Sound Energy to buy hydrocarbon assets in eastern Morocco

Gas firm Sound Energy is to buy Oil & Gas Investment Fund’s (OGIF) hydrocarbon assets in eastern Morocco in exchange for 272m shares in the company, subject to shareholder approval.

The acquisition will see the company buy a further 20% stake in the Tendrara site taking its total participation to 75%, and a 75% interest in the Meridja site, which represents 47.5% on a net basis. The remaining 25% interests in Tendrara and Meridja are held by Morocco's Office National des Hydrocarbures et des Mines, a government organisation.

The AIM-listed company will also be able to apply for a 75% stake in the relinquished area close to Tendrara.

The company, which is primarily focussed on African and European markets, will pay for the assets with 272m shares in Sound Energy, meaning OGIF, which is owned by seven large Moroccan financial institutions, will be a second cornerstone investor with future non-executive board representation.

The 272m shares represent, 24.5% of the company's share capital, and as part of the transaction OGIF agreed to a 12-month lock-in for shares, a 36-month restriction on exceeding 29.9% ownership of Sound Energy and will enter into a relationship agreement.

Sound Energy previously sought to buy 55% of the 75% stake in Meridja.

Sound Energy’s chief executive, James Parsons, said the acquisition provides the company with an attractive, material and consolidated portfolio across eastern Morocco, additional upside prior to the drilling of TE-8, its first step-out well at Tendrara, which is due to spud next month, and a second supportive cornerstone investor group made up of Morocco's largest institutions.

He said: “We are pleased to have entered into heads of agreement with OGIF following the successful extended well test and I look forward to welcoming them to our shareholder register. I have worked closely with the OGIF team for over 18 months now and their access to Moroccan debt capital and their relationship and influence in country are second to none."

Mohammed Benslimane, chief executive of OGIF's management company, added: "Morocco is a fast growing and low risk emerging country with significant hydrocarbon potential […] This new partnership aligns the interests of OGIF and Morocco's largest financial institutions with those of Sound Energy.

Shares in Sound Energy were down 0.31% to 162p at 1042 GMT.