Sound Energy shares slide despite positive progress

Europe and Africa-focused upstream oil and gas company Sound Energy announced its unaudited half year report for the six months to 30 June on Thursday - a period in which it made a significant onshore Morocco gas discovery with the potential for a multi Tcf connected gas field, at Tendrara.

The AIM-traded firm said the first Tendrara well, TE-6, encountered approximately 28 metres of net gas pay in the TAGI reservoir, with flow achieved pre-simulation and 17 mmscf/d achieved on test.

It said it had a significant near term development plan to secure near term cash flow.

Sound Energy reported that Oil & Gas Investment Fund, the partner on the licence, has expressed interest to fund a new pipeline connecting Tendrara to the Gazoduc Maghreb Europe pipeline.

The second well on Tendrara was spud on 25 August, the board reported, with a view to proving a sub-horizontal drilling concept.

It also secured the Meridja exploration permit, adjacent to Tendrara, and completed the acquisition and farm-out of Sidi Moktar licences in Morocco.

In Italy, Sound Energy received the final Badile drilling permission in May, and secured its first farm-out with Schlumberger, who will fund €7.5 m of the first well at Badile in exchange for an option on 20% of the licence.

A memorandum of understanding regarding a rig contract in relation to Badile was signed with Pergemina SPA as well.

On the corporate side, the company said Brian Mitchener, a “proven world class hydrocarbon finder”, had joined the team as executive vice president of exploration.

Its inclusion in the FTSE AIM UK 50 Index was looming, with effect from 19 September, and migration of trading to SETS, which the board called “the LSE premier electronic trading service”.

Sound Energy has now completed the refinancing of group debt, with the issue of five year €28.8m bonds.

Despite the progress, Sound Energy’s shares were down 5.67% at 91.5p at 1133 BST.