REG - Sound Energy PLC - Half-year Report
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RNS Number : 7773Z Sound Energy PLC 18 September 2025
The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended. Upon the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.
18 September 2025
SOUND ENERGY PLC
("Sound Energy", "Sound" or the "Company" and together with subsidiaries the
''Group'')
HALF YEARLY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2025
Sound Energy, the transition energy company, announces its unaudited half-year
report for the six months ended 30 June 2025.
HIGHLIGHTS
Development of the Moroccan Tendrara Production Concession
· Phase 1 Micro LNG (''mLNG'') project (''Phase 1''):
o Change of main contract of the mLNG project from vendor financing contract
to a traditional Engineering, Procurement and Construction (EPC) contract
o Post-period end the Operator, Mana Energy, on behalf of the consortium has
finalised a $25 million debt facility from a local bank to fund the
above-mentioned change in contract. Sound's share of the facility is $5
million
o First gas expected by year-end 2025
· Phase 2 Gas (pipeline) development (''Phase 2'')
o The Operator has commissioned an update of the Front-End Engineering &
Design (FEED) study and selection of EPC contractor
Energy Transition Business Development
· Formation of HyMaroc Ltd, a Company established to explore for
Natural Hydrogen and Helium in Morocco
· A binding agreement to create a joint venture Company to produce
and sell renewable energy via access to the medium voltage grid in Morocco
Exploration
· Exploration licences are all in the process of extension and
renewal
Graham Lyon, Executive Chairman said:
''The Company is now on the cusp of first revenue generation with Tendrara gas
production and a funded second phase project development awaiting FID. It has
two funded exploration wells to be drilled and has begun diversification with
two exciting new ventures. I would like to thank the Ministries in Morocco and
National Office of Hydrocarbons and Mines (ONHYM) our state partner, for their
continued co-operation and increased support. I appreciate the proactive
approach of Mana Energy to enhance the value at Tendrara. Finally, a thank you
to our staff who have continued to drive the Company forward and expand our
portfolio opportunity set, and to all our shareholders for their continuing
support of the Company and its objectives.''
For further information please visit https://www.soundenergyplc.com/
(https://www.soundenergyplc.com/)
follow on X @soundenergyplc and LinkedIn
or contact:
Flagstaff Strategic and Investor Communications Tel: 44 (0)20 129 1474
Tim Thompson, Mark Edwards, Alison Allfrey soundenergy@flagstaffcomms.com
Sound Energy Chairman@soundenergyplc.com
Graham Lyon, Executive Chairman
Zeus- Nominated Advisor and Broker Tel:44 (Tel:44) (0)20 3829 5000
James Joyce, Gabriella Zwarts (Investment Banking)
Simon Johnson (Corporate Broking)
Tel:44 (Tel:44) (0)20 3829 5000
STATEMENT FROM THE EXECUTIVE CHAIRMAN
Transformation
The first half of 2025 saw Sound in its new role as minority co-venturer with
Mana Energy and the National Office of Hydrocarbons and Mines (ONHYM) in the
development of the Tendrara concession. In June, two new initiatives to
diversify the Sound portfolio in Morocco were announced, both with experienced
partners. Firstly, the formation of HyMaroc Ltd, www.HyMaroc.com
(http://www.HyMaroc.com) , a company established to explore for Natural
Hydrogen and Helium in Morocco and secondly a binding agreement to create a
joint venture to produce and sell renewable energy via access to the medium
voltage grid in Morocco. Leveraging our local knowledge and stakeholder
relationships, Sound is now in a diversified position to perform a key role in
Morocco's energy growth and transition plans.
Phase 1 Tendrara Micro LNG Project (mLNG)
The Micro-LNG project continues to move from design, engineering and
construction to installation and commissioning with first gas production now
scheduled for Q4 2025. Mana Energy as Operator has enhanced the former Sound
Energy local team with additional specific project delivery resources. The
main contract with Italfluid GeoEnergy S.r.l (Italfluid) has been changed from
a vendor financing contract to a traditional Engineering, Procurement and
Construction (EPC) contract with commensurate reduction in daily operating
costs. This has only been possible with the support of Mana Energy's financial
capacity. Attijariwafa Bank has provided a $25 million debt facility to Mana
Energy on behalf of the consortium to fund this contract conversion. Sound's
share of this facility is $5 million. Sound continues to support the
Operator with certain services; however, it is recognised that Mana Energy is
using its considerable Project delivery capacity to achieve first gas by
year-end 2025.
ESG
Following the transfer of operatorship to Mana Energy, Sound Energy's
Environmental, Social and Governance (ESG) commitments and activities
associated with the Tendrara operations have been handed over to Mana Energy.
Mana Energy continues to operate in an environmentally responsible manner and
to support the local community. Governance continues to be a focus for the
organisation, overseen by the Board of Directors. ESG related processes and
commitments are core to Sound Energy's values and will be included in all new
business opportunities. ESG remains at our core despite non-operator emissions
attributable to Sound being de-minimis.
It is to our great sadness that our Health, Safety, Security and Environmental
(HSSE) Manager, Sean Gallagher, passed away unexpectedly in July 2025
following a routine hospital operation. Sean was a much respected, liked and
admired member of the Sound executive team at the Tendrara development with a
wealth of experience in HSSE matters and extensive practical handling of risk
management with 23 years' experience in the oil and gas industry. He will be
sorely missed by all his colleagues.
Phase 2 Tendrara Processing and Pipeline Project
The pipeline project has not progressed as promptly as Sound would have liked
this year, however updating of the Front-End Engineering & Design (FEED)
study and selection of EPC contractor, which remains the key outstanding CP
for the debt closure, is now in the hands of the Mana Energy procurement team
who have commissioned this work. Results of the FEED update is due this year
such that Final Investment Decision (FID) can be taken thereafter.
Exploration
The Company and ONHYM have previously proposed extensions to the Anoual
licence to the relevant Ministries and we continue to await approval.
Similarly, Sound is in continued exclusive discussions with ONHYM for the
Grand Tendrara licence through Operator Mana Energy and directly for Sidi
Moktar Onshore licence. Sound Energy's costs are to be carried by Managem SA
for the SBK-1 structure well and M5 exploration wells as per terms of the
farm-out transaction. We continue to push for optimal licence terms and
instigation of exploration drilling.
Corporate
During the period Sound continued to optimise its costs. Zeus was appointed as
NOMAD alongside its role as Corporate broker. Sound's former CFO resigned to
pursue other opportunities, and the company hired Andy Matharu, a very
experienced corporate financier with strong background in Petroleum
Engineering to succeed as CFO. Andy joined the Company full time as of 1st
September 2025, corporate balance sheet restructuring being his current
primary focus. The company continues to engage with stakeholders and has held
several live Q&A sessions. The AGM was held on 17th June with all
resolutions supported by shareholders.
Board
Mohammed Seghiri resigned as COO from the Company and the Board to join
Managem SA, providing continuation of operations in Morocco. We thank Mohammed
for his 8 years of service to Sound Energy.
Graham Lyon
Chairman (Executive)
OPERATIONS REVIEW
Tendrara Development
Sound Energy is pursuing the Field Development Plan underpinning the Tendrara
Concession centred around the TE-5 Horst gas discovery. The development is
progressing in two phases. Phase 1, the mLNG production scheme provides gas to
industrial consumers. The planned Phase 2 pipeline development provides gas to
power the state energy power stations. Phase 2 is centred around the
installation of a 120km gas export pipeline to help fully unlock the gas
potential of this region and lower the cost of development for future
discoveries. Both phases address different markets in Morocco - the industrial
energy user and the state power producer, both of which have strong and
growing demand, with Tendrara gas playing an important role in supporting
Morocco's strategy to lower carbon emissions. As Morocco continues to grow
both industrially and domestically and as other fuel sources become scarcer
in-country, there is opportunity to supply more of the energy mix. Morocco's
imports of natural gas from Spain through the GME pipeline rose again in
2024. In 2023 Morocco imported 9,472(1) GWh (approximately 0.965 BCM, 30.5
Bcf) of natural gas from Spain and in 2024 imports increased to 9,703(1) GWh
(approximately 0.886 BCM, 31.3 Bcf). In the first five months of 2025,
imports have risen by 7% compared to the same period in 2024(1).
Progress of the Phase 1 Development Project mLNG
This first phase focuses on the existing TE-6 and TE-7 wells of the TE-5
Horst. First gas will be achieved by tying the currently suspended TE-6 and
TE-7 gas wells with flowlines connected to the inlet of a skid mounted,
combined gas processing and mLNG plant. Production from both wells will meet
the 10 mmcf/d sales gas volume.
In 2021, the Company entered into a lease contract with Italfluid for the
design, construction, commissioning, operation, and maintenance of the mLNG
facilities under a 10-year lease arrangement. The mLNG facilities, which will
also treat, and process raw gas produced from the wells prior to liquefaction,
is the principal part of the surface facilities required to be built and
operated as part of this first phase of development. Also in 2021, the Company
entered into a Sale and Purchase Agreement with Afriquia Gaz to offtake the
LNG produced. The LNG will be delivered to on-site storage from the outlet
of the mLNG facilities whereupon Afriquia Gaz will lift and take title for LNG
for transportation, distribution and sale to the Moroccan industrial market.
Groundworks for the construction of the mLNG facility commenced March 2022
following completion of surveying and remediation works to the access road for
the facility. The raised foundation platform for the LNG storage tank, and
pads for the skid mounted units, including the compressor package, were
completed in 2023 along with the necessary piping and cabling for the
firefighting system which have been installed along with fencing and lighting
towers. During 2024, installation of the necessary insulation and
construction of the outer and inner tank shells of the tank commenced and were
completed in 2025. Facilities engineering and manufacturing continued to
progress with major vendors under the Italfluid contract. In 2023 the
Company selected Gas to Liquid Equipment (GLE) to provide engineering and
procurement services for the flowline system and associated well head facility
equipment for the gas gathering system to transport the gas from the well
heads to the mLNG plant. During the first half of 2025 the necessary
equipment packages for the gas gathering system were delivered to site and the
groundworks completed.
In 2024, works to convert TE-6 and TE-7 wells from appraisal gas wells into
long term gas producers were successfully completed, replacing the carbon
steel production tubing with corrosion resistant steel. The wells were opened
up in 2025, tested successfully flowing gas with no water.
During 2024, the equipment packages for the gas plant were completed and
tested in the workshops, brought from workshops located around the world and
delivered to site via the main ports in Morocco.
In March 2025, the Company announced that the mLNG project main contractor,
Italfluid, and the operator of the Tendrara Production Concession had agreed
to amend their contractual arrangement by terminating the vendor financed
lease agreement entered into in 2020 and entering into an EPC contract. The
parties are currently in advanced discussions to agree an operations and
maintenance contract. Throughout 2025 the equipment packages are being
assembled on site in preparation for plant commissioning and activation in the
remaining quarter of the year.
(1)
https://www.cores.es/sites/default/files/archivos/estadisticas/gas-exports.xlsx
(https://www.cores.es/sites/default/files/archivos/estadisticas/gas-exports.xlsx)
All gas data from Corporación de Reservas Estratégicas de Productos
Petrolíferos under the aegis of the Spanish Ministry for the Ecological
Transition and the Demographic Challenge
Progress of the Phase 2 Development Project
Based upon current development capital estimates, the funding arising from
Managem SA combined with the previously announced project debt financing from
Attijariwafa Bank will provide Sound Energy with funds required to achieve
first gas under its Phase 2 Tendrara Production Concession development plan.
Eastern Morocco
GRAND TENDRARA
- 8 years from October 2018(2)
27.5% interest Non-operated Exploration permit 14,411 km(2) acreage
ANOUAL
- 11 years from September 2017(2)
27.5% interest Non-operated Exploration permit 8,873 km(2)
Eastern Morocco Licences
TENDRARA CONCESSION
- 25 years from September 2018
20% interest Non-operated Production permit 133.5 km(2) acreage
Exploration
Our Eastern Morocco Licences comprising the Concession together with the
Anoual and Grand Tendrara exploration permits are positioned in a region
containing a potential extension of the established petroleum plays of the
Algerian Triassic Province and Saharan Hercynian Platform. The presence of the
key geological elements of the Algerian Trias Argilo-Gréseux Inférieur or
(TAGI) gas play are already proven within the licence areas with the
underlying Palaeozoic, representing a significant upside opportunity to be
explored.
These licences cover a surface area of over 23,000 square kilometres, but so
far only thirteen wells have been drilled, of which six are either located
within or local to the Concession. Exploration drilling beyond the region of
the Concession has been limited and the Group maintains a portfolio of
features identified from previous operators' studies, plus new targets
identified by Sound Energy from the recent geophysical data acquisition,
subsequent processing and ongoing interpretation studies. These features are
internally classified as either prospects, leads or concepts based upon their
level of technical maturity and represent potential future exploration
drilling targets.
Whilst the Company has strategically prioritised its gas monetisation strategy
through the phased development of the TE-5 Horst (Tendrara Production
Concession), the Company has also re-evaluated its extensive exploration
portfolio within the Grand Tendrara and Anoual exploration permits surrounding
the Concession. By integrating the acquired data and learnings from previous
drilling campaigns with acquired and reprocessed seismic datasets, the Company
has high graded several potential near term subsalt drilling opportunities
within the TAGI gas reservoir, the proven reservoir of the TE-5 Horst gas
accumulation.
In June 2024, the Company concluded a competitive farm-out process in the
under-explored but highly prospective Tendrara Basin in Eastern Morocco. This
opportunity provides access to high impact, short term exploration
opportunities, in a stable country with very attractive fiscal terms. By
entering into a binding SPA with Managem, the Company has secured the funding
of drilling two exploration wells, one on Grand Tendrara and one at Anoual,
which each have the potential to be commercialised through the planned
infrastructure on Phase 2. The SPA was completed in December 2024.
At Grand Tendrara an exploration well is planned on the structure previously
drilled by the SBK-1 well in 2000, with an estimated unrisked exploration
potential of 140 Bcf gross P(mean) Gas Initially in Place (GIIP). 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.
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.
At Anoual a well is planned to be drilled on the M5 prospect located on the
Anoual permits, with an estimated unrisked exploration potential of 943 Bcf
gross P(mean) GIIP. The timing of drilling of both wells are to be agreed with
Managem and the Company is providing technical support to the operator on an
on-going basis under a Technical Services Agreement.
(2) agreed with ONHYM and subject to Ministry of Energy Transition and
Sustainable Development approval
Southern Morocco
Southern Morocco Licence
SIDI MOKTAR ONSHORE
- 10 years from April 2018
75% interest Operated Exploration permit 4,712 km(2)
Southern Morocco Exploration
The Sidi Moktar licence is located in the Essaouira Basin, in Southern
Morocco. The licence covers a combined area of 4,712 km2. The Group views the
Sidi Moktar licences as an exciting opportunity to explore high impact
prospectivity within the sub-salt Triassic and Palaeozoic plays in the
underexplored Essaouira Basin in the West of Morocco.
The Sidi Moktar permit hosts a variety of proven plays. The licence hosts 44
vintage wells drilled between the 1950s and the present day. Previous
exploration has been predominantly focused on the shallower post-salt plays.
The licence is adjacent to the ONHYM operated Meskala gas and condensate
field. The main reservoirs in the field are Triassic aged sands, directly
analogous to the deeper exploration plays in the Sidi Moktar licence. The
Meskala field and its associated gas processing facility are linked via a
pipeline to a state-owned phosphate plant, which produces fertiliser both for
domestic and export markets. This pipeline passes across the Sidi Moktar
licence. The discovery of the Meskala field proved the existence of a deeper
petroleum system in the basin. Specifically, Meskala provides evidence that
Triassic clastic reservoirs are effective, proves the existence of the
overlying salt seal and gives support for evidence of charge from deep
Palaeozoic source rocks. Based on work undertaken by Sound Energy, the main
focus of future exploration activity in the licence is expected to be within
this deeper play fairway. The Company believes that the deeper, sub-salt
Triassic and Palaeozoic plays may contain significant prospective resources,
in excess of any discovered volumes in the shallower stratigraphy.
The Company's evaluation of the exploration potential of Sidi Moktar,
following an independent technical review, includes a mapped portfolio of
sub-salt, Triassic and Palaeozoic leads in a variety of hydrocarbon trap
types. Sound Energy is developing a work programme to mature the licence with
specific focus on the deeper, sub-salt plays. The Company believes
additional seismic acquisition and processing is required to mature these
leads into drillable exploration prospects.
Preparations for this seismic acquisition campaign have commenced with the
completion and approval of an Environmental Impact Assessment (EIA) in late
2019.
The Company continues to seek to progress a farm out process for this permit,
offering an opportunity to a technically competent partner to acquire a
material position in this large tract of prospective acreage. In parallel, the
Company continues to engage in dialogue with a number of seismic acquisition
and processing contractors for potential services to undertake the survey.
Condensed Interim Consolidated Income Statement
Notes Six months ended Six months ended Year ended
30 June 2025 30 June 2024 31 Dec 2024
Unaudited £'000s Unaudited Audited
£'000s £'000s
Other income 8 - -
Impairment loss on development assets and exploration costs 4 - (122,951) (122,042)
Gross profit/(loss) 8 (122,951) (122,042)
Administrative expenses (1,437) (1,398) (4,586)
Group operating loss from continuing operations (1,429) (124,349) (126,628)
Finance revenue 33 9 12
Foreign exchange (loss)/gain (3,866) 155 2,294
Finance expense (262) (903) (2,302)
Loss for period before taxation from continuing operations (5,524) (125,088) (126,624)
Tax expense (2) - -
Loss for period after taxation from continuing operations (5,526) (125,088) (126,624)
10 - (23,141) (24,196)
Discontinued operations
Loss for the period after tax from discontinued operations
Total loss for the period (5,526) (148,229) (150,820)
Other comprehensive income
Items that may subsequently be reclassified
to profit and loss account:
Foreign currency translation income 51 810 9
Total comprehensive loss for (5,475) (147,419) (150,811)
the period attributable to equity holders
of the parent
Pence Pence Pence
Basic and diluted (loss)/profit per share for the period from continuing and 3 (0.27) (7.50) (7.48)
discontinued operations attributable to equity holders of the parent
Basic and diluted (loss)/profit per share for the period from continuing 3 (0.27) (6.33) (6.28)
operations attributable to equity holders of the parent
Condensed Interim Consolidated Balance Sheet
Notes 30 June 30 June 31 Dec
2025
2024 2024
Unaudited
Unaudited Audited
£'000s
£'000s £'000s
Non-current assets
Property, plant and equipment 4 12,222 10,135 10,489
Intangible assets 5 13,135 13,846 14,097
Prepayments 6 - 1,367 1,522
Deferred consideration 7 20,082 - 21,045
45,439 25,348 47,153
Current assets
Inventories 390 191 69
Other receivables 2,855 53 3,247
Prepayments 50 43 25
Cash and short term deposits 8 2,831 235 7,895
6,126 522 11,236
Assets of disposal group held for sale 10 - 35,531 -
Total assets 51,565 61,401 58,389
Current liabilities
Trade and other payables 2,137 833 3,665
Lease liabilities 68 31 -
2,205 864 3,665
Liabilities of disposal group held for sale 10 - 5,443 -
Non-current liabilities
Lease liabilities 90 - -
Loans and borrowings 9 37,647 35,534 37,707
37,737 35,534 37,707
Total liabilities 39,942 41,841 41,372
Net assets 11,623 19,560 17,017
Capital and reserves
Share capital and share premium 41,073 40,050 41,073
Shares to be issued 374 374 374
Warrant reserve 2,071 2,071 2,071
Convertible bond reserve 28 28 28
Foreign currency reserve 1,659 2,704 1,608
Accumulated deficit (33,582) (25,667) (28,137)
Total equity 11,623 19,560 17,017
Condensed Interim Consolidated Statement of Changes in Equity
Share Share Accumulated Warrant Convertible bond Foreign currency Total
capital premium Shares to be issued Deficit reserve reserve reserves equity
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
At 1 January 2025 20,806 20,267 374 (28,137) 2,071 28 1,608 17,017
Total loss for the period - - - (5,526) - - - (5,526)
Other comprehensive income - - - - - - 51 51
Total comprehensive loss for the period - - - (5,526) - - 51 (5,475)
Share based payments - - - 81 - - - 81
At 30 June 2025 (unaudited) 20,806 20,267 374 (33,582) 2,071 28 1,659 11,623
Share Share Accumulated Warrant Convertible bond Foreign currency Total
capital premium Shares to be issued Deficit reserve reserve reserves equity
£'000s £'000s £'000s £'000s £'000s £'000s £'000s £'000s
At 1 January 2024 19,631 20,267 374 122,443 2,071 28 1,894 166,708
Total loss for the period - - - (148,229) - - - (148,229)
Other comprehensive loss - - - - - - 810 810
Total comprehensive loss for the period - - - (148,229) - - 810 (147,419)
Issue of share capital on conversion of bond 300 (148) - - - - - 152
Share based payments - - - 119 - - - 119
At 30 June 2024 (unaudited) 19,931 20,119 374 (25,667) 2,071 28 2,704 19,560
Convertible Foreign currency reserves
Share capital Share premium Shares to be Accumulated Warrant reserve Bond reserve £'000s Total equity
£'000s £'000s issued Surplus/ £'000s £'000s £'000s
£'000s (deficit)
£'000s
At 1 January 2024 19,631 20,267 374 122,443 2,071 28 1,894 166,708
Total loss for the year - - - (150,820) - - - (150,820)
Other comprehensive
gain - - - - - - 9 9
Total comprehensive loss
- - - (150,820) - - 9 (150,811)
Issue of share capital on conversion of bond
1,175 - - (554) - - - 621
Transfer to profit and loss account on bond conversion to shares
- - - 554 - - - 554
Reclassification to profit and loss account on disposal of subsidiary
- - - - - - (295) (295)
Share-based payments - - - 240 - - - 240
At 31 December 2024 20,806 20,267 374 (28,137) 2,071 28 1,608 17,017
Condensed Interim Consolidated Statement of Cash Flows
Notes Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2025 Unaudited £'000s 2024 Unaudited £'000s 2024
Audited
£'000s
Cash flow from operating activities
Cash flow from operations (2,815) (191) (2,352)
Interest received 33 20 23
Tax paid (2) - -
Net cash flow from operating activities (2,784) (171) (2,329)
Cash flow from investing activities
Disposal of subsidiary - - 9,236
Capital expenditure (992) (1,616) (4,640)
Exploration expenditure (242) (371) (651)
Prepayment for Phase 1, mLNG Project - - (143)
Net cash flow from investing activities (1,234) (1,987) 3,802
Cash flow from financing activities
Net proceeds from borrowings - 2,046 5,822
Interest payments (666) (354) (1,168)
Loan repayments - - (1,350)
Lease payments (6) (93) (124)
Net cash flow from financing activities (672) 1,599 3,180
Net (decrease)/increase in cash and cash equivalents (4,690) (559) 4,653
Net foreign exchange difference (374) (345) 226
Cash and cash equivalents at the beginning of the period 7,895 3,016 3,016
Cash and cash equivalents at the end of the period 8 2,831 2,112 7,895
Notes to Statement of Cash Flows
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2025 Unaudited £'000s 2024 Unaudited £'000s 2024
Audited
£'000s
Cash flow from operations reconciliation
Loss before tax from continuing operations (5,526) (125,088) (126,624)
Loss before tax from discontinued operations - (23,141) (24,196)
Total (loss)/profit for the period before tax (5,526) (148,229) (150,820)
Finance revenue (33) (20) (23)
Increase in inventories (321) (717) (260)
Decrease in short term receivables and prepayments 367 794 803
(Decrease)/increase in accruals and short term payables (1,529) 585 1,113
Impairment loss on development assets, intangible assets and exploration costs - 146,425 122,042
Loss on disposal of subsidiary - - 23,438
Foreign currency translation loss reclassified from other comprehensive income - - 295
Depreciation and amortisation 18 104 128
Share based payments charge 81 119 794
Finance costs and exchange adjustments 4,128 748 138
Cash flow from operations (2,815) (191) (2,352)
There were no non-cash transactions during the period.
Notes to the Condensed Interim Consolidated Financial Statements
1. Basis of preparation
The condensed interim consolidated financial statements do not represent
statutory accounts within the meaning of section 435 of the Companies Act
2006. The financial information for the year ended 31 December 2024 is based
on the statutory accounts for the year ended 31 December 2024. Those accounts,
upon which the auditors issued an unqualified opinion, have been delivered to
the Registrar of Companies and did not contain statements under section 498(2)
or (3) of the Companies Act 2006.
The condensed interim financial information is unaudited and has been prepared
on the basis of the accounting policies set out in the Group's 2024 statutory
accounts and in accordance with IAS 34 Interim Financial Reporting as adopted
by the United Kingdom.
The seasonality or cyclicality of operations does not impact on the interim
financial statements.
Going concern
As at 31 August 2025, the Group's unaudited cash balance was approximately
£2.1 million. The Directors have reviewed the Company's cash flow forecasts
for the next 12-month period to September 2026.
The need for additional financing indicates the existence of a material
uncertainty, which may cast significant doubt about the Group and Company's
ability to continue as a going concern. These condensed interim consolidated
financial statements do not include adjustments that would be required if the
Company was unable to continue as a going concern. Mana Energy, the Operator
of the Tendrara Production Concession (Concession) expect to achieve first gas
before the end of 2025. During August 2025, Mana Energy entered into a
facility agreement (subject to some conditions precedent), with a local
Moroccan bank to fund Phase 1 of the Concession. The facility is intended to
finance capital expenditure, for all the partners, attributable to the
engineering, procurement and construction contract with the mLNG project main
contractor, Italfuid, during 2025. The Company, through its wholly owned
subsidiary, Sound Energy Meridja Limited which has a 20% interest in the
Concession, is in discussion with Mana Energy to conclude the terms under
which the Company will access up to $5.0 million of the facility to fund its
share of the capital expenditure. The Company continues to exercise rigorous
cost control to conserve cash resources, and the Directors believe that there
are several corporate funding options available to the Company, including
various debt, equity and equity-linked funding options. The Directors
therefore have a reasonable expectation that the Company and the Group will be
able to secure the funding required to continue in operational existence for
the foreseeable future and have made a judgement that the Group will continue
to realise its assets and discharge its liabilities in the normal course of
business. Accordingly, the Directors have adopted the going concern basis in
preparing the condensed interim consolidated financial statements.
2. Segment information
The Group categorises its operations into three business segments based on
Corporate, Exploration and Appraisal and Development and Production. The
Group's Exploration and Appraisal activities are carried out in Morocco. The
Group's reportable segments are based on internal reports about the components
of the Group which are regularly reviewed by the Board of Directors, being the
Chief Operating Decision Maker, for strategic decision making and resources
allocation to the segment and to assess its performance. The segment results
for the period ended 30 June 2025 are as follows:
Segment results for the period ended 30 June 2025
Corporate £'000s Development & Production £'000s Exploration & Appraisal £'000s Total
£'000s
Other income - - 8 8
Impairment loss on development assets and exploration costs - - - -
Administration expenses (1,437) - - (1,437)
Operating loss segment result (1,437) - 8 (1,429)
Interest revenue 33 - - 33
Finance costs and exchange adjustments (4,128) - - (4,128)
Loss for the period before taxation from continuing operations (5,532) - 8 (5,524)
The segments assets and liabilities at 30 June 2025 are as follows:
Corporate £'000s Development & Production £'000s Exploration & Appraisal £'000s Total
£'000s
Non-current assets 208 32,141 13,090 45,439
Current assets 2,893 3,001 232 6,126
Liabilities attributable to continuing operations (23,898) (15,922) (122) (39,942)
The geographical split of non-current assets at 30 June 2025 is as follows:
UK Morocco
£'000s £'000s
Development and production assets - 12,059
Deferred consideration - 20,082
Right of use assets 156 -
Fixtures, fittings and office equipment 2 5
Software 37 8
Exploration and evaluation assets - 13,090
Total 195 45,244
Segment results for the period ended 30 June 2024
Corporate £'000s Development & Production £'000s Exploration & Appraisal £'000s Total
£'000s
Other income - - - -
Impairment loss on development assets and exploration costs - (122,951) - (122,951)
Administration expenses (1,398) - - (1,398)
Operating profit segment result (1,398) (122,951) - (124,349)
Interest revenue 9 - - 9
Finance costs and exchange adjustments (748) - - (748)
Profit for the period before taxation from continuing operations (2,137) (122,951) - (125,088)
The segments assets and liabilities at 30 June 2024 were as follows:
Corporate £'000s Development & Production £'000s Exploration & Appraisal £'000s Total
£'000s
Non-current assets 88 11,483 13,777 25,348
Current assets 288 191 43 522
Liabilities attributable to continuing operations (23,583) (12,613) (202) (36,398)
The geographical split of non-current assets at 30 June 2024 was as follows:
UK Morocco
£'000s £'000s
Development and production assets - 10,116
Right of use assets 15 -
Fixtures, fittings and office equipment 3 1
Software 60 9
Prepayment - 1,367
Exploration and evaluation assets - 13,777
Total 78 25,270
Segment results for the year ended 31 December 2024
Development Exploration
and production and appraisal
Corporate £'000s £'000s Total
£'000s £'000s
Other income - - - -
Impairment of development assets and exploration costs - (122,042) - (122,042)
Administration expenses (4,586) - - (4,586)
Operating (loss)/profit segment result (4,586) (122,042) - (126,628)
Interest receivable 12 - - 12
Finance expense and exchange adjustments (8) - - (8)
Loss for the year before taxation from continuing operations
(4,582) (122,042) - (126,624)
The segments assets and liabilities at 31 December 2024 were as follows:
Development Exploration
and production and appraisal
Corporate £'000s £'000s Total
£'000s £'000s
Non-current assets 61 28,707 18,385 47,153
Current assets 9,513 1,649 74 11,236
Liabilities attributable to continuing operations (25,818) (15,433) (121) (41,372)
The geographical split of non-current assets at 31 December 2024 was as
follows:
UK Morocco
£'000s £'000s
Development and production assets - 10,485
Fixtures, fittings and office equipment 3 1
Deferred consideration - 21,045
Software 49 8
Prepayments - 1,522
Exploration and evaluation assets - 14,040
Total 52 47,101
3. Profit/(loss) per share
The calculation of basic profit/(loss) per Ordinary Share is based on the
profit/(loss) after tax and on the weighted average number of Ordinary Shares
in issue during the period. The calculation of diluted profit/(loss) per share
is based on the profit/(loss) after tax on the weighted average number of
ordinary shares in issue plus weighted average number of shares that would be
issued if dilutive options and warrants were converted into shares. Basic and
diluted profit/(loss) per share is calculated as follows:
30 June 30 June 31 December
2025 2024 2024
£'000 £'000 £'000
Loss after tax from continuing operations (5,526) (125,088) (126,624)
Loss after tax from discontinued operations - (23,141) (24,196)
Total loss after tax from continuing operations (5,526) (148,229) (150,820)
million million million
Weighted average shares in issue 2,081 1,977 2,017
Dilutive potential ordinary shares - - -
Diluted weighted average number of shares 2,081 1,977 2,017
Pence Pence Pence
Basic and diluted loss per share from continuing operations (0.27) (6.33) (6.28)
Basic and diluted loss/(profit) per share from discontinued operations - (1.17) (1.20)
Basic and diluted loss per share from continuing operations and discontinued (0.27) (7.50) (7.48)
operations
4. Property, plant and equipment
30 June 30 June 31 December
2025 2024 2024
£'000s £'000s £'000s
Cost
At start of period 135,274 158,791 158,791
Additions 1,185 2,628 5,260
Transfer from prepayments 1,391 - -
Exchange adjustments (11,526) 1,050 2,023
Derecognition on expiry of lease - - (331)
Disposal - (192) (30,469)
Transfer to assets of disposal group held for sale - (28,482) -
At end of period 126,324 133,795 135,274
Impairment and depreciation
At start of period 124,785 864 864
Charge for period 6 128,260 129,948
Exchange adjustments (10,689) 32 2,393
Derecognition on expiry of lease - - (331)
Disposal - (182) (8,089)
Transfer to assets of disposal group held for sale - (5,314) -
At end of period 114,102 123,660 124,785
Net book amount 12,222 10,135 10,489
The Company undertook an assessment of external and internal indicators of
impairment as at 30 June 2025 and concluded that there was no indication that
the carrying amount of the Company's share of the Tendrara Production
Concession was impaired.
5. Intangibles
30 June 30 June 31 December
2025 2024 2024
Unaudited £'000s Unaudited Audited
£'000s £'000s
Cost
At start of period 14,222 45,964 45,964
Additions 243 427 749
Exchange adjustments (1,193) 498 334
Disposal - - (32,825)
Transfer to assets of disposal group held for sale - (32,721) -
At end of period 13,272 14,168 14,222
Impairment and Depreciation
At start of period 125 10,962 10,962
Charge for period 12 17,902 16,526
Exchange adjustments - 269 207
Disposal - - (27,570)
Transfer to assets of disposal group held for sale - (28,811) -
At end of period 137 322 125
Net book amount 13,135 13,846 14,097
6. Prepayments
During Q1 2025 Micro-LNG Project main contractor, Italfluid, and the operator
of the Tendrara Production Concession agreed to amend their contractual
arrangement by terminating the vendor financed lease agreement entered into in
2020 and entering into an engineering, procurement and construction (EPC)
contract. As a result, amounts previously reported as non-current prepayment
were reclassified to property, plant and
equipment.
7. Deferred consideration
30 June 30 June 31 December
2025 2024 2024
Unaudited Unaudited Audited
£'000s £'000s £'000s
At Start of period 21,045 - -
Additions - - 20,696
Unwinding of discount/change in discount rate 893 - -
Exchange adjustments (1,856) - 349
At end of period 20,082 - 21,045
Deferred consideration relates to future funding to be received by the group
from Managem SA, (the purchaser) of the Company's former subsidiary disposed
in December 2024. The Company's share of its future expenditure on the
Tendrara Production Concession Phase 2 development (Phase 2 development) will
be funded by the purchaser up to $24.5 million, the purchaser will also fund
the drilling of one exploration well on each of the Anoual and Grand Tendrara
licences for up to $2.6 million and $3.6 million, respectively, and pay to the
group $1.5 million upon achieving first gas on the Phase 2 development. The
Company calculated the deferred consideration after taking account of the
expected timing of receipt of the various elements of the deferred
consideration based on current estimates of the timing of the operations and
applied a discount rate of 10.24% (2024: 10.55%).
8. Cash and cash equivalents
For the purposes of the condensed interim consolidated statement of cash
flows, cash and cash equivalents comprise the following as at 30 June 2025.
30 June 30 June 31 December
2025 2024 2024
Unaudited Unaudited Audited
£'000s £'000s £'000s
Cash and short term deposits 2,831 235 7,895
Cash and short term deposits attributable to discontinued operations - 1,877 -
2,831 2,112 7,895
9. Loans and borrowings
30 June 30 June 31 December
2025 2024 2024
Unaudited Unaudited Audited
£'000s £'000s £'000s
Non-current liability
Secured bonds 23,184 21,964 21,950
Loan note- Afriquia 14,108 12,613 15,433
Convertible bonds 355 957 324
37,647 35,534 37,707
The Company has €25.32 million secured bonds (the "Secured Bonds"). The
Secured Bonds mature on 21 December 2027. The Secured Bonds bear 2% cash
interest paid per annum until maturity and 3% interest per annum to be paid at
redemption. In 2021, the Company issued to the Bondholders 99,999,936 warrants
to subscribe for new ordinary shares in the Company at an exercise price of
2.75 pence per share. The warrants expire on 21 December 2027. The Bonds are
secured on the issued share capital of Sound Energy Morocco South Limited.
After taking account of the terms of the Bonds, the effective interest is
approximately
6.5%.
The Company has a $18.0 million 6% secured loan note facility with Afriquia
Gaz maturing in December 2033 (the ''Loan''). The drawn down principal bears
6% interest per annum payable quarterly, but was deferred and capitalised
semi-annually, until the second anniversary of the issue of Notice to Proceed.
Repayment of interest that is not deferred commenced in Q2 2024. The principal
and deferred interest will be repayable annually in equal instalments
commencing December 2028. The Loan is secured on the issued share capital of
Sound Energy Meridja Limited. The weighted effective interest on the drawdowns
made is approximately 6.2%.
The Company has outstanding interest of £0.6 million accrued on previously
issued convertible bonds that were converted to equity and £0.25 million
being the principal amount that was then outstanding repaid in December
2024. The carrying amount of the deferred interest is stated at fair value
and is measured using the discounted cashflow method. A discount rate of 17.4%
was used to discount the outstanding deferred interest over the term of the
liability.
10. Discontinued operations
On 14 June 2024, the Company announced that it had entered into a binding sale
and purchase agreement with Managem SA for the disposal of SEME that owns:
· 55% interest in the Tendrara Production Concession, including the
liability for payments arising from the Schlumberger net profit interest (NPI)
agreement (pursuant to the acquisition of Schlumberger Silk Route Services
Limited in 2021);
· 47.5% interest in the Grand Tendrara licence; and
· 47.5% interest in the Anoual licence.
The consideration for the sale (which completed in December 2024) comprised:
· Back costs (expenditure on the licences) from 1 January 2022 to
completion date;
· Tendrara Production Concession Phase 2 carry of up $24.5 million;
· Anoual licence carry on one well, $2.6 million;
· Grand Tendrara licence carry on one well, $3.6 million;
· On achieving Phase 2 first gas, $1.5 million.
The results of discontinued operations for the period are presented below.
Six months
Six months ended
ended 30 June Year ended
30 June 2025 2024 31 December
Unaudited Unaudited 2024
£'000s £'000s Audited
£'000s
Other income - - -
Impairment of tangible and intangible assets - (23,107) -
Gross loss - (23,107) -
Administrative costs - (140) (563)
Operating loss from discontinued operations - (23,247) (563)
Finance revenue - 11 11
Foreign exchange loss - (71) (76)
Finance costs recovery/(expense) - 166 165
Foreign currency translation loss reclassified from other comprehensive income - - (295)
Loss on disposal of subsidiary - - (23,438)
Loss for the period before taxation from discontinued operations - (23,141) (24,196)
Tax expense - - -
Loss for the period after taxation from discontinued operations - (23,141) (24,196)
The major classes of assets and liabilities of the discontinued operations
classified as held for sale as at 30 June 2024 are as follows:
30 June 2024
Unaudited
£'000s
Assets
Property, plant and equipment 23,168
Intangible assets 3,910
Prepayments 4,278
Inventories 1,441
Other receivables 857
Cash and short term deposits 1,877
Assets of disposal group held for sale 35,531
Liabilities
Trade and other payables 4,002
Tax liabilities 1,441
Liabilities of disposal group held for sale 5,443
Net assets 30,088
The net cash flows of the discontinued operations were as follows:
Six months
Six months ended
ended 30 June Year ended
30 June 2025 2023 31 December
Unaudited Unaudited 2024
£'000s £'000s Audited
£'000s
Net cash flow from operating activities - 1,581 (816)
Net cash flow from investing activities - (1,361) 9,236
Net cash flow from financing activities - - -
Net cash inflow/(outflow) - 220 8,420
11. Post balance sheet events
In August 2025, the joint operations Operator of the Concession, Mana Energy,
on behalf of the consortium finalised a $25 million debt facility from a local
bank to partially fund mLNG project capital expenditure. The Company, through
its wholly owned subsidiary, Sound Energy Meridja Limited which has a 20%
interest in the Concession, is in discussion with Mana Energy to conclude the
terms under which the Company will access up to $5.0 million of the facility.
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