REG - Sound Energy PLC - Exploration Permit Update

Sound EnergyAnnouncement

22/12/2022 12:45

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RNS Number : 6571K  Sound Energy PLC  22 December 2022

 

The information contained within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation ("MAR")
(EU) No. 596/2014, as incorporated into UK law by the European Union
(Withdrawal) Act 2018. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

22 December 2022

Sound Energy plc

 

("Sound Energy", the "Company" and together with its subsidiary undertakings
the "Group")

 

Exploration Permit Update

 

Sound Energy, the transition energy company, provides an update regarding its
exploration permits at Grand Tendrara, Anoual and Sidi Moktar.

 

Highlights

 

·      Grand Tendrara exploration permits (Sound Energy holds 75%
interest and operatorship)

 

o  Morocco's L'Office National des Hydrocarbures et des Mines ("ONHYM") has
approved the Company's application to enter the optional First Complimentary
Period under the Grand Tendrara Exploration Permits consisting of 2 years to 1
October 2024 (the "Grand Tendrara First Complimentary Period")

o  Work commitment for the First Complimentary Period comprises the drilling
of one exploration well with a Triassic objective

o  The entry of the First Complimentary Period remains subject to Moroccan
Energy and Finance Ministerial approval

 

·      Anoual exploration permits (Sound Energy holds 75% interest and
operatorship)

 

o  ONHYM has approved the Company's application for a 12-month extension to
the Anoual Exploration Permits initial period to 8 January 2024 (the "Anoual
Initial Period")

o  Remaining work commitment in the Anoual Initial Period is the drilling of
one exploration well with a Triassic objective.

o  Extension of the Anoual Initial Period is subject to Moroccan Energy and
Finance Ministerial approval

 

 

·      Sidi Moktar exploration permits (Sound Energy holds 75% interest
and operatorship)

 

o  ONHYM has agreed a 12-month extension to the Sidi Moktar Exploration
Permits Initial Period, which ended on 9 October 2022 (the "Sidi Moktar
Initial Period"), to 9 October 2023 and has accordingly reduced the optional
First Complimentary Period of 3 years by 12 months to 2 years. This is in
order that the Company completes the committed work programme and progresses
 this highly prospective basin.

o  Extension of the Sidi Moktar Initial Period is subject to Moroccan Energy
and Finance Ministerial approval

 

Grand Tendrara Exploration Permits

 

Further to the Company's announcement of 20 October 2022, and subject to
Ministerial approval, the Company is pleased to confirm that ONHYM has
approved the Company's application to enter the optional Grand Tendrara First
Complimentary Period consisting of 2 years to 1 October 2024.

 

The Grand Tendrara Permits cover approximately 14,411 square kilometres in
Eastern Morocco and the Company has historically completed the full work
commitment for the initial Grand Tendrara exploration period of 4 years,
within the total duration of 8 years commencing on or about 1 October 2018, by
previously drilling the TE-9 and TE-10 exploration wells with Triassic
objectives.

 

The work commitment for the Grand Tendrara First Complimentary Period, which
will run until or about 1 October 2024, will, subject to ministerial approval,
comprise the drilling of one exploration well with a Triassic objective. The
Company expects to fulfil this commitment from the planned subsalt drilling
opportunities within the Trias Argilo-Gréseux Inférieur ("TAGI") gas
reservoir detailed in the Company's announcement of 9 August 2022.  The TAGI
is the proven reservoir of the TE-5 Horst gas accumulation within the Tendrara
Production Concession currently under development by the Company and its joint
venture partner ONHYM.

 

The Company has high-graded the SBK-1 and TE-4 Horst structures, both of which
were previously drilled, in 2000 and 2006 respectively,

 

The gross exploration potential, expressed as Gas Initially-in-Place ("GIIP"),
of the high-graded structures currently considered by Sound Energy to be the
structures to be considered for the meeting of the Grand Tendrara First
Complimentary Period work commitment are as follows:

 

 Target name           Unrisked Volume Potential               Chance of Success

                       Gas Initially-in-Place (Bcf)
                                                     Gros
                                                     s
                                                     (100
                                                     %)
                                                     basi
                                                     s
                       Low       Best      High      Mean
 TE-4 Horst Structure  153       260       408       273       36%
 SBK-1 Structure       71        130       225       140       50%

 

 

The Company also announces that ONHYM has approved an amendment to the
governing Petroleum Agreement to the Grand Tendrara Exploration Permits. This
amendment, subject again to Moroccan Energy and Finance Ministry approval,
will comprise an amendment to the Bank Guarantee and Parent Company Guarantees
required to be placed by Sound Energy Morocco East.

 

On entry to the Grand Tendrara First Complimentary Period, the Company will be
required to relinquish a portion of the permitted Grand Tendrara acreage. The
currently proposed retained area (60% of the current permit area) includes all
Company recognised prospectivity.

 

 

Anoual Exploration Permits

 

The Company is also pleased to report that ONHYM has approved a 12-month
extension to the Anoual Initial Period to 8 January 2024.

 

The Anoual Permits cover 8,873 square kilometres in Eastern Morocco and the
Company, as operator, holds 75% interest in the Anoual Permits, with the
remaining 25% interest held by joint venture partner, ONHYM.

 

Subject to Moroccan Energy and Finance Ministry approval, the length of the
Anoual Initial Period defined under the Petroleum Agreement will now be 6
years and 4 months, commencing on or about 8 September 2017. The work
programme commitments for the Anoual Initial Period, details of which are
provided below, remain unchanged.

 

In providing its approval, subject to Ministerial approval, for the extension
to the Anoual Initial Period, the length of the first Anoual complimentary
period, which would commence upon the successful completion of the now
extended Anoual Initial Period, will be reduced to 1 year and 2 months and the
second complimentary period will remain unchanged at 2 years and 6 months. The
work programmes for each of the complimentary periods will remain unchanged.

 

As a result, the Anoual Permits now have a total duration of 10 years (in
place of 9 years previously announced by the Company on 1 September 2021) and,
following the Company having historically fulfilled the requirements under the
Anoual Initial Period to acquire FTG-aerogradiometry and 600 kilometres of 2D
seismic, the unchanged remaining work commitments under the Anoual Permits are
as follows:

 

·      Anoual Initial Period of 6 years and 4 months from 8 September
2017:

o  1 exploration well with Triassic objective to be scheduled in 2023

o  The Company's estimation of the gross exploration potential of the M5
exploration prospect, a possible candidate for the exploration well, expressed
in GIIP is as follows.

 

 Target name     Unrisked Volume Potential               Chance of Success

                 Gas Initially-in-Place (Bcf)
                                               Gros
                                               s
                                               (100
                                               %)
                                               basi
                                               s
                 Low       Best      High      Mean
 M5 Exploration  332       800       1728      943       21%

 

 

·      Optional First Anoual Complimentary Period of a further 1 years
and 2 months:

o  Should the results of the drilling of the exploration well drilled during
the Anoual Initial Period be likely to constitute a commercially exploitable
discovery, the Company will be required to acquire 150 square kilometres of 3D
seismic or its equivalent in 2D seismic data. If the results of the
exploration well drilled in the Anoual Initial Period are not likely to
constitute a commercially exploitable discovery, the Company will undertake
further geological and geophysical studies but will not be required to acquire
this additional seismic.

 

·      Optional Second Anoual Complimentary Period of a final 2 years
and 6 months:

o  A further single exploration well with Triassic objective.

 

Sidi Moktar exploration permits

 

The Company is also pleased to report that ONHYM has agreed a 12-month
extension to the Sidi Moktar Initial Period to 9 October 2023.

 

The Sidi Moktar exploration permits cover approximately 4,712 square
kilometres in Southern Morocco with an initial period of 4 years and 6 months
(the "Initial Period") within the total duration of 10 years commencing on or
about 9 April 2018.  The Initial Period was to end by 9 October 2022. ONHYM
has agreed to a 12-month extension to the Sidi Moktar Initial Period to 9
October 2023 and has accordingly reduced the optional First Complimentary
Period of 3 years by 12 months to 2 years. The Company will now seek to
complete the committed work programme within the Initial Period and progress
the exploration of this highly prospective basin. The work commitments for the
Initial Period of the Sidi Moktar permits remain to acquire and process 500
kilometres of 2D seismic, a short well test of the Koba-1 well and abandonment
of Koba-1 and Kamar-1, if required.

 

 

Cautionary statement

 

The Company cautions that notwithstanding its internal estimates for the
exploration potential of the high-graded work programme prospects across the
Grand Tendrara, Anoual and Sidi Moktar exploration permits set out above,
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:

 

"Whilst we continue to manage the legacy fallout of COVID 19 on business
environment and our supply chains to undertake exploration activities the
situation is improving. We are now making good progress with our farm-out
process to secure partner participation for our next exploration drilling
campaign which will target near-field opportunities within the TAGI play in
Eastern Morocco assets of Grand Tendrara and Anoual but also progress our
seismic campaign in Essaouira Basin covered by Sidi Moktar. We thank ONHYM and
the Ministry of Energy for their strong and continuing support."

 

Further announcements will be made, as appropriate, in due course.

 

 

For further information please contact:

 

 Vigo Consulting - PR Adviser               Tel: 44 (0)20 7390 0230

 Patrick d'Ancona

 Finlay Thomson

                                            chairman@soundenergyplc.com (mailto:chairman@soundenergyplc.com)

 Sound Energy

 Graham Lyon, Executive Chairman

 Cenkos Securities - Nominated Adviser      Tel: 44 (0)20 7397 8900

 Ben Jeynes

 Peter Lynch

 SP Angel Corporate Finance LLP - Broker    Tel: 44 (0)7789 865 095
 Richard Hail

 Gneiss Energy Limited - Financial Adviser  Tel: 44 (0)20 3983 9263

 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.

 

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse Regulation (EU) No.
596/2014. Upon the publication of this announcement, this inside information
is now considered to be in the public domain.

 

This information is provided by RNS, the news service of the London Stock
Exchange. RNS is approved by the Financial Conduct Authority to act as a
Primary Information Provider in the United Kingdom. Terms and conditions
relating to the use and distribution of this information may apply. For
further information, please contact rns@lseg.com or visit www.rns.com.

 

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