TIDMSOU
RNS Number : 3385I
Sound Energy PLC
14 April 2022
14 April 2022
Sound Energy plc
("Sound Energy" or the "Company")
Operational and Strategic Update
Sound Energy, the transition energy company, is pleased to
provide the following operational and strategic update.
Tendrara Phase 1 mLNG Development
Following the Company's announcement on 15 February 2022 that
Sound Energy Morocco East Limited ("SEMEL"), Sound Energy's wholly
owned subsidiary, had issued a Notice to Proceed to Italfluid
Geoenergy S.r.l. ("Italfluid") in respect of the Phase 1 mLNG
development of the Tendrara Production Concession, the Company is
pleased to provide the following update on project progress:
- mLNG equipment and services provider Italfluid, has confirmed
the issuance of purchase orders for the gas processing and
liquefaction packages together with the LNG storage tank;
- Site preparation activities by Italfluid and Sound Energy at
the Tendrara site location have commenced and are ongoing;
- Italfluid is advancing engineering in line with project schedule;
- Selection, by SEMEL, of engineering contractors for flow
assurance, flowlines and owner engineering nearing completion;
- Wellhead servicing scope finalised and contractor appointment progressing; and
- Contract awarded by SEMEL to Petroleum Equipment Supply
Engineering Company Limited to undertake scheduled inspection and
routine maintenance of the wellhead Christmas tree assemblies on
TE-6 and TE-7, the wells to supply the raw gas to the mLNG
facility, with planning now underway for inspection and
maintenance.
Over the next 6 months, the following milestones are
scheduled:
- Completion of site access road improvements;
- Placement of purchase orders for and execute flow assurance,
flowlines and owners engineering scopes;
- Execution of TE-6 and TE-7 wellhead inspection and servicing;
- Flowline and associated equipment procurement process to commence; and
- Italfluid will undertake the following:
o Complete Preliminary Engineering and progress Detailed
Design
o Place remaining purchase orders for equipment/packages and
bulks
o Complete site preparation and commence civils (foundations)
works
Tendrara Phase 2 Development Financing Update
Following the execution of the conditional binding 10-year gas
sale and purchase agreement with ONEE announced on 30 November 2021
in respect of the proposed Tendrara Phase 2 gas development
("Tendrara Phase 2 Development"), the Company has been able to
advance discussions with a broad range of financing partners.
Consequently, the Company has received non-binding terms sheets
from a number of parties including banks and mezzanine financiers
relating to potential capital provision for the proposed Tendrara
Phase 2 Development. The Company is currently evaluating the term
sheets and looks forward to providing further updates in due
course.
In parallel, the Company is also progressing discussions with a
number of international upstream service providers in relation to
the potential provision of EPC services and vendor financing for
the development of the proposed central processing facility ("CPF")
and gas export pipeline, associated with the Tendrara Phase 2
Development. There has been strong interest from credible
counterparties offering the potential to mature alternative or
complementary financing to debt and/or mezzanine financing.
Eastern Morocco Exploration Update
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 the extensive exploration portfolio within the Greater
Tendrara and Anoual exploration permits surrounding the Tendrara
Production 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 Trias
Argilo-Gréseux Inférieur ("TAGI") gas reservoir, the proven
reservoir of the TE-5 Horst gas accumulation.
These targets include the exploration prospect 'M5' located on
the Anoual permits, together with the potential of the structures
previously drilled on the Greater Tendrara permits, SBK-1 and TE-4.
Both SBK-1 and TE-4, drilled in 2000 and 2006 respectively,
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 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.
The Company looks forward to providing further updates on these
near term drilling opportunities as further evaluation and planning
progresses.
Strategic Update
In 2020, Sound Energy announced that it was pivoting its
monetisation strategy from predominantly high impact, frontier
exploration towards a development-led commercialisation approach,
as subsequently evidenced through progression of the phased
development of the Tendrara Production Concession.
Since 2020, aside from the ongoing development of the Company's
existing portfolio, the Company has been assessing a basket of
opportunities to build out, diversify and grow Sound Energy both
organically and inorganically. These assessments have included
potential further gas related opportunities and potential renewable
energy projects, including wind and solar power generation,
leveraging the Company's skills, relationships and existing
position in Morocco.
Consequently, the Company is pleased to announce that its wholly
owned subsidiary, Sound Energy Sustainables Limited ("SESL"), is in
discussions with a number of Moroccan industrial scale farmers
proximate to the Company's Sidi Moktar exploration permits to
evaluate the provision of 4.3MW of solar powered electricity (with
realisable opportunities to scale beyond this area). Following
completion of a feasibility study SESL now plans to further
discussions with the farmers to seek to finalise a power supply
contract(s) with a view to replacing carbon based, grid sourced
electricity via the potential solar project. In parallel, the
Company is maturing the capital funding alternatives to finance the
modest solar development costs and further announcements in
relation to this potential project will be announced, as
appropriate, in due course.
SESL is also evaluating a number of additional renewables
projects which may provide the opportunity to offer attractive
returns to Sound Energy.
Whilst the Company is excited about the possibilities for growth
in the renewables sector and believes that it is well-positioned to
unlock such opportunities, Sound Energy remains committed to
supporting the energy transition by continuing to develop its
existing gas projects as well as additional gas opportunities. The
recent strengthening of the global commodities market and the
increased focus on energy security within Europe and North Africa
has underscored the strategic rationale of developing gas resources
and the attractiveness of the region. Consequently, the Company has
developed a funnel of organic and inorganic opportunities within
the gas sector, in Morocco and beyond. This includes gas storage
and gas importation together with more conventional development of
gas fields, all of which are characterised by offering the
potential for immediate to near term cash generation. The Company
looks forward to providing further updates on developments in this
regard as the growth funnel matures.
Graham Lyon, Sound Energy's Executive Chairman, commented:
"We are pleased to announce these updates today following a
period of concerted focus on the future strategy of the Company.
The updates highlight the significant progress that Sound Energy
has been making to put the key elements in place to create
sustained shareholder value through the development of a cash
generative, self-financing business centred around society's
aspirations, and Sound Energy's strategy to accelerate the energy
transition. We are on a path to building a quality portfolio that
fully reflects our aspiration to be a key player right across the
energy transition landscape.
The Tendrara Phase 1 mLNG project is now well underway and the
Tendrara Phase 2 Development, which is significantly greater in
scale than Phase 1 and therefore offers the potential for greater
rewards, but also presents more challenges from a financing
perspective, is also moving forward. Following the execution of the
binding gas sales and purchase agreement with ONEE in November
2021, we have been able to materially advance financing discussions
and I am pleased that not only do we have strong interest from
established international service providers but also from a number
of Moroccan banks, which underscores the potential and strategic
significance of this nationally important Moroccan gas development
project.
Strategically, I am pleased with the progress we are making to
deliver growth on the current portfolio but also in identifying and
maturing a funnel of transition energy and renewable power
opportunities that all have the potential to offer attractive
returns for the Company whilst playing an important role in
strengthening energy security of supply and decarbonisation. I am
particularly pleased that we have been able to do so within an
embedded culture of capital discipline which has only been possible
through the commitment, focus, abilities and energy of our
team"
For further information please contact:
Vigo Consulting - PR Adviser Tel: 44 (0)20 7390 0230
Patrick d'Ancona
Finlay Thomson
Sound Energy chairman@soundenergyplc.com
Graham Lyon, Executive Chairman
Cenkos Securities - Nominated Adviser Tel: 44 (0)20 7397 8900
Ben Jeynes
Peter Lynch
SP Angel Corporate Finance LLP - Broker
Richard Hail Tel: +44 (0)20 3470 0470
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