas discovery. First gas will be achieved by tying the currently shut-in TE-6 and TE-7 gas wells with flowlines connected to the inlet of a skid mounted, combined gas processing and mLNG plant. Production from both wells will meet 10 mmcf/d sales gas volume.

During 2025 significant equipment deliveries were made to the site and construction progressed. This led to commencement of initial commissioning of the Gas Gathering System in Q4 of 2025, and in early 2026 the gas-fired generators were commissioned and tested using natural gas from one of the Tendrara Phase 1 development wells, displacing more costly diesel. This has the benefit of reducing operating costs and Scope 1 emissions.

Post period on 3 August 2026, the Company announced the divestment of the Company's remaining 20% interest in the Tendrara Production Concession, by way of the disposal of the entire share capital of Sound Energy Meridja Limited to Managem SA.

Eastern Morocco Exploration

The Eastern Morocco Licences comprise the Concession together with the Anoual and Grand Tendrara exploration permits are positioned in a region containing a potential extension of the established petroleum plays of the Algerian Triassic Province and Saharan Hercynian Platform. The presence of the key geological elements of the Algerian Trias Argilo-Gréseux Inférieur or (TAGI) gas play is already proven within the licence areas and represents a significant upside opportunity to be explored.

These licences cover a surface area of over 19,000 square kilometres, but so far only thirteen wells have been drilled, of which six are located either within or near to the Concession. Exploration drilling beyond the region of the Concession has been limited and a portfolio of features identified from previous operators’ studies, plus new targets identified by Sound Energy from geophysical data acquisition, followed by processing and completed interpretation studies. These features were internally classified as either prospects, leads or concepts based upon their level of technical maturity and are potential future exploration drilling targets.

Post period on 3 August 2026, the Company announced that, alongside the divestment of the Company's interests in the Tendrara Production Concession, by way of the disposal of the entire share capital of Sound Energy Meridja Limited to Managem SA, the Company relinquished its 27.5% interest in the Anoual Exploration Permit and the waived any subsisting rights in the Grand Tendrara Exploration Permit.

Southern Morocco

Southern Morocco Licence

Southern Morocco Exploration

The Sidi Moktar licence is located in the Essaouira Basin, in Southern Morocco. The licence covers a combined area of 4,712 km2. The Group views the Sidi Moktar licences as an exciting opportunity to explore high impact prospectivity within the sub-salt Triassic and Palaeozoic plays in the underexplored Essaouira Basin in the West of Morocco.

The Sidi Moktar permit hosts a variety of proven plays. The licence hosts 44 vintage wells drilled between the 1950s and the present day. Previous exploration has been predominantly focused on the shallower post-salt plays. The licence is adjacent to the ONHYM operated Meskala gas and condensate field. The main reservoirs in the field are Triassic aged sands, directly analogous to the deeper exploration plays in the Sidi Moktar licence. The Meskala field and its associated gas processing facility are linked via a pipeline to a state-owned phosphate plant, which produces fertiliser both for domestic and export markets. This pipeline passes across the Sidi Moktar licence. The discovery of the Meskala field proved the existence of a deeper petroleum system in the basin. Specifically, Meskala provides evidence that Triassic clastic reservoirs are effective, proves the existence of the overlying salt seal and gives support for evidence of charge from deep Palaeozoic source rocks. Based on work undertaken by Sound Energy, the focus of future exploration activity in the licence is expected to be within this deeper play fairway. The Company believes that the deeper, sub-salt Triassic and Palaeozoic plays may contain significant prospective resources, in excess of any discovered volumes in the shallower stratigraphy.

The Company’s evaluation of the exploration potential of Sidi Moktar, following an independent technical review, includes a mapped portfolio of sub-salt, Triassic and Palaeozoic leads in a variety of hydrocarbon trap types. Sound Energy is developing a work programme to mature the licence with specific focus on the deeper, sub-salt plays.  The Company believes additional seismic acquisition and processing is required to mature these leads into drillable exploration prospects.

During the first half of 2026 the Company continued to seek to progress a farm out process for this permit, offering an opportunity to a technically competent partner to acquire a material position in this large tract of prospective acreage. In parallel, the Company continues to engage in direct dialogue with ONHYM to secure a modification to the initial period previously proposed by ONHYM to expire in April 2026 through renewal, extension or change in work programme.  During the period the Company received correspondence from ONHYM seeking to make a claim for non-fulfilment of the minimum exploration work programme for the initial period of the Sidi Moktar licence.  The Company has accrued what it considers to contractually owe and continues to engage constructively with ONHYM on the steps necessary to regularise the situation in a manner satisfactory to all parties and has continued to impair the expenditure incurred on the permit until the discussions with ONHYM are concluded.

Condensed Interim Consolidated Income Statement

Condensed Interim Consolidated Balance Sheet

Condensed Interim Consolidated Statement of Changes in Equity

Condensed Interim Consolidated Statement of Cash Flows

Note to Statement of Cash Flows

Non-cash transactions during the period were the issue of 8,310,189 ordinary shares of the Company on conversion of £568,750 of accrued interest on convertible bonds into ordinary shares and the issue of 774,094 ordinary shares of the Company to a director of the Company following the exercise of 774,094 nil-cost options.

Notes to the Condensed Interim Consolidated Financial Statements

1. Basis of preparation

The condensed interim consolidated financial statements do not represent statutory accounts within the meaning of section 435 of the Companies Act 2006. The financial information for the year ended 31 December 2025 is based on the statutory accounts for the year ended 31 December 2025. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

The condensed interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group’s 2025 statutory accounts and in accordance with IAS 34 Interim Financial Reporting as adopted by the United Kingdom.

The seasonality or cyclicality of operations does not impact on the interim financial statements.

Going concern

As at 31 August 2026, the Group’s unaudited cash balance was approximately £7.3 million. The Directors have reviewed the Company's cash flow forecasts for the next 12-month period to September 2027. 

Post period end, the Company completed the divestment of the Company’s 20% interest in the Tendrara Production Concession and exit from its 27.5% interest in the Anoual and Grand Tendrara exploration permits. Out of the proceeds received, the Company has fully repaid all its financial debt obligations and of the remaining cash resources, the Company’s cash flow forecasts indicate that the Company will be able to meet its current obligations and commitments as they fall due.  To fund the Company’s growth including investment into new cash generative projects of scale, the Company will require additional funding. The Directors believe that there are various funding options available to the Company involving debt, equity and equity linked funding options. Accordingly, the Directors have a reasonable expectation that the Company will have adequate resources available to continue in operational existence for the foreseeable future and have adopted the going concern basis in preparing the condensed interim consolidated financial statements.

2. Segment information

The Group categorises its operations into three business segments based on Corporate, Exploration and Appraisal and Development and Production. The Group’s Exploration and Appraisal activities are carried out in Morocco. The Group’s reportable segments are based on internal reports about the components of the Group which are regularly reviewed by the Board of Directors, being the Chief Operating Decision Maker, for strategic decision making and resources allocation to the segment and to assess its performance. The segment results for the period ended 30 June 2026 are as follows:

Segment results for the period ended 30 June 2026

The segments assets and liabilities at 30 June 2026 are as follows:

The geographical split of non-current assets at 30 June 2026 is as follows:

Segment results for the period ended 30 June 2025

The segments assets and liabilities at 30 June 2025 were as follows:

The geographical split of non-current assets at 30 June 2025 was as follows:

Segment results for the year ended 31 December 2025:

The segments assets and liabilities at 31 December 2025 were as follows:

3. Profit/(loss) per share

The calculation of basic profit/(loss) per Ordinary Share is based on the profit/(loss) after tax and on the weighted average number of Ordinary Shares in issue during the period. The calculation of diluted profit/(loss) per share is based on the profit/(loss) after tax on the weighted average number of ordinary shares in issue plus weighted average number of shares that would be issued if dilutive options and warrants were converted into shares. Basic and diluted profit/(loss) per share is calculated as follows:

As a result of the share consolidation described in note 11, the number of weighted average shares in issue as at 30 June 2025 and 31 December 2025 and the resulting basic and diluted profit/(loss) per share have been restated accordingly.

4. Property, plant and equipment

Following the entry into a sale and purchase agreement as described in note 10, the Company compared the carrying amount of the assets of the disposal group held for sale and the fair value of the consideration less cost to sell and concluded that there was no impairment charge to recognise.

5. Intangibles

6. Investment in joint ventures

The Company is seeking investment opportunities in solar power projects in Morocco. Expenses during the period related to initial set up related costs.

In 2025, the Company through a wholly owned subsidiary and Getech plc (Getech) formed a joint venture Company, HyMaroc Limited (HyMaroc), owned 50% by the Company and 50% by Getech. HyMaroc is expected to negotiate exclusive rights for the exploration of hydrogen and helium resources in Morocco, progressing towards necessary geophysical and drilling activities to unlock potential deposits. As the business is still in the initial stages of negotiating exclusive rights, no material transactions had been incurred by HyMaroc as at 30 June 2026.

7. Deferred consideration

Deferred consideration related to funding that was to be received by the group from Managem SA, (the purchaser) of the Company’s former subsidiary disposed in December 2024. The Company’s share of its future expenditure on the Tendrara Production Concession Phase 2 development (Phase 2 development) was to be funded by the purchaser up to $24.5 million. The purchaser was also to fund the drilling of one exploration well on each of the Anoual and Grand Tendrara licences for up to $2.6 million and $3.6 million, respectively, and pay to the group $1.5 million upon achieving first gas on the Phase 2 development. The Company calculated the deferred consideration after taking account of the expected timing of receipt of the various elements of the deferred consideration based on current estimates of the timing of the operations and applied a discount rate of 10.97% (Dec 2025: 10.64%). Following post period completion of sale of the Company’s subsidiary and exit from the Anoual and Grand Tendrara licences as described in note 12, the deferred consideration no longer applies.

8. Cash and cash equivalents

For the purposes of the condensed interim consolidated statement of cash flows, cash and cash equivalents comprise the following as at 30 June 2026.

9. Loans and borrowings

The Company had €25.32 million secured bonds (the “Secured Bonds”). The Secured Bonds were to mature on 21 December 2027. The Secured Bonds bore 2% cash interest paid per annum until maturity and 3% interest per annum was to be paid at redemption. In 2021, the Company issued to the Bondholders 99,999,936 warrants to subscribe for new ordinary shares in the Company at an exercise price of 2.75 pence per share. The warrants expire on 21 December 2027. Following the capital reorganisation described in note 11, the exercise price is 27.5 pence per share. The Bonds are secured on the issued share capital of Sound Energy Morocco South Limited. After taking account of the terms of the Bonds, the effective interest was approximately 6.5%.

The Company had a $18.0 million 6% secured loan note facility with Afriquia Gaz maturing in December 2033 (the ‘‘Loan’’). The drawn down principal bore 6% interest per annum payable quarterly, but was deferred and capitalised semi-annually, until the second anniversary of the issue of Notice to Proceed. Repayment of interest that was not deferred commenced in Q2 2024. The principal and deferred interest were to be repayable annually in equal instalments commencing December 2028. The Loan was secured on the issued share capital of Sound Energy Meridja Limited. The weighted effective interest on the drawdowns made was approximately 6.2%.

The Company had outstanding interest of £0.6 million accrued on previously issued convertible bonds.  During the period, the £0.6 million interest was converted into 8,310,198 ordinary shares of the Company.

In March 2026, the Company entered into a €1.3 million term facility agreement with an international investment bank (the 'Lender'). The term loan attracted an interest of 20% per 120 days, accruing daily on a pro rata basis and was to fall due for repayment on or before 31 December 2026. In the event of default, the principal plus accrued interest plus default interest (40% per 120 days) can, at the Lender's option, was to be converted into the Company's ordinary shares priced at the VWAP of the 10-month period ending on the day preceding the date of the conversion notice.

In 2025, the Operator of the Concession (joint operations) finalised approximately MAD 225.5 million debt facility from a local bank in Morocco to partially fund the mLNG project capital expenditure.  The Company, through its wholly owned subsidiary, Sound Energy Meridja Limited which had a 20% interest in the joint operations had been in discussion with the Operator to conclude the terms under which the Company was to access up to MAD 50.5 million of the facility. The utilised facility of approximately £2.9 million as at 30 June 2026 is included in the liabilities of disposal group held for sale at 30 June 2026.

Following post period completion of the sale of Sound Energy Meridja Limited (SEML) and exit from the Anoual and Grand Tendrara exploration permits as described in note 12, all the Company’s loans and borrowings were repaid.

10. Discontinued operations

In May 2026, the Company announced that it had entered into a binding sale and purchase agreement with Managem SA for the divestment of the Company’s 20% interest in the Tendrara Production Concession in Morocco by way of the disposal of Sound Energy Meridja Limited (SEML) for aggregate proceeds of $57.0 million (subject to working capital adjustments). In addition, the Company announced the relinquishment of its 27.5% interest in the Anoual Exploration Permit and the waiving of any subsisting rights in the Grand Tendrara Exploration Permit. Post period, the transaction completed in August 2026.

The major classes of assets and liabilities of the discontinued operations classified as held for sale as at 30 June 2026 were as follows:

The net cash flows of the discontinued operations were as follows:

11. Shares in issue

In February 2026, the Company shareholders approved a capital reorganisation to consolidate 10 ordinary shares into one new ordinary share (excluding 2,180,000 sanctioned shares) and reset the nominal share price from 1.0 pence share to 0.1 pence per share. Each of the consolidated ordinary share was subdivided into one new ordinary share of 0.1 pence each and one deferred share of 9.9 pence each. Each of the new ordinary share will carry the same rights as previously existing ordinary shares and each deferred share will have very limited rights. The share consolidation reduced the number of existing ordinary shares in issue from 2,080,622,672 ordinary shares to 207,844,268 ordinary shares and 2,180,000 sanctioned shares making a total of 210,024,268 shares.

From the date of the consolidation to 30 June 2026, the following ordinary shares were issued:

In March 2026, the Company issued 8,310,198 ordinary shares following conversion into ordinary shares, of £568,750 accrued interest on convertible bonds.             

In March 2026, the Company issued 10,000,000 ordinary shares at 5 pence per share following an equity placing. 

In June 2026, the Company issued to a director of the Company 774,094 ordinary shares of 0.1 pence per share following the exercise of nil-cost options.

12. Post balance sheet events

In August 2026, the Company announced the completion of the disposal of Sound Energy Meridja Limited and exit from the 27.5% interest in the Anoual and Grand Tendrara Exploration permits. The sale proceeds were $57.0 million (prior to working capital adjustments), and a substantial part of the proceeds was utilised to repay all the Company’s outstanding debt. The loans and borrowings repaid including, where applicable, capitalised and accrued interest up to the date of repayment comprised: $20.3m paid to Afriquia Gaz, €1.6 million term loan facility and €17.3 million EUR secured bonds. The joint operations partner facility was included as part of the working capital adjustments to the sale proceeds of $57.0 million.