REG - Sound Energy PLC - Update re Sound Energy Morocco East Moroccan Tax

Sound EnergyAnnouncement

13/07/2022 07:00

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RNS Number : 2487S  Sound Energy PLC  13 July 2022

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13 July 2022

Sound Energy plc

("Sound Energy" or the "Company")

 

Update re Sound Energy Morocco East Moroccan Tax

 

Sound Energy, the transition energy company, announced on 30 September 2021
that its wholly owned subsidiary Sound Energy Morocco East Ltd ("SEME") had
filed to the Moroccan Court its challenge to the remaining charges against
SEME relating to the Moroccan Tax Administration's assessment of the signing
in October 2018 of a brand-new petroleum agreement for exploration at Greater
Tendrara (the "New Petroleum Agreement").

 

Under the remaining charges against SEME the Moroccan Tax Administration
alleged that SEME had disposed of assets to Schlumberger in entering into the
New Petroleum Agreement, triggering a claimed total taxation liability for
SEME of approximately US$2.55 million (the "Remaining SEME Charges"). The
Company remains of the strong opinion that the Remaining SEME Charges result
from an incorrect interpretation by the Moroccan Tax Administration of the
entry of the New Petroleum Agreement.

 

SEME has now been informed that the tribunal pronounced its decision in a
public hearing in respect of the Remaining SEME Charges, with the judge
rejecting SEME's demand for the annulment of the prior decision of the
commission in respect of the Remaining SEME Charges (the "Notification").

 

The Notification does not provide reasons for, or details of, the tribunal's
decision.

 

The tribunal's reasons for the decision will be available in due course. SEME
will then consider the tribunal's reasons and decide what further steps it
will take including but not limited to lodging an appeal.

 

In addition to the Remaining SEME Charges, the Moroccan tax claims against
Sound Energy Morocco SARL AU ("SEMS") related to the Tendrara Lakbir
Exploration Permits and the transfer of Operatorship from SEMS to SEME (the
"SEMS Claims") remain in due process. Under the SEMS Claims the Moroccan Tax
Administration purports a so-called disposal for nil consideration of
intangible assets by SEMS to SEME.

 

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

 

Graham Lyon, Sound Energy's Executive Chairman, commented:

 

"We are both surprised and disappointed with this ruling. Clearly, this is not
what was expected and reflects poorly on the application and understanding of
the applicable legislative code in Morocco. We will both appeal to the
Moroccan higher courts and reflect on the ruling with the various Moroccan
ministries given its impact for new entrants into Morocco.

 

It remains perplexing that the entry of a new petroleum agreement awarded by
Government agreement, with its own exploration work commitment negotiated with
the State of Morocco and covering different geographic areas/time periods, can
be purported to be a 'sale' of acreage previously surrendered to the
Government.

 

Confusion has arisen due to a previous notification by the Company on 23 July
2018 whereby an entrant into the Tendrara Lakbir licence was postulated. This
transaction never occurred. The Greater Tendrara exploration licence is not
the continuation of the Tendrara Lakbir exploration licence.

 

We believe an error has been made and, whilst the Company, together with its
advisors, continues to seek to engage constructively with the authorities,
Sound Energy will continue to defend its rights through the Courts in relation
to all outstanding claims."

 

 

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 / Stuart Gledhill / Adam Cowl

 

 

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