REG - Sound Energy PLC - Project Financing Update

Sound EnergyAnnouncement

31/10/2022 07:00

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RNS Number : 5713E  Sound Energy PLC  31 October 2022

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31(st) October 2022

Sound Energy plc

("Sound Energy" or the "Company")

 

Project Financing Update

 

Sound Energy, the transition energy company, is pleased to announce the
following project financing update.

 

Farm-Out Update

 

The Company announced on 9 August 2022 that it had initiated a formal farm-out
process for the Tendrara Production Concession and the surrounding Grand
Tendrara and Anoual exploration permits.  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 to first gas of approximately
US$60 million net to the Company's working interest in the Tendrara Production
Concession and also to progress an exploration and appraisal drilling
programme in the Grand Tendrara and Anoual exploration permit areas.

 

The Company has received strong interest in the process from a wide range of
credible and well-funded parties. Management presentations and data room
evaluations are ongoing, and further announcements will be made, as
appropriate, in due course.

 

Phase 2 Development Financing Update - Lead Finance Arranger Mandate

 

The Company announced on 23 June 2022 that it had entered into an Arrangement
and Mandate letter ("Mandate") with Attijariwafa bank (the "Arranger"), a
Moroccan multinational bank and one of the leading banks in Morocco, under
which the Company mandated the Arranger in relation to the arrangement of
project debt financing for the development of Sound Energy's Tendrara
Production Concession (the "Agreement").

 

Pursuant to the Agreement, the Arranger was mandated, and provided with
exclusivity by the Company for a period of eight months, to arrange a
long-term project senior debt facility with a term of no more than 12 years of
up to 2.250 billion Moroccan dirhams (approximately US$206 million using
current exchange rates) for the partial financing of the currently estimated
approximately US$330 million total Phase 2 development cost (including
development wells post-first gas) of the Tendrara Production Concession (the
"Financing").

 

Under the terms of the Mandate, the parties agreed to seek to negotiate
binding terms for the Financing within 120 days of entry of the Agreement.
Whilst discussions between the parties are progressing well, the Company
announces that the parties have entered into an amendment to the Mandate in
order to extend the date by which they will seek to negotiate binding terms
for the Financing to 15 December 2022. For the avoidance of doubt, the
eight-month period of exclusivity provided to the Arranger in order to arrange
the Financing remains as per the original Mandate.

 

Phase 2 Development Gas Sales Agreement

 

The Company announced on 30 November 2021 that it had entered into a binding
gas sale and purchase agreement (the "GSA") in respect of the Phase 2
development of the Tendrara Production Concession with Morocco's state-owned
power company ONEE (Office National de l'Electricite et de l'Eau potable) for
the sale of natural gas from the Tendrara Concession in Eastern Morocco over
a 10-year period.

 

The GSA remains conditional upon, inter alia: (i) all necessary authorisations
and permits having been granted for the construction of the Phase 2 gas
installations; and (ii) the final investment decision, when taken, by the
Tendrara joint venture partners, being approved by the Moroccan Ministries of
Transition Energy and Sustainable Development and Economy and Finance;

 

Pursuant to the terms of the GSA, the Company announced on 9 March 2022 that
it had agreed with ONEE a 90-day extension to the period by which the
conditions would be required to be satisfied in order for the GSA to become
effective. Whilst good progress is being made in order to satisfy the
conditions, the Company announces that it has agreed with the parties to the
GSA to extend the date by which the conditions should be satisfied to 30 June
2023.

 

 

Commenting, Garry Dempster (CFO) said:

 

"Alongside the Company continuing to make good progress on executing the
Tendrara Phase 1 gas development, I am pleased with the progress that the
Company is making in advancing project funding for the proposed Tendrara Phase
2 gas development. Strategically, for Sound Energy, its licence partner ONHYM
and for Morocco, this is a critical project that will propel the Company's
future growth along with forming a key pillar of Morocco's energy strategy
centred around the energy transition.

 

There is a complex series of inter-related steps necessary to be advanced and
completed in order that the Company and its partner, ONHYM, can take a final
investment decision on the development. Consequently, and whilst the Company
is making good progress in this regard, I am pleased that we have agreed an
extension to the back-stop date of the ONEE GSA to June 2023 to allow us to
focus on delivery of the various pre-FID activities, including conclusion of
ongoing discussions with EPC contractors to execute development activities.

 

Furthermore, I am encouraged by the strong level of interest in the ongoing
farm-out process, from well-established and notable industry players. This is
testimony not just to the increased appetite for investment in well-positioned
gas portfolios such as ours but to the quality of the underlying opportunity
upon which Sound Energy's strategy is centred.

 

We look forward to further positive updates as the various planned milestones
are delivered."

 

 

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
 Richard Hail                               Tel: 44 (0)7789 865 095

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

 Jon Fitzpatrick / Paul Weidman

 

 

 

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