Sound Energy to acquire Schlumberger interests in Morocco

The AIM-traded firm said that as a result, it would have increased participating interests in the Anoual and Greater Tendrara exploration permits in eastern Morocco at 75%, as well as full control over its 75% participating interest in the Tendrara concession.

It described the deal as an “accretive acquisition” on “highly attractive” terms, adding that it would place the company in a position to generate enhanced returns, cash flow and value as it moved forward with the phased development of the TE-5 Horst.

The acquisition would also “significantly enhance” its discovered and undiscovered resource position.

Sound Energy said the increased participating interest would not impact the planned phased development strategy in east Morocco.

It said it would remain fully funded for its increased 75% working interest of planned first phase capital investments required until first gas at the Tendrara concession, subject to finalising funding arrangements previously announced with its strategic partner Afriquia Gaz.

The company said it would make an initial payment of one US dollar to the seller in cash on completion, with future payments possible under a profit sharing deed.

Under the terms of the deed, Sound Energy said it would between 8% and 11% of total net profits after costs, taxes and other applicable deductions arising from the concession over 12 years from first commercial production.

In the event of a cash disposal of part or all of SSRS' interest in the permits on or before 28 February 2023, Sound Energy said it would be required to pay 27.5% of the net cash proceeds from the disposal, rising to 55% if a disposal happened before 31 December 2021.

“We are delighted to have increased our working interest in our principal assets in eastern Morocco on highly attractive terms,” said executive chairman Graham Lyon.

“This accretive transaction will, when completed, underline Sound Energy's position as the leading gas developer in Morocco and position us to generate enhanced returns, cash flow and value as we move forward the phased development of the TE-5 Horst.”

Lyon said the increased position on the licences would “significantly enhance” the company’s discovered and undiscovered resource position in eastern Morocco, as it continued delivering on its phased development strategy.

“Importantly, upon securing the funding envisaged under the heads of terms previously entered into with Afriquia Gaz, the company will remain fully funded for its increased 75% working interest of planned phase one Tendrara concession capital investments required until planned first gas.”

At 1433 BST, shares in Sound Energy were up 3.45% at 1.5p.