REG - Sound Energy PLC - Final Results
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RNS Number : 3609F Sound Energy PLC 22 May 2026
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.
22 May 2026
SOUND ENERGY PLC
("Sound Energy", "Sound" or the "Company" and together with subsidiaries the
''Group'')
FINAL RESULTS
Sound Energy, the transition energy company, announces its audited final
results for the year ended 31 December 2025.
HIGHLIGHTS
Development of the Moroccan Tendrara Production Concession (the
''Concession'')
· Phase 1 Micro LNG (''mLNG'') project (''Phase 1''):
o Change of main contract for the mLNG project from vendor financing to a
traditional Engineering, Procurement and Construction (EPC) contract
o The Operator, Mana Energy, on behalf of the consortium finalised
approximately $25 million debt facility from a local bank to fund the
above-mentioned change in contract. Sound's share of the facility is
approximately $5 million
o Significant activities during 2025 included clean-up operations of wells
TE-6 and TE-7, connecting the wells to the mLNG plant, delivery, installation
and connection of mLNG plant processing packages (ongoing into 2026)
o Commencement of LNG sales expected Q3 2026
· Phase 2 Gas (pipeline) development (''Phase 2'')
o The Operator 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
· Post period, formation of a joint venture Company, Tayra Energy,
to produce and sell renewable energy via access to the medium and high voltage
grids in Morocco
Exploration
· Anoual licence extension was approved in December 2025. The Grand
Tendrara and Sidi Moktar exploration licences are all in the process of
extension and renewal
Commenting on 2025 performance, Majid Shafiq, Chief Executive Officer said:
''The progress made during 2025 positions the Company at an important
inflection point. We are focussed on advancing and optimising our businesses
in Morocco, with the objective of transitioning them into cash-generative
operations on an expedited basis and strengthening our balance sheet. We will
look to diversify our asset base with strategic acquisitions of accretive
businesses outside Morocco. With a strengthened leadership team and a clear
strategic focus, we believe Sound Energy is well placed to enter its next
phase of development.''
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 sound@flagstaffcomms.com
Sound Energy Chairman@soundenergyplc.com
Graham Lyon, Chairman
Zeus- Nominated Advisor and Broker Tel:44 (0)20 3829 5000
James Joyce, Darshan Patel, Liv Highton (Investment Banking)
Simon Johnson (Corporate Broking)
Note regarding forward-looking statements
This announcement contains certain forward-looking statements relating to the
Company's future prospects, developments and business strategies.
Forward-looking statements are identified by their use of terms and phrases
such as "targets" "estimates", "envisages", "believes", "expects", "aims",
"intends", "plans", "will", "may", "anticipates", "would", "could" or similar
expressions or the negative of those, variations or comparable expressions,
including references to assumptions. The forward-looking statements in this
announcement are based on current expectations and are subject to risks and
uncertainties, which could cause actual results to differ materially from
those expressed or implied by those statements. These forward-looking
statements relate only to the position as at the date of this announcement.
Neither the Directors nor the Company undertake any obligation to update
forward looking statements, other than as required by the AIM Rules for
Companies or by the rules of any other applicable securities regulatory
authority, whether as a result of the information, future events or otherwise.
You are advised to read this announcement and the information incorporated by
reference herein, in its entirety. The events described in the forward-looking
statements made in this announcement may not occur.
STATEMENT FROM THE CHAIRMAN
Introduction
2025 saw Sound Energy plc (Sound Energy) fulfil 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 Production 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 a Company set up to explore for Natural Hydrogen in Morocco with Getech
plc and secondly a binding agreement to create a joint venture with Gaia
Energy (through the formation of Tayra Energy post period end) to generate
renewable energy for the medium and high voltage grids in Morocco.
Leveraging our local knowledge and stakeholder relationships, Sound is poised
to diversify its activities to perform a key role in galvanising Morocco's
energy growth and transition plans.
With Tendrara being Operated by Mana Energy and Moroccan energy transition
projects identified, Sound intends to grow its business further by adding cash
generating businesses. Several such new opportunities outside Morocco have
been studied. To assist in this process the Company has strengthened its
business origination and delivery team.
The Micro-LNG project continues to move from design, engineering and
construction to installation and commissioning with first gas now scheduled
for early Q3 2026. As Operator, Mana Energy has enhanced the former Sound
Energy local team with additional specific project delivery resources. The
main contract with Italfluid GeoEnergy S.r.l, (Italfluid) was 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 thanks to Mana Energy's financial capacity.
Attijariwafa Bank has provided Mana Energy with a $25 million debt facility on
behalf of the consortium to fund this contract conversion. Sound's share of
this facility is approximately $5 million. Wells were commissioned and live
hydrocarbons are available for finalisation of the commissioning and currently
being used to generate electric power on site. Gas processing and other key
equipment have been tested. Sound continued to support the Operator with
certain services; however, it is recognised that Mana Energy is deploying its
considerable project delivery capacity and increased staffing to complete
commissioning to achieve first gas sales and to operate thereafter.
The Phase 2 pipeline led development project has not progressed as promptly as
Sound would have liked during the year, however updating of the Front-End
Engineering & Design (FEED) study was undertaken, this and the selection
of an EPC contractor and finalisation of the Gas Sales Agreement, remain the
key outstanding CPs for the debt closure. They are now in the hands of the
Mana Energy Management and procurement team. Results of the FEED update are
being reviewed by Mana Energy and Sound continues to press for an improvement
in FID date.
During 2025 the Company and ONHYM proposed extensions to the Anoual
Exploration Licence to the relevant Ministries. This was a frustratingly slow
process, but the extension was approved in December. Similarly, Sound is in
continued exclusive discussions with ONHYM for the Grand Tendrara licence
through the Operator Mana Energy and directly for Sidi Moktar licences. Sound
is to be carried by Mana Energy for the SBK-1 appraisal well on the Grand
Tendrara licence and the M5 exploration well on the Anoual licence. We
continue to push for licence optimisation and commencement of exploration
drilling. Until all licences are fully approved by the various ministries and
are perfected, no on-the-ground works can take place. The extension to the
Sidi Moktar permit initial period was previously proposed by ONHYM to expire
in April 2026 and though the Company is in ongoing discussions with ONHYM for
renewal, extension or change in work programme, the Company has made a
judgement that an impairment indicator exists and on assessment, recognised an
impairment charge of approximately £12.5 million as at 31 December 2025. Post
period end, the Company received a letter from ONHYM seeking a $1.5 million
claim against a guarantee made by the Company. The Company is in discussion
with ONHYM in respect of this claim and no provision was made as at 31
December 2025 as the Company has assessed the claim to be a non-adjusting post
balance sheet event.
Corporate
Following the transfer of operatorship to Mana Energy, Sound Energy's
Environmental, Social and Governance (ESG) commitments and activities
associated with the Tendrara operations are as non-operator. We strive to
ensure that Mana Energy continue 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
even though as non-operator, emissions attributable to Sound alone are
de-minimis. Our carbon emissions for 2025 amounted to 120 Tonnes of Carbon
Dioxide Equivalent (tCO2e) representing our 20% share at Tendrara site. It is
with deep sadness that we announced that our 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 and his colleagues at the Tendrara development with a wealth of
experience in Health, Safety, Security and Environmental matters and extensive
practical handling of risk management with 23 years of experience in the oil
and gas industry. He is sorely missed by all.
During the year Sound continued to optimise its cost base, though the addition
of new staff focussed on growth and balance sheet strengthening has increased
employee head count; however, this is counterbalanced by reduced use of
external consultants. The leadership team of the Company has been
strengthened and aligned with corporate governance best practice, separating
Chair and CEO roles. The leadership team now comprise experienced new staff in
the roles of CEO, CFO and Technical Director. Zeus was appointed as NOMAD,
alongside its role as corporate broker, strengthening our ties with this
growing investment banking group.
During the year, the Company held regular shareholder meetings both online and
in person. Shareholders requested virtual interactive sessions, and five
live webinar Q&A sessions were held on different platforms, with various
video recordings made answering questions which had been submitted to the
Company. Face to face shareholder engagement continued with an extended
Investor session at the AGM. We held an analysts' session at year end to
ensure our investment case is understood by the brokers. In 2026 regular
engagements will continue to be undertaken, as we continue to interact, listen
and inform our shareholder community.
Board
2025 saw the Board meet regularly and oversee effective implementation of the
Company's strategy of transition energy in Morocco, revenue generation and
growth. Mohammed Seghiri resigned as COO of the Company and from the Board to
join Managem SA, providing continuation of operations in Morocco. We thank
Mohammed for his 8 years of service to Sound Energy. Majid Shafiq joined the
board as CEO in October 2025. Majid is an experienced CEO who grew his
previous company from zero revenue to production and ultimately a profitable
sale. Graham Lyon transitioned from Executive to Non-Executive Chairman in
April 2026. The board presently consists of one Chairman, two Independent
Non-Executive Directors and the CEO. The board undertook an effectiveness
review in 2025. The key review findings will be implemented during 2026.
Summary
Significant progress has been made in advancing the sustainability of the
Company through the transformational transaction with Managem in 2024. Revenue
generation from mLNG is expected in the near future.
Delays in FID for phase 2 and Exploration licence awards are frustrating. The
executive continues to press the Operator for these activities to be advanced.
Balance sheet strengthening remains the Company's priority alongside its new
growth plans. Revenue generation in 2026 will be the culmination of six
years activity to take the Company from being a pure exploration Company to a
full cycle, exploration, development and production Company. The strengthened
leadership team is well positioned to take the Company further forward to the
benefit of all shareholders in 2026.
Graham Lyon
Chairman
STATEMENT FROM THE CHIEF EXECUTIVE OFFICER
2025 has been a year of operational progress and repositioning for Sound
Energy, as the Company continued its transition towards first revenue and
diversifying its business into renewable energy and hydrogen exploration.
At Tendrara, our primary focus has been the delivery of the Micro-LNG project.
During the year, the project progressed through the final stages of
engineering and construction and into installation and commissioning. The
conversion of the Italfluid contract to a conventional EPC structure
represented an important milestone, reducing operating costs and simplifying
the delivery framework. With initial production wells ready and the gas
gathering system fully commissioned, the focus has moved to final construction
and commissioning of the Micro-LNG plant. The commencement of LNG production
will deliver Sound's first revenues from Tendrara and represents the
culmination of several years of technical and commercial work. Our focus is
now firmly on ensuring safe and efficient start-up and establishing stable
production. First gas is expected in early Q3 2026.
Following the transfer of operatorship to Mana Energy, Sound focused on
ensuring a smooth transfer of operations to the new Operator and provision of
assistance and advice to Mana Energy via a Technical Services Agreement.
During the year, Mana Energy has enhanced project delivery capability on the
ground, and we continue to work closely with the Operator to support execution
and maintain alignment across the consortium.
Progress on Phase 2 of Tendrara, including the pipeline development, has been
slower than originally anticipated. The Operator continues work on the FEED
study, gas sales negotiations with the potential gas purchaser and
preparations for procurement and services tendering. We remain actively
engaged with Mana Energy to support progress towards Final Investment Decision
and to ensure that the project is advanced in a disciplined and timely manner.
We have also made progress on perfecting our exploration licenses. The Anoual
exploration permit has been extended by the relevant Moroccan government
ministries to 7 September 2028 with a firm work programme commitment to drill
one exploration well with a primary Triassic objective. In the event of the
exploration well being successful the Operator has the option to elect to
acquire a 150 km(2) 3D seismic dataset and drill an additional exploration
well targeting the Triassic interval. For Grand Tendrara the partners are
negotiating amendments to perfect the Petroleum Agreement which will progress
our intention to drill either the SBK-1 structure or the TE-4 Horst. We
continue our efforts to bring in a farm-in partner to help fund exploration
activities on our Sidi Moktar acreage.
Beyond Tendrara, the Company has taken initial steps to broaden its portfolio
within Morocco. The formation of HyMaroc our joint venture with Getech for
Hydrogen exploration and Tayra our joint venture with Gaia for solar power
development reflect our strategy of leveraging in-country expertise and
relationships to access new opportunities aligned with Morocco's evolving
energy landscape. In parallel, we assessed a number of potential opportunities
outside Morocco, with a focus on assets capable of generating near-term cash
flow and complementing our existing portfolio.
Capital discipline remains central to our approach. The Company continues to
evaluate funding options carefully, balancing the use of partner capital,
project-level debt and, where appropriate, corporate funding. Our objective is
to minimise dilution while ensuring that we retain sufficient flexibility to
deliver our growth strategy.
Looking ahead, our priorities are clear. In the near term, we are focused on
working with our partners to deliver first gas from the Tendrara Phase 1
Micro-LNG project and transitioning to revenue generation, whilst continuing
to support progress towards FID on Phase 2 at Tendrara. Now that we have
established our solar joint venture, Tayra, we will progress permitting of
medium voltage solar projects and look to rapidly progress these towards
electricity production and first cashflows. We will continue to advance our
Moroccan diversification initiatives and selectively pursue new opportunities
both inside and outside Morocco that can contribute to cash flow and long-term
value creation.
PORTFOLIO REVIEW
A blended portfolio of gas assets
Eastern Morocco
Tendrara Production Concession
Permit Area
The permit in which Sound Energy has a 20% interest is located close to the
Gazoduc Maghreb Europe ("GME") pipeline, approximately 120 kilometres to the
north of it. The 522 kilometre-long Moroccan section is owned by the Moroccan
State and operated by Office National des Hydrocarbures et des Mines
(''ONHYM''). The pipeline connects Morocco to Spanish/Portuguese gas grids as
well as Moroccan gas-fired power stations.
Geology
The gas is trapped within the Triassic Argilo-Gréseux Inférieur (''TAGI"(1))
reservoir within the structural fault block, termed the Tendrara TE-5 Horst,
and sealed by the overlying salt. Reservoir characteristics are significantly
enhanced by the application of proven hydraulic stimulation techniques to
increase gas flow rates.
Ongoing and Planned Developments
Planned development of our discovered TE-5 gas to address gas demand in a
phased manner is progressing, with Phase I being the implementation of a
micro-LNG development scheme (currently nearing completion) and a future Phase
2 being the development of a larger scale central processing facility ("CPF")
and gas export pipeline to the GME pipeline.
Phase 1- Micro LNG Development
Supply of LNG displacing higher carbon footprint energy (such as imported
liquid fuels).
Funding is arranged to meet Sound Energy's share of sanctioned pre first gas
development costs.
Deployment of field gas treatment, processing, liquefaction and storage
facilities to deliver mobile LNG to buyer at site. The LNG buyer will
distribute and sell on to its growing Moroccan industrial consumers within the
domestic gas market. Supplies of LNG are to be an annual contractual quantity
equivalent to approximately 100 million normal cubic metres of gas
(approximately 3.5 billion standard cubic feet of gas per year) over a
ten-year period.
A binding gas sales agreement and associated funding are in place with
Afriquia Gaz, one of the largest LPG distributors in Morocco. There is a
ten-year commitment from first gas to sell annual contractual quantity of 100
million Normal cubic metres per annum with take or pay agreement priced at
$6-$8.346 per mmBTU (million British thermal units) ex plant. The first phase
of development will utilise the existing wells TE-6 and TE-7, with the
drilling of one new well, as required, to maintain the ten-year period of
production at the plateau.
LNG Central Processing Facility
The micro-LNG Plant is to be designed, constructed, commissioned by Italfluid
under an engineering, procurement and Construction (EPC) contract. The Plant
will then be operated and maintained by Italfluid with guarantees for plant
operability and delivery under an operations and maintenance (OM) contract. At
year-end, the gas gathering system had been commissioned to both wells.
Phase 2 - Tendrara TE-5 Development
Concept - Processed gas as a transition fuel flowing to the GME pipeline:
• 10 to 20 inch, 120km Tendrara Gas Export Pipeline ("TGEP")
• Tie-in to existing GME pipeline (Station M04), approved by the GME
operator ONHYM, which took over the GME operatorship at the end of Q4 2021
• Pipeline EIA permit approved, and pipeline corridor fully secured.
Lease agreements signed with the landowners and the first lease payments have
been paid
• CPF EIA permit approved
• Gas Sales Agreement ("GSA") with ONEE (Office National de
l'Electricité et de l'Eau potable) signed November 2021 for a minimum volume
of 0.3 bcm/year (approximately 10.5 billion standard cubic feet of gas per
year) at a fixed sale price over a ten-year term. This agreement will be
renegotiated when Phase 2 project is better defined.
• Up to six horizontal wells planned to achieve First Gas (Phase 2)
• Senior debt facility in place with Attijariwafa Bank (which is one
of the top banks in Morocco and Africa), and part of the Al Mada Group (a
Pan-African private investment fund) to fund a substantial part of the Phase 2
project. Fully termed and binding senior debt facility in place (subject to
fulfilment of certain conditions precedent before FID)
Exploration
Grand Tendrara - two Triassic TAGI discoveries
Permit Details
Area 14,411 km2
Status Petroleum Agreement: Exploration
Effective date 1 October 2018
Net interest 27.5%
Term 8 years
Resource Potential Exploration potential in the Triassic TAGI(1) reservoir of 7.52 Tcf gross/2.07
Tcf net (arithmetical sum of mid-case un-risked GIIP(2)) identified in
sub-salt concepts, leads and prospects.
Permit Area
Surrounds the Tendrara Production Concession.
The permit in which Sound Energy has a 27.5% interest is located with access
to the GME pipeline, situated approximately 120 kilometres to the north of it.
The 522 kilometre long Moroccan section is owned and operated by the Moroccan
State. The pipeline connects Morocco to Spanish/Portuguese gas grids as well
as Moroccan gas-fired-power stations.
Geology
All eight wells drilled across the entire area have, encountered evidence of a
petroleum system. The primary sandstone reservoir is the Triassic TAGI1
charged from Palaeozoic petroleum source rocks and sealed by the overlying
Triassic salt, which is present across much of the basin. This petroleum play
is regionally extensive and extends into Morocco from Algeria.
Two Triassic TAGI gas discoveries exist within the permit area:
• SBK-1 tested by the previous permit holder at a peak rate of 4.41
mmscf/d in July 2000
• TE-10 flowed gas at non-commercial rates in May 2019
Exploration potential in the Triassic TAGI(1) reservoir of 7.52 Tcf gross/2.07
Tcf net (arithmetical sum of mid-case un-risked GIIP(2)) identified in
sub-salt concepts, leads and prospects.
Future Developments
A number of targets are available for near-term drilling with two features,
the SBK structure and the TE-4 Horst, high-graded for drilling. Both these
structures were drilled by SBK-1 and TE-4, in 2000 and 2006, respectively, and
both 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 hydraulic stimulation. TE-4 was tested in 2006 but did not
flow gas to the surface. Hydraulic stimulation has proven to be a key
technology to commercially unlock the potential of the TAGI gas reservoir in
the Tendrara TE-5 Horst gas accumulation and, accordingly, the Company
believes this offers potential to develop commercial operations elsewhere in
the basin.
The gross exploration potential of these high-graded structures, expressed as
GIIP, is as follows:
Target name Unrisked Volume Potential Gas Initially in Place (Bcf) Chance of Success
Gros
s
(100
%)
basi
s
Low Best High Mean
TE-4 Horst Structure 153 260 408 273 36%
SBK-1 Structure 71 130 225 140 50%
A discovery in either structure 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 mLNG projects.
Subject to approval by the Ministry of Energy Transition and Sustainable
Development and the Ministry of Economy and Finance, the Company has elected
to enter the voluntary first Complementary period, which commenced mid-October
2022. The Company, through the Operator Mana Energy Ltd, has continued
exclusive discussions with ONHYM to perfect terms of the Grand Tendrara
licence to allow the drilling of the one well commitment. This commitment
well is expected to be drilled on either the SBK structure or the TE-4 Horst.
Anoual
Permit Details
Area 5,031 km(2)
Status Petroleum Agreement: Exploration
Effective date 8 September 2017
Net interest 27.5%
Term 11 years
Resource Potential Exploration potential in the Triassic TAGI(1) reservoir of 11.51 Tcf
gross/3.17 Tcf net (arithmetical sum of mid-case un-risked GIIP(2)) identified
in sub-salt concepts, leads and prospects
Permit Area
The permit in which Sound Energy has a 27.5% interest is located with access
to Gazoduc Maghreb Europe ("GME") pipeline approximately 120 kilometres to the
North. The 522 kilometre-long Moroccan section is owned and operated by the
Moroccan State. The pipeline connects Morocco to Spanish/Portuguese gas grids
as well as Moroccan gas-fired power stations.
Geology
Only one well drilled across the entire area. The primary reservoir is the
Triassic TAGI(1) charged from Palaeozoic petroleum source rocks and sealed by
the overlying Triassic salt, which is present across much of the basin. This
petroleum play is regionally extensive and extends into Morocco from Algeria.
Committed geophysical surveying completed with a single well commitment
remaining. Exploration potential in the Triassic TAGI(1) reservoir of 11.51
Tcf gross/3.17 Tcf net (arithmetical sum of mid-case un-risked GIIP(2))
identified in sub-salt concepts, leads and prospects.
Future Developments
"M5" prospect high graded for drilling a TAGI(1) target, operational planning
is progressing. The Company's estimation of the gross exploration potential of
the M5 exploration prospect, a possible candidate for the exploration well,
expressed in GIIP, is as follows:
Target name Unrisked Volume Potential Gas Initially In Place (Bcf) Chance of Success
Gros
s
(100
%)
basi
s
Low Best High Mean
M5 Exploration 332 800 1728 943 21%
Sidi Moktar
Permit Details
Area 4,712 km(2)
Status Petroleum Agreement: Exploration
Effective date April 2018
Net interest 75%
Term 10 years
Resource Potential Unrisked exploration potential of 8.9 Tcf gross/6.68 Tcf net (arithmetical sum
of mid-case un-risked GIIP(2)) following interpretation of the historical 2D
seismic identified in sub-salt leads
Permit Area
The permit in which Sound Energy has a 75% interest is located onshore on the
Atlantic seaboard of Morocco, approximately 100 kilometres to the west of
Marrakech.
In July 2017, the Company reported the results of the re-entry, completion,
perforation and flow testing of the existing Koba-1 well, with a focus on
previously producing relatively shallow gas reservoirs.
Strategically, the Company has shifted its focus on the Sidi Moktar area
towards what it believes has the potential to be the most significant
opportunity amongst the deeper Triassic TAGI(1) and Palaeozoic gas plays in
the region already demonstrated by the gas and condensate producing adjacent
Meskala Field operated by our partner ONHYM. In June 2018, the Company was
awarded a new eight-year Petroleum Agreement and is now actively seeking a
partner to participate in a geophysical survey programme focused on these
deeper objectives.
In December 2020, an extension to the Petroleum Agreement from eight years to
ten years was agreed due to impact of pandemic. In December 2022, the Company
announced a further one-year extension to the initial period of the Sidi
Moktar permit Petroleum Agreement. The Company remains in discussions with
ONHYM to perfect the terms of the Petroleum Agreement in order to align with
potential partner expectations.
Geology
There is initial un-risked exploration potential of up to 8.9 Tcf gross
gas/6.68 Tcf net gas (arithmetical sum of mid-case un-risked GIIP(2))
following interpretation of the historical 2D seismic. The Company believes
the pre-salt plays have been overlooked in the region with limited drilling to
specifically target these deeper successions.
The sub-salt plays are underexplored with more than 60 historical exploration
wells focused on shallower objectives in the Jurassic post-salt carbonate
successions. The few historical sub-salt tests were drilled on the basis of
poor sub-salt seismic imaging. Recent improvements in seismic acquisition and
processing technologies are expected to provide enhanced imaging of the
sub-salt structure and geology.
Future Developments
Our next step is to mature the identified leads to drillable prospects with
improved seismic imaging. We aim to acquire new, high-quality 2D seismic data,
focused on improving the sub-salt imaging. This work is hoped to lead to an
exploration well targeting a high-impact gas prospect.
(1. ) Trias Argilo-Gréseux Inférieur ("TAGI") are
sandstones deposited in a fluvial-alluvial environment and are significant oil
and gas reservoirs across Algeria, extending into Morocco
(2. ) Internal exploration potential estimates, arithmetical
sum of mid-case unrisked Gas Initially In Place ("GIIP")
Financial Review
Income Statement
The pre-tax loss for the year from continuing operations was £22.3 million
(2024: £150.8 million). The extension to the Sidi Moktar permit initial
period previously proposed by ONHYM expired in April 2026 and though the
Company is in ongoing discussions with ONHYM for renewal, extension or change
in work programme, the Company has made a judgement that an impairment
indicator exists and on assessment, recognised an impairment charge of
approximately £12.5 million as at 31 December 2025. The loss decreased
significantly as the impairment was lower than that recognised in 2024
relating to tangible assets, of approximately £122.0 million on disposal of
the Company's former subsidiary, Sound Energy Morocco East Limited (SEME), to
Managem SA.
Administrative costs at £2.9 million were lower than 2024 administration
costs (£4.6 million) as there were no activities related to divestment or
non-cash charges arising from convertible share issues and in addition, there
was a decrease in staff costs during 2025.
Foreign exchange losses primarily related to intra-Group loans, which were
partially offset by exchange gains in US dollar denominated borrowings.
Foreign exchange gains and losses arising from inter-company loans that
originated on acquisition of Moroccan permits are recognised in the other
comprehensive income section of the statement of comprehensive income.
Cash Flow/Financing
Interest paid amounted to approximately £1.3 million (2024: £1.2 million).
The interest payment related to the Afriquia loan facility and the EUR
denominated loan notes (Euro bond).
In August 2025, the Operator of the Tendrara Production Concession finalised
approximately MAD 225.5 million debt facility from a local bank in Morocco to
partially fund the mLNG project capital expenditure. The Company utilised
approximately £2.7 million of the facility as at 31 December 2025. The
Company, through its wholly owned subsidiary, Sound Energy Meridja Limited
which has a 20% interest in the joint operations is in discussion with the
Operator to conclude the terms under which the Company will access up to MAD
50.5 million of the facility. The draft facility agreement includes a final
maturity date of 7 years from first utilisation with semi-annual principal
repayments commencing after a 12-month grace period. The effective interest on
the utilised facility as at 31 December 2025 is approximately 5.0%.
Financing costs during the year were £3.0 million (2024: £2.3 million). The
increase is primarily due to the unwinding of discount (£0.7m) on the
deferred consideration arising from sale of SEME to Managem SA in December
2024. Other elements of the finance costs include amortised costs of the
Company's Euro bond, the US dollar Afriquia loan facility and unwinding of
discount related to convertible bonds, net of interest capitalised to the
development assets of £0.1 million (2024: £0.2 million).
The Group spent £3.6 million (2024: £5.4 million) on investing activities
during 2025 primarily related to the Group's Micro-LNG project with the
balance relating to expenditure on the Group's exploration permits in Morocco
and capitalised general and administrative expenses.
Balance Sheet
As at 31 December 2025, the carrying amount of property, plant and equipment
was £14.7 million (2024: £10.5 million), primarily related to the
development and production assets in Morocco. The increase is due to additions
of £3.5 million and reclassification of prepayment of £1.4 million to
property, plant and equipment following the change of contractual terms
between the Micro-LNG project main contractor and the Operator of the Tendrara
Production Concession terminating the vendor financing lease agreement entered
into in 2020 and entering into an engineering, procurement and construction
(EPC) contract in 2025. The additions increases were partially reduced by
foreign exchange loss adjustment of approximately £0.7 million.
Intangible assets, with a carrying amount of £1.0 million (2024: £14.1
million), primarily relates to the Group's investment in its exploration
permits in Morocco. Additions during the year amounted to £0.4 million but
were offset by foreign exchange loss adjustment of approximately £0.9 million
on translation of the closing USD denominated balances into GBP and impairment
of Sidi Moktar permit carrying amount of approximately £12.5 million.
Deferred consideration receivable of £18.9 million (2024: £21.0 million)
relates to the elements of 2024 SEME disposal consideration receivable in the
future (note 8). The decrease in the carrying amount is due to exchange rate
movement and effect of the change in the Company's current estimates of the
timing of operations that trigger the receipt of the various elements of the
deferred consideration.
Other receivables, amounting to £2.3 million (2024: £3.2 million), primarily
related to the joint operations partner account balance for the Tendrara
development. The Group provide funding to the Operator of the joint operations
for the Group's share of expenditure in respect of the Morocco licences in
advance of the expenditure being incurred. The amount advanced is reduced by
the Group's share of actual expenditure incurred during the period with the
resulting net position being the balance carried forward after taking account
of the opening balance of the account. As described in the cash flow/financing
paragraph above, the Group had obligations to Mana Energy for the finance
facility utilised; and there were accrued cash calls payable resulting in the
overall closing position with Mana Energy being a payable balance of
approximately £0.9 million.
Trade and other payables amounting to £1.0 million (2024: £3.7 million)
primarily related to accruals for operations in the Group's permits in
Morocco.
Going Concern
As detailed in note 1 to the financial statements, the Company's cash flow
forecasts, for the next twelve-month period to May 2027, indicate that
additional funding will be required to enable the Company to continue to meet
its obligations. This condition indicates the existence of a material
uncertainty regarding the Company's ability to continue as a going concern.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2025
2025 2024
Notes £'000s £'000s
Continuing operations
Revenue - -
Other income 3 295 -
Operating costs 3 (261) -
Impairment of exploration and development assets 7,6 (12,770) (122,042)
Gross loss (12,736) (122,042)
Administrative expenses (2,852) (4,586)
Group operating loss from continuing operations (15,588) (126,628)
Finance revenue 44 12
Foreign exchange (loss)/gain (3,803) 2,294
Finance expense 11 (3,000) (2,302)
Loss for the year before taxation (22,347) (126,624)
Tax expense 4 (2) -
Loss for the year after taxation (22,349) (126,624)
Discontinued operations
Loss for the period after tax from discontinued operations - (24,196)
Total loss for the year (22,349) (150,820)
Other comprehensive income
Items that may subsequently be reclassified to the profit and loss account
Foreign currency translation gain 362 9
Total comprehensive loss for the year (21,987) (150,811)
Loss for the year attributable to:
Owners of the Company (21,987) (150,811)
2025 2024
Notes Pence Pence
Basic and diluted loss per share for the year from continuing and discontinued
operations attributable to the equity shareholders of the parent
5 (1.11) (7.48)
Basic and diluted loss per share for the year from continuing operations
attributable to the equity shareholders of the parent
5 (1.11) (6.28)
Consolidated Balance Sheet as at 31 December 2025
2025 2024
Notes £'000s £'000s
Non-current assets
Property, plant and equipment 6 14,699 10,489
Intangible assets 7 1,039 14,097
Prepayments - 1,522
Deferred consideration 8 18,928 21,045
34,666 47,153
Current assets
Inventories 72 69
Other receivables 2,289 3,247
Prepayments 24 25
Cash and short-term deposits 802 7,895
3,187 11,236
Total assets 37,853 58,389
Current liabilities
Trade and other payables 997 3,665
Lease liabilities 84 -
1,081 3,665
Non-current liabilities
Lease liabilities 46 -
Loans and borrowings 11 41,781 37,707
41,827 37,707
Total liabilities 42,908 41,372
Net (liabilities)/assets (5,055) 17,017
Capital and reserves
Share capital and share premium 41,073 41,073
Shares to be issued 374 374
Accumulated (deficit) /surplus (50,498) (28,137)
Warrant reserve 1,998 2,071
Convertible bond reserve 28 28
Foreign currency reserve 1,970 1,608
Total equity (5,055) 17,017
Consolidated Statement of Changes in Equity
Share capital Share premium Shares to be Accumulated Warrant reserve Convertible Foreign currency reserves Total equity
Notes £'000s £'000s issued Surplus/ £'000s Bond reserve £'000s £'000s
£'000s (deficit) £'000s
£'000s
At 1 January 2025 20,806 20,267 374 (28,137) 2,071 28 1,608 17,017
Total loss for the year - - - (22,349) - - - (22,349)
Other comprehensive
gain - - - - - - 362 362
Total comprehensive loss
- - - (22,349) - - 362 (21,987)
Reclassification on expiry of warrants - - - 73 (73) - - -
Share-based payments - - - (85) - - - (85)
At 31 December 2025 20,806 20,267 374 (50,498) 1,998 28 1,970 (5,055)
Convertible Foreign currency reserves
Share capital Share premium Shares to be Accumulated Warrant reserve Bond reserve £'000s Total equity
Notes £'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
Consolidated Statement of Cash Flows
For the year ended 31 December 2025
2025 2024
Notes £'000s £'000s
Cash flow from operating activities
Cash flow from operations (1,818) (2,352)
Interest received 44 23
Tax paid (2) -
Net cash flow from operating activities (1,776) (2,329)
Cash flow from investing activities
Disposal of subsidiary - 9,236
Capital expenditure (3,214) (4,640)
Exploration expenditure (401) (651)
Prepayment for Phase 1 the mLNG project - (143)
Net cash flow from investing activities (3,615) 3,802
Cash flow from financing activities
Net proceeds from borrowings - 5,822
Interest payments (1,324) (1,168)
Loan repayments - (1,350)
Lease payments (43) (124)
Net cash flow from financing activities (1,367) 3,180
Net (decrease)/increase in cash and cash equivalents (6,758) 4,653
Net foreign exchange difference (335) 226
Cash and cash equivalents at the beginning of the year 7,895 3,016
Cash and cash equivalents at the end of the year 802 7,895
Note to Statement of Cash Flows
For the period ended 31 December 2025
2025 2024
£'000s £'000s
Cash flow from operations reconciliation
Loss before tax for the year from continuing operation (22,347) (126,624)
Loss before tax for the period from discontinued operations - (24,196)
Loss for the year before tax (22,347) (150,820)
Finance revenue (44) (23)
Increase in drilling inventories (3) (260)
Decrease in receivables and prepayments 3,700 803
(Decrease)/increase in accruals and short-term payables (2,682) 1,113
Impairment of intangible and development assets 12,770 122,042
Loss on disposal of subsidiary - 23,438
Foreign currency translation loss reclassified from other comprehensive income
- 295
Depreciation 70 128
Share-based payments (credit)/charge and remuneration paid in shares (85) 794
Finance expense and exchange adjustments 6,803 138
Cash flow from operations (1,818) (2,352)
Non-cash transactions during the period included £2.7 million utilisation of
a financing facility provided by the Operator of the Tendrara Production
Concession to settle outstanding cash calls for the joint operations.
Notes to the Financial Statements for the year ended 31 December 2025
1. Accounting Policies
Sound Energy plc is a public limited Company registered and domiciled in
England and Wales under the Companies Act 2006. The Company's registered
office is 20 St Dunstan's Hill, London EC3R 8HL.
The consolidated financial information contained within this announcement does
not constitute statutory accounts for the year ended 31 December 2025 within
the meaning of Section 434 of the Companies Act 2006 but is derived from those
audited accounts. The auditors reported on those accounts and their report was
unqualified and did not contain any statement under section 498(2) or section
498(3) of the Companies Act 2006. The statutory accounts for the year ended 31
December 2025 will be delivered to the Registrar of Companies in due course.
The annual report and statutory accounts will be sent to shareholders and will
be made available to the public on the Company's website:
www.soundenergyplc.com or, upon request, copies may be obtained from the
Company Secretary at the registered office of Sound Energy plc 20 St Dunstan's
Hill, London, EC3R 8HL.
a) Basis of preparation
The financial statements of the Group and its parent Company have been
prepared in accordance with UK-adopted International Accounting Standards.
The consolidated financial statements have been prepared under the historical
cost convention, except to the extent that the following policies require fair
value adjustments. The Group and its parent Company's financial statements are
presented in sterling (£) and all values are rounded to the nearest thousand
(£'000) except when otherwise indicated.
The principal accounting policies set out below have been consistently applied
to all financial reporting periods presented in these consolidated financial
statements and by all Group entities, unless otherwise stated. All amounts
classified as current are expected to be settled/recovered in less than 12
months unless otherwise stated in the notes to these financial statements. The
Group and its parent Company's financial statements for the year ended 31
December 2025 were authorised for issue by the Board of Directors on 20 May
2026.
Going concern
As at 30 April 2026, the Group's cash balance was £0.9 million. The directors
have reviewed the Company's cash flow forecasts for the next 12-month period
to May 2027. The Company's forecasts and projections indicate that, to fulfil
its ongoing obligations, primarily the Company's work programme on its
permits, the Company will require additional funding.
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 financial statements do not
include adjustments that would be required if the Company was unable to
continue as a going concern. 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, farm-out options, 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 consolidated financial statements.
Significant judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
reported amounts of assets and liabilities, as well as the disclosure of
contingent assets and liabilities at the balance sheet date and the reported
amounts of revenues and expenses during the reporting period. The Group based
its judgements, assumptions and estimates on parameters available when the
consolidated financial statements were prepared. Existing circumstances and
assumptions about future developments, however, may change due to market
changes or circumstances arising that are beyond the control of the Group.
Such changes are reflected in the assumptions when they occur.
(i) Significant judgements
E&E, development and production assets
When making assessment for impairment, the Company made a judgement that the
Group's development plans for the Phase 1 mLNG plant and Phase 2 pipeline led
development of the Tendrara Production Concession will continue as planned and
that relevant financing will become available when required. The Company
expects the exploration period of the exploration permits currently under
discussion with ONHYM to be extended, renewed or a new agreement be entered
into.
The extension to the Sidi Moktar permit initial period previously proposed by
ONHYM expired in April 2026 and though the Company is in ongoing discussions
with ONHYM for renewal, extension or change in work programme, the Company
has made a judgement that an impairment indicator exists and on assessment,
recognised an impairment charge of approximately £12.5 million as at 31
December 2025 (note 7).
Deferred consideration
The Company expects to receive the various elements of the deferred
consideration (note 8) as no events have arisen that would indicate that the
amounts would not be received.
Share-based payments
When undertaking the valuation of LTIP awards, the Company makes a judgement
on the number of employees that would continue to participate based on
historical experience of forfeitures.
Taxation
The Group seeks professional tax and legal advice to make a judgement on
application of tax rules on underlying transactions within the Group or with
third parties. Tax treatment adopted by the Group may be challenged by tax
authorities.
Going concern
As described in the going concern paragraph above, the directors have a
reasonable expectation that the Company and the Group will be able to secure
funding required to continue in operational existence for the foreseeable
future and have therefore adopted the going concern basis in the preparation
of the financial statements.
(ii) Key sources of estimation uncertainty
The key sources of estimation uncertainty, which have a significant risk of
causing material adjustment to the carrying amounts of assets and liabilities
within the next financial year, are the impairment of intangible exploration
and evaluation ("E&E") assets, impairment of development and production
assets, Deferred consideration, investments, warrants, and the estimation of
share-based payment costs.
E&E, development and production assets
When considering whether E&E assets are impaired, the Group first
considers the IFRS 6 indicators set out in note 7. In considering whether
development and production assets are impaired, the Group considers various
impairment indicators and whether any of these indicate existence of an
impairment. If those indicators are met, a full impairment test is performed.
Impairment test
When value in use calculations are undertaken, management estimates the
expected future cash flows from the asset and chooses a suitable discount rate
to calculate the present value of those cash flows. In undertaking these value
in use calculations, management is required to make use of estimates and
assumptions similar to those described in the treatment of E&E assets
above. Further details are given in note 7.
A significant portion of the Group's net assets is the carrying value of the
development and producing assets and disclosures relating to management's
assessment of impairment for these assets and the investment in subsidiaries
are included in note 6. The Company has funded its subsidiaries through
non-interest bearing loans payable on demand. Given that the Company has no
intention of calling in the loans in the foreseeable future, the loans are
classified as non-current investment. The recoverability of the investment in
subsidiaries in the Company balance sheet is linked to the value of the
development and producing assets as, ultimately, the cash flows these generate
will determine the subsidiaries' ability to pay returns to the Company. Other
sources of estimate concern IFRS 9 on intercompany loans at Parent Company
level.
Impairment exists when the carrying value of an asset or cash generating unit
exceeds its recoverable amount, which is the higher of its fair value less
costs of disposal and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales transactions,
conducted at arm's length, for similar assets or observable market prices less
incremental costs of disposing of the asset. If there is no binding sales
transactions or observable market prices, the fair value is estimated using a
discounted cash flow model ('DCF model''). The cash flows are derived from the
latest budgets, expenditure and price data in signed gas sales agreements (for
contracted gas sales volumes), market based price data (for uncontracted gas
sales volumes), project contract or agreed heads of terms, and the latest
management plans on project phasing. The recoverable amount is sensitive to
the discount rate and gas price assumption as well as the Brent price
assumption that impacts condensate sales pricing in the DCF model. The Company
undertook an assessment of external and internal indicators of impairment as
at 31 December 2025 and concluded that there was no indication that the
carrying amount of the Company's exploration and development assets were
impaired.
Share-based payments
The estimation of share-based payment costs requires the selection of an
appropriate valuation model, consideration as to the inputs necessary for the
valuation model chosen, and the estimation of the number of awards that will
ultimately vest (note 10).
.Fair value of convertible bonds
The calculation of fair value on convertible bonds requires estimation of the
discount rate to use when discounting outstanding principal and interest
amounts at each reporting date. The discount rate is a significant input into
the discounted cashflow model used by the Company to estimate the fair value
of the convertible bonds.
Fair value of deferred consideration
The calculation of fair value on deferred consideration requires estimation of
the discount rate to use when discounting the expected funding of the
Company's share of the Phase 2 Tendrara Development Concession and one
exploration well each on the Grand Tendrara and the Anoual permits in Morocco.
The discount rate is a significant input into the discounted cashflow model
used by the Company to estimate the fair value of the deferred consideration
(note 8).
(a) Investment in subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the
financial and operating policies, is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Such power, generally but not
exclusively, accompanies a shareholding of more than one-half of the
voting rights. The Group uses the purchase method of accounting for the
acquisition of subsidiaries. The cost of an acquisition is measured as the
fair value of the assets given, equity instruments issued, and liabilities
incurred or assumed at the date of exchange. Costs of acquisition are expensed
during the period they are incurred.
(b) Foreign currency translation
The functional currency of the Company is GBP sterling. The Group also has
subsidiaries whose functional currencies are US dollar.
Transactions in foreign currencies are initially recorded in the functional
currency by applying the spot exchange rate ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign currencies
are retranslated at the functional currency rate of exchange ruling at the
balance sheet date. All differences are taken to the income statement.
On consolidation, the assets and liabilities of foreign operations are
translated into sterling at the rate of exchange ruling at the balance sheet
date. Income and expenses are translated at weighted average exchange rates
for the year unless this is not a reasonable approximation of the rates on the
transaction dates. The resulting exchange differences are recognised in other
comprehensive income and held in a separate component of equity. On disposal
of a foreign entity, the deferred cumulative amount recognised in equity
relating to that foreign operation is recognised in the income statement.
(c) Deferred consideration
Deferred consideration relates to future funding to be received by the group
from the purchaser (the purchaser) of the Company's subsidiary disposed of in
2024. The Company's share of its future expenditure on the Morocco licences
will be funded by the purchaser up to specified amounts detailed in note 8.
Deferred consideration is recognised at fair value.
(d) Joint arrangements
A joint arrangement is an arrangement over which two or more parties have
joint control. Joint control exists when the Group does not have the power,
directly or indirectly, to solely govern the financial and operating policies
of an entity. The Group classifies its joint arrangements as either joint
ventures, where the Group has rights to only the net assets of the joint
arrangement, or joint operations where the Group has both the rights and
obligations for the liabilities of the joint arrangement. The Group's 20%
interest in the Tendrara Production Concession has been classified as a joint
operation. The Group recognises, on a line-by-line basis in the consolidated
financial statements, its 20% share of assets, liabilities, revenues and
expenses in accordance with its contractually conferred rights and
obligations.
(e) Discontinued operations
A discontinued operation is a component of an entity that either has been
disposed of, or is classified as held for sale, and:
• Represents a separate major line of business or geographical area
of operations
• Is part of a single coordinated plan to dispose of a separate
major line of business or geographical area of operations.
Discontinued operations are excluded from the results of continuing operations
and are presented as a single amount as profit or loss after tax from
discontinued operations in the statement of profit or loss. Cash flows from
discontinued operations are included in the consolidated statement of cash
flows and are disclosed separately. The group includes proceeds from disposal
in cash flows from discontinued operations. All other notes to the financial
statements include amounts for continuing operations unless indicated
otherwise.
2. Segment information
The Group categorises its operations into three business segments based on
corporate, exploration and appraisal, and development and production.
In the year ended 31 December 2025, the Group's development, exploration and
appraisal activities were primarily carried out in Morocco.
The Group's reportable segments are based on internal reports about components
of the Group, which are regularly reviewed and used by the Board of Directors,
being the Chief Operating Decision Maker, for strategic decision making and
resource allocation, in order to allocate resources to the segment and to
assess its performance.
Details regarding each of the operations of each reportable segments are
included in the following tables.
Segment results for the year ended 31 December 2025:
Development Exploration
and production and appraisal
Corporate £'000s £'000s Total
£'000s £'000s
Other income - 287 8 295
Operating costs - (261) - (261)
Impairment of intangible assets - - (12,770) (12,770)
Administration expenses (2,852) - - (2,852)
Operating (loss)/profit segment result (2,852) 26 (12,762) (15,588)
Interest receivable 44 - - 44
Finance expense and exchange adjustments (6,803) - - (6,803)
Loss for the year before taxation from continuing operations
(9,611) 26 (12,762) (22,347)
The segments assets and liabilities at 31 December 2025 is as follows:
Development Exploration
and production and appraisal
Corporate £'000s £'000s Total
£'000s £'000s
Non-current assets 172 30,045 4,449 34,666
Current assets 590 2,397 200 3,187
Liabilities attributable to continuing operations (24,972) (17,803) (133) (42,908)
The geographical split of non-current assets is as follows:
UK Morocco
£'000s £'000s
Development and production assets - 14,564
Fixtures, fittings and office equipment 4 16
Deferred consideration - 18,928
Right of use assets 115 -
Software 37 -
Exploration and evaluation assets - 1,002
Total 156 34,510
Segment results for the year ended 31 December 2024 were as follows:
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 were as follows:
UK Morocco
£'000s £'000s
Development and production assets - 10,485
Fixtures, fittings and office equipment 3 1
Deferred consideration - 21,045
Prepayments - 1,522
Software 49 8
Exploration and evaluation assets - 14,040
Total 52 47,101
3. Other income and operating costs
2025 2024
£'000s £'000s
Share of joint operations other income 287 -
Research and development expenditure credit 8 -
295 -
Share of joint operations operating costs (261) -
Share of joint operations other income represents the Company's share of
amount due, as at 31 December 2025, from the Tendrara Production Concession
micro-LNG project contractor for delay in completing the project. Share of
joint operations operating costs represents the Company's share of amount due,
as at 31 December 2025, to the LNG offtaker for the delay by the joint
operations in making initial LNG delivery to the offtaker.
4. Taxation
(a) Analysis of the tax charge for the year:
2025 2024
£'000s £'000s
Current tax
UK Corporation Tax - -
Adjustment to tax expense in respect of prior years (2) -
Tax cases settlement (overseas tax) - -
Total current tax (charge)/credit (2) -
Deferred tax credit arising in the current year - -
Total tax (charge)/credit (2) -
(b) Reconciliation of tax charge
2025 2024
£'000s £'000s
Loss before tax (22,347) (126,624)
Tax (charge)/credit charged at UK corporation tax rate of 25% (2024: 25%) 5,587 31,656
Tax effect of:
Expenses not deductible for tax purposes 4 (231)
Impairment not deductible for tax purposes (3,193) (30,511)
Tax losses not recognised (2,383) (924)
Differences in overseas tax rates (17) 10
Total tax (charge)/credit (2) -
Deferred tax assets have not been recognised in respect of tax losses
available due to the uncertainty of the utilisation of those assets. Unused
tax losses as at 31 December 2025 were estimated to be approximately £9.4
million (2024: £6.9 million).
The Group had tax cases where Morocco Tax Authority had claimed taxes relating
to the Group's historical permits transfers and intragroup transactions. In
May 2023, the Company entered into a settlement agreement with Morocco Tax
Authority on a phased payment schedule back ended over 6 years.
The table below sets out the current and non-current tax liability and the
movement during the year.
2025 2024
£'000s £'000s
Amounts due within one year - -
Amounts due after more than one year - -
- -
The movement during the year is as below:
As at 1 January - 1,609
Change in/unwinding of discount - (165)
Tax payment - -
Exchange adjustment - (14)
Disposal of subsidiary - (1,430)
As at 31 December - -
5. (Loss)/profit 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 year. The calculation of diluted profit/(loss) per share
is based on profit/(loss) after tax on the weighted average number of ordinary
shares in issue, plus the 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:
2025 2024
£'000s £'000s
Loss after tax from continuing operations (22,349 (126,624)
Loss after tax from discontinued operations - (24,196)
Total loss for the year after taxation (22,349) (150,820)
2025 2024
Million Million
Basic weighted average shares in issue 2,017 2,017
Dilutive potential ordinary shares - -
Diluted weighted average number of shares 2,017 2,017
2025 2024
Pence Pence
Basic and diluted loss per share from continuing operations (1.11) (6.28)
Basic and diluted loss per share from discontinued operations - (1.20)
Basic and diluted loss per share from continuing and discontinued operations
(1.11) (7.48)
Due to loss during the year, the effect of the potential dilutive shares on
the earnings per share would have been anti-dilutive and therefore were not
included in the calculation of the dilutive earnings per share.
6. Property, Plant and Equipment
Development Fixtures, fittings and
and production office
assets equipment Right-of-use
assets 2025
£'000s £'000s £'000s £'000s
Cost
At 1 January 2025 134,906 368 - 135,274
Additions 3,325 19 163 3,507
Reclassification from prepayment 1,418 - - 1,418
Disposal - (113) - (113)
Exchange adjustments (9,171) (8) - (9,179)
At 31 December 2025 130,478 266 163 130,907
Impairment and depreciation
At 1 January 2025 124,421 364 - 124,785
Charge for period - 3 48 51
Disposal - (113) - (113)
Exchange adjustments (8,507) (8) - (8,515)
At 31 December 2025 115,914 246 48 116,208
Net book amount 14,564 20 115 14,699
Development Fixtures, fittings and
and production office
assets equipment Right-of-use
assets 2024
£'000s £'000s £'000s £'000s
Cost
At 1 January 2024 157,816 644 331 158,791
Additions 5,258 2 - 5,260
Exchange adjustments 2,023 - - 2,023
Disposal on expiry of lease - - (331) (331)
Disposal on sale of subsidiary (30,191) (278) - (30,469)
At 31 December 2024 134,906 368 - 135,274
Impairment and depreciation
At 1 January 2024 - 634 230 864
Charge for period 129,845 2 101 129,948
Exchange adjustments 2,393 - - 2,393
Disposal on expiry of lease - - (331) (331)
Disposal on sale of subsidiary (7,817) (272) - (8,089)
At 31 December 2024 124,421 364 - 124,785
Net book amount 10,485 4 - 10,489
The Company undertook an assessment of external and internal indicators of
impairment as at 31 December 2025 and concluded that there was no indication
that the carrying amount of the Company's share of the Tendrara Production
Concession was impaired.
In 2024, the Company sold its subsidiary, Sound Energy Morocco East Limited
(SEME). Property, plant and equipment of the disposal group were measured at
the lower of their carrying amount and fair value less costs to sell and as a
result, impairment loss was recognised. Similarly, for continuing operations,
the Company estimated the recoverable amount by reference to the fair value of
the Tendrara Production Concession (the ''Concession'') attributable to the
discontinued operation and recognised an impairment loss. In calculating the
fair value less cost to sell, the Company included in its valuation the
consideration received and receivable from sale of SEME, which comprised;
expenditure incurred on the licence from 1 January 2022 to the date of
disposal (back costs), Concession Phase 2 funding of up to $24.5 million,
funding for one exploration well each on the Anoual and Grand Tendrara
licences of up to $2.6 million and $3.6 million, respectively and $1.5 million
on achieving first gas on Concession Phase 2. The funding for Concession Phase
2 and the exploration wells is expected to be received over the period to July
2028 based on the Company's understanding of the timing of the operations.
The total 2024 impairment loss for discontinued operation recognised amounted
to approximately £7.8 million and in respect of the continuing operations,
approximately £124.4m (inclusive of exchange rate movements). The Company
used a discount rate of 10.55% at 31 December 2024. A change in the discount
rate by 1% had a £0.1m impact of the impairment charge for continuing
operation and a 10% reduction in amount receivable for future funding of
Concession Phase 2 and the exploration wells would have increased the 2024
impairment charge for continuing operations by £0.6 million.
7. Intangibles
Software Exploration & Evaluation Assets
£'000s £'000s
2024
£000s
Cost
At 1 January 2025 182 14,040 14,222
Additions - 415 415
Exchange adjustments (1) (942) (943)
At 31 December 2025 181 13,513 13,694
Impairment and depreciation
At 1 January 2025 125 - 125
Charge for the year 19 12,770 12,789
Exchange adjustments - (259) (259)
At 31 December 2024 144 12,511 12,655
Net book amount 37 1,002 1,039
Software Exploration & Evaluation Assets
£'000s £'000s
2024
£000s
Cost
At 1 January 2024 382 45,582 45,964
Additions 53 696 749
Exchange adjustments (1) 335 334
Disposal (252) (32,573) (32,825)
At 31 December 2024 182 14,040 14,222
Impairment and depreciation
At 1 January 2024 356 10,606 10,962
Charge for the year 25 16,501 16,526
Exchange adjustments (4) 211 207
Disposal (252) (27,318) (27,570)
At 31 December 2024 125 - 125
Net book amount 57 14,040 14,097
Exploration and evaluation assets
Details regarding the geography of the Group's E&E assets are contained in
note 2. The directors assess for impairment when facts and
circumstances suggest that the carrying amount of an E&E asset may exceed
its recoverable amount. In making this assessment, the directors have regard
to the facts and circumstances noted in IFRS 6 paragraph 20. In performing
their assessment of each of these factors, at 31 December 2025, the directors
have:
• reviewed the time period that the Group has the right to explore
the area and noted no instances of expiration, or permits that are expected to
expire in the near future and not be renewed;
• determined that further E&E expenditure is either budgeted
or planned for all permits;
• not decided to discontinue exploration activity due to there
being a lack of quantifiable mineral resource; and
• not identified any instances where sufficient data exists to
indicate that there are permits where the E&E spend is unlikely to be
recovered from successful development or sale.
On the basis of the above assessment, the directors are not aware of any facts
or circumstances that would suggest the carrying amount of the E&E asset
may exceed its recoverable amount, except in respect of the Sidi Moktar. The
Company has been in ongoing discussions with ONHYM, including in post period
end, to extend, renewal, or change the work programme for the Sidi Moktar
permit. The extension to the initial period previously proposed by ONHYM
expired in April 2026 and whilst discussions with ONHYM are continuing, the
Company has made a judgement that an impairment indicator exists and on
assessment, concluded that an impairment charge be recognised for carrying
amount the Sidi Moktar permit of approximately £12.5 million (inclusive of
foreign exchange adjustment) as at 31 December 2025. Once the discussions with
ONHYM are concluded and should the extension, renewal or change in work
programme be granted, the Company will assess whether a reversal of the
impairment loss should be made. Included in the 2024 charge for the year is
approximately £16.5 million impairment following disposal of a subsidiary.
8. Deferred consideration
2025 2024
£'000s £'000s
At 1 January 21,045 -
Additions - 20,696
Effect of change in the expected timing of receipt (692) -
Exchange adjustments (1,425) 349
At 31 December 18,928 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 sold 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 the Company's current estimates of the timing of the
operations that trigger the deferred consideration payments and applied a
discount rate of 10.6% (2024: 10.6%).
9. Capital and Reserves
2025 2024
Number of shares Number of shares
£'000s £'000s
Ordinary shares - 1p 2,080,622,679 20,806 2,080,622,679 20,806
2025 2024
Number of shares Number of shares
At 1 January 2,080,622,679 1,963,122,679
Issued during the year for cash - -
Non-cash share issue - 117,500,000
At 31 December 2,080,622,679 2,080,622,679
Reserves
In 2018, the Company sought, and was granted, a court order approving a
capital reduction following the cancellation of the share premium account.
This resulted in the transfer of £277.7 million to distributable reserves.
10. Share based payments
2025 2024
£'000s £'000s
(Credit)/expense arising from equity settled LTIP (85) 240
(85) 240
LTIP Awards
The Company has a long term incentive plan (the ''LTIP''), designed to reward,
incentivise and retain the Company's Executives and senior management to
deliver sustainable growth for shareholders.
The maximum number of awards that may be issued under the LTIP from time to
time will be limited to 3% of the Company's issued share capital on the date
of grant of awards, and, together with all other options issued by the Company
under any employee share scheme from time to time, will not exceed an
aggregate of 15% of the Company's issued ordinary share capital in a rolling
ten year period. Awards granted under the LTIP will, generally, be subject to
a three-year vesting period from the date of grant, the number of awards,
ultimately, vesting dependent on the grantee's continued service and on
additional performance conditions set by the Remuneration Committee.
The Company issued 48,875,515 options to subscribe for new ordinary shares
under the LTIP, out of which 31,769,085 options were allocated to qualifying
Executives and senior management and the balance of 17,106,430 was retained
for future allocations. The LTIP awards are exercisable at 2.4 pence per share
and expire ten years after the grant.
The fair value of LTIP awards granted was estimated at the date of grant using
a Black-Scholes model, taking account of the terms and conditions upon which
the awards were granted. The expected life of the LTIP award is based on the
maximum award period and is not necessarily indicative of exercise patterns
that may occur. Expected volatility was determined by reference to the
historical volatility of the Company's share price over a five-year period.
The expected volatility reflects the assumption that historical volatility is
indicative of future trends, which may not necessarily be the actual outcome.
No LTIP awards were granted during 2025 or 2024. The remaining contractual
life of the LTIP awards outstanding at 31 December 2025 is 6.3 years. If all
the 24,437,758 LTIP awards were exercisable immediately, new ordinary shares
equal to approximately 1.2% (2024: 1.5%) of the shares currently in issue,
would be created. As the Company's share price on the third anniversary of the
date of grant (the ''Performance Testing Date'') was below 5.38p, none of the
LTIP options have vested.
Number Number
2025 2024
LTIP awards outstanding at the start of the year Granted during the year 31,769,085 31,769,085
Forfeiture during the year - -
(7,331,327) -
Non vested LTIP awards (24,437,758) -
LTIP awards outstanding at the end of the year _ 31,769,085
Nil cost options
The Company has outstanding nil-cost options that were granted to employees in
previous years in settlement of bonus awards. The nil-cost options vested
immediately and expire 5 years from the grant date.
Number Number
2025 2024
Nil cost options outstanding at the start of the year Granted during the year 13,796,793 13,796,793
Exercised during the year - -
- -
Expired during the year - -
Nil cost options outstanding at the end of the year 13,796,793 13,796,793
Warrants
As at 31 December 2025, the Company had the following outstanding warrants to
subscribe to the Company's ordinary shares.
Exercise Number at Granted Number at
2025 price Expiry date 1 January /(exercised) Expired 31 December
Pence
2023 Warrants 2.25 13 June 2026 40,476,190 - - 40,476,190
2022 Warrants 2.75 13 June 2025 7,056,875 - (7,056,875) -
2021 Warrants 2.75 21 December 2027 99,999,936 - - 99,999,936
147,533,001 - - 140,476,126
Exercise Number at Granted Number at
2024 price Expiry date 1 January /(exercised) Expired 31 December
Pence
2023 Warrants 2.25 13 June 2026 40,476,190 - - 40,476,190
2022 Warrants 2.75 13 June 2025 7,056,875 - - 7,056,875
2021 Warrants 2.75 21 December 2027 99,999,936 - - 99,999,936
147,533,001 - - 147,533,001
11. Loans and borrowings
Secured Bonds Loan note- Afriquia Convertible
£'000s £'000s Bonds Joint operations Partner
£'000s Facility
£'000s
Sub-Total 2025
£'000s Total
£'000s
Non-current liabilities
At 1 January 21,950 15,433 324 37,707 - 37,707
Utilisation of Joint operations facility - - - - 2,741 2,741
Amortised finance charges 1,410 922 - 2,332 36 2,368
Unwinding of discount - - 60 60 - 60
Interest payments (433) (891) - (1,324) - (1,324)
Exchange adjustments 1,228 (1,087) - 141 88 229
At 31 December 24,155 14,377 384 38,916 2,865 41,781
Secured Bonds Loan note- Afriquia Convertible Short-term 2024
£'000s £'000s Bonds loan Total
£'000s £'000s £'000s
Current liabilities
At 1 January - - - - -
Gross amount of loan drawn down - - - 1,100 1,100
Accrued interest - - - 133 133
Principal loan and interest repayment - - - (1,233) (1,233)
At 31 December - - - - -
Non-current liabilities
At 1 January 21,980 10,276 1,029 - 33,285
Gross amount of loan drawdown during the year - 4,722 - - 4,722
Amortised finance charges 1,422 816 - - 2,238
Unwinding of discount - - 166 - 166
Interest payments (430) (605) - - (1,035)
Debt conversion to equity - - (621) - (621)
Principal loan repayment - - (250) - (250)
Exchange adjustments (1,022) 224 - - (798)
At 31 December 21,950 15,433 324 - 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 a 3% interest per annum to be paid
at redemption. 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 an $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 February 2024. 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 £0.6 million outstanding in accrued interest from a 2023
convertible bond issue (the ''Bonds'') whose principal became fully converted
in 2024. As part of the convertible bonds issue, the Company had issued
33,333,333 warrants to subscribe for new ordinary shares in the Company at an
exercise price of 2.25 pence per ordinary share with a term of 3 years. A
discount rate of 17.4% was used to discount the outstanding capitalised
interest over the outstanding term of the Bonds.
In August 2025, the Operator of the Concession (joint operations) finalised
approximately MAD 225.5 million debt facility from a local bank in Morocco to
partially fund the mLNG project capital expenditure. The Company utilised
approximately £2.7 million of the facility as at 31 December 2025. The
Company, through its wholly owned subsidiary, Sound Energy Meridja Limited
which has a 20% interest in the joint operations is in discussion with the
Operator to conclude the terms under which the Company will access up to MAD
50.5 million of the facility. The draft facility agreement includes a final
maturity date of 7 years from first utilisation with semi-annual principal
repayments commencing after a 12-month grace period. The effective interest on
the utilised facility as at 31 December 2025 is approximately 5.0%.
Reconciliation of liabilities arising from financing activities
Non- cash changes
Office lease entry
31
1 January Cash flows Finance charges Partner facility Exchange adjustments December
2025 2025
2025 £'000s £'000s £'000s £'000s £'000s £'000s £'000s
Long-term borrowings 37,707 (1,324) 2,428 2,741 229 - 41,781
Leases - (43) 10 - - 163 130
Total liabilities from financing activities
37,707 (1,367) 2,438 2,741 229 163 41,911
Non-cash changes
Convertible Bonds non-
cash 31
1 January Cash flows Finance charges Exchange adjustments movements December
2024 2024
2024 £'000s £'000s £'000s £'000s £'000s £'000s
Long-term borrowings 33,285 3,304 2,537 (798) (621) 37,707
Leases 121 (124) 3 - - -
Total liabilities from financing activities
33,406 3,180 2,540 (798) (621) 37,707
Reconciliation of finance expense
2025 2024
£'000s £'000s
Amortised finance charges 2,368 2,371
Unwinding of discount/change in expected timing of the deferred consideration
receipt
762 169
Less capitalised interest (130) (238)
Total finance expense for the year 3,000 2,302
12. Post Balance Sheet Events
In February 2026, the Company announced shareholders' approval for a capital
reorganisation to consolidate 10 ordinary shares into one new ordinary share
(excluding 2,180,000 sanctioned shares) and reset the nominal share price from
1.0 pence share to 0.1 pence per share. Each of the consolidated ordinary
share was subdivided into one new ordinary share of 0.1 pence each and one
deferred share of 9.9 pence each. Each of the new ordinary share will carry
the same rights as previously existing ordinary shares and each deferred share
will have very limited rights.
In March 2026, the Company announced the issue of 8,310,198 ordinary shares of
the Company following the conversion of £568,750 accrued interest in respect
of convertible bonds issued in 2023.
In March 2026, the Company entered into a €1.3 million term loan facility
agreement. Interest on the facility is 20% per 120 days and the facility is
repayable on or before 31 December 2026.
In March 2026, the Company raised gross proceeds of £0.5 million following a
placing of 10 million ordinary shares of 0.1 pence per share at a placing
price of 5.0 pence per share.
In April 2026, the Company received a letter from ONHYM seeking a $1.5 million
claim against a guarantee made by the Company. The Company is in discussion
with ONHYM in respect of this claim. No provision was made as at 31 December
2025 in respect of this claim as the Company has assessed it to be a
non-adjusting post balance sheet event.
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