REG - Sound Energy PLC - Project Financing Update

Sound EnergyAnnouncement

12/12/2022 07:00

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RNS Number : 2942J  Sound Energy PLC  12 December 2022

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12  December 2022

Sound Energy plc

("Sound Energy" or the "Company")

 

Project Financing Update

 

Sound Energy, the transition energy company, is pleased to provide a project
financing update in relation to the Company's Tendrara Production Concession,
onshore Morocco.

 

Partner and possible Farm-Out Update

 

The Company announced on 9 August 2022 that it had initiated a formal farm-out
process to identify a partner for the Tendrara Production Concession and the
surrounding Grand Tendrara and Anoual exploration permits.  The objective of
the area-wide approach 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 "Process").

 

Following strong levels of interest in the Process from a wide range of
credible and well-funded parties, the Company has now received quantified
non-binding indications of interest in the Process from several parties and,
following review, the Company intends to engage in more detail with the
relevant parties. Further announcements will be made, as appropriate, in due
course.

 

Phase 2 Development - EPC Contractor

 

In parallel with the farm-out process in progress, the Company has been
developing relationships with various vendors to conduct Engineering,
Procurement, Construction ("EPC") and potentially Operations and Maintenance
activities for the Phase 2 development of the Tendrara Production Concession.
Advanced negotiations are ongoing, with suitable Consortia to undertake such
work identified.

 

Phase 2 Development - Lead Finance Arranger Mandate Update

 

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$210 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, as amended, the parties agreed
to seek to negotiate binding terms for the Financing by 15 December 2022.

 

Good progress continues to be made with the Arranger who has recently
commenced technical due diligence. To provide sufficient time for this
technical diligence process to complete, the parties have entered into a
further amendment to the Mandate in order to extend the date by which they
will seek to negotiate binding terms for the Financing to 15 March 2023. The
exclusivity provided to the Arranger under the Mandate to arrange the
Financing has also been extended to 1 June 2023.

 

 

Commenting, Graham Lyon (Executive Chairman) said:

 

"The receipt of credible interest from a number of industry participants in
joining the Tendrara Production Concession development and surrounding
exploration acreage is encouraging and the Company will now spend time to
fully evaluate each and the structure of any potential future transaction.
 Identifying the Consortium for the Phase 2 development Engineering work is
also key as is the structure by which the Company engages all parties.

 

"Understandably Attijariwafa bank require more time for their external experts
to get familiar with the project as this would be the first Moroccan bank led
gas development financing. We look forward to providing further positive
updates as the various project 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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