Sound Oil in negotiations to secure Moroccan licence

If negotiations are successful, the Moroccan Oil and Gas Investment Fund, which currently owns the licence for the Moroccan project, will sell a 55% stake to the London-listed company.

Should the deal go through, the Moroccan Fund and the National Office of Hydrocarbons and Mines of Morocco would hold a 20% and 25% stake respectively, while Sound would initially take control of a 37.5% stake.

The oil explorer said the remaining 17.5% would be awarded once it formally commits to the second exploration phase at the project, which would see Sound fund the full costs of three wells on the site.

However, of the three wells, only the first one, which would cost £6m and should be drilled within the last three months of 2015, would be a firm commitment.

Sound said it would base its decision to fund the second and third well based on the results delivered by the first well, which is designed to appraise the larger of two existing discoveries in the Tendrara licence.

Meanwhile, the London-listed company said it has drilled the second Nervesa well in Italy to the next casting point and the well is now 200 metres short of drilling its first reservoir.

Sound shares were up 2.25% to 22.24p at 16:34 on Monday.