REG - Sound Energy PLC - Financing Update, Farm-Out Process and Exploration

Sound EnergyAnnouncement

09/08/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220809:nRSI3276Va&default-theme=true

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 Success

                       Gas Initially-in-Place (Bcf)
                                                     Gros
                                                     s
                                                     (100
                                                     %)
                                                     basi
                                                     s
                       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 (mailto: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 - Broker    Tel: 44 (0)20 3470 0470

 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.

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 (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCDGGDIRXGDGDI