Eastern Morocco Update

RNS Number : 6922L

Sound Energy PLC

21 July 2017

 

21 July 2017

Sound Energy plc

("Sound Energy" or the "Company")

Eastern Morocco Update: Licence and Geophysical Operations

Sound Energy, the African and European focused upstream gas company, is pleased to provide an update on its Eastern Morocco acreage post the OGIF acquisition, which is expected to complete shortly, and the recently initiated regional geophysical programme.

Background

The Company operates the Tendrara permit (75% operated position, which is shared 27.5% with Schlumberger thereby resulting in a net 47.5% Sound Energy position). The Tendrara permit is currently in the first complimentary period, transitioning into the second complimentary period (which would expire in August 2020) in August 2018. The Company's three existing wells on Tendrara (TE6, TE7 and TE8) have already fulfilled the work programme for the first and second complimentary periods. The Company expects, subject to regulatory approval, to secure a new eight year licence in 2018, after the first complimentary period ends.

The Company is currently pursuing (as detailed below) a geophysical programme including a Full Tensor Gravity (FTG) gradiometry survey and 2D seismic which, as previously announced, is to be provided, and funded, by Schlumberger in accordance with the terms of the Schlumberger commitments announced by the Company on 25 April 2017.

Licence Update post acquisition of Oil & Gas Investment Fund S.A.S. ("OGIF") interests

The Company is progressing well with its acquisition of various licences in Eastern Morocco from OGIF (the "Acquisition") and is expecting completion of the Acquisition at the end of Q3 2017.  As announced on 20 February 2017 the Acquisition will see Sound Energy acquire: (i) a further 20% interest in the Company's Tendrara exploration permits; (ii) rights to apply for a 75% operated interest in an exploration permit for the Meridja area (over which the Company had previously exercised an existing option to acquire a 55% operated interest, conditional on regulatory approval); and (iii) an application and/or rights to apply for a 75% position in certain relinquished area(s)* of the Tendrara exploration permit areas.

On completion of the Acquisition OGIF will be issued with 272 million new ordinary shares in the Company (the "Consideration Shares"). The issue of the Consideration Shares was approved by Sound Energy shareholders on 15 March 2017 and OGIF will be locked in for a period of 12 months from issue. 

Various new licence agreements have now been entered into by the Company and Morocco's Office National des Hydrocarbures des Mines ("ONHYM"). These agreements, details of which are set out below, will come into force at the same time as completion of the Acquisition, which is now only pending approval of the Moroccan Energy and Finance ministries.  As is normal in Morocco, a bank guarantee of US$2.95 million is being lodged by the Company and its partners to cover a proportion of the work commitments under the various licences.

Meridja / Anoual

The first agreement relates to the Petroleum Agreement covering what is currently known as the Meridja reconnaissance area. The acreage covered by this new Petroleum Agreement, spans some 8,863 square kilometres and will be named Anoual. Upon completion, the Company will hold an operated 75% position, of which 27.5% is shared with Schlumberger resulting in a net 47.5% position for the Company. The remaining 25% will be held by ONHYM. The Anoual exploration permit will have a duration of 8 years from grant and, as with all Moroccan licences, will be divided into 3 phases with each having pre-agreed work commitments. The work commitments under the Anoual exploration permit will be:

·    Initial period of 3 years: FTG-aerogradiometry, 600 kilometres of 2D seismic and 150 square kilometres of 3D seismic. These elements of the Anoual exploration permit work commitments will be provided, and funded, by Schlumberger in accordance with the terms of the Schlumberger commitments announced by the Company on 25 April 2017.

·    Optional First complimentary period of 2 years and 6 months: 1 exploration well with Triassic objective. Under the Moroccan hydrocarbon code, this well can be drilled at any time (including during the initial period) and will still count as a commitment well for the first period.

·    Optional Second complimentary period of 2 years and 6 months: A further single exploration well with Triassic objective. Under the Moroccan hydrocarbon code, this well can be drilled at any time and will still count as a commitment well for the second period.

Tendrara relinquished acreage / Matarka

The second agreement relates to a new reconnaissance exploration licence for the previously relinquished Tendrara acreage*, which will also come in to effect on completion of the Acquisition. This new reconnaissance acreage, covering 5,185 square kilometres, will be named Matarka (the "Matarka Licence"). Upon completion of the Acquisition, the Company will hold an operated 75% position, of which 27.5% is shared with Schlumberger, resulting in a net 47.5% position for the Company. As with all Moroccan reconnaissance licences, the Matarka Licence will have a duration of 1 year from issue. The work commitments on the Matarka Licence will be a FTG aerogradiometry survey, which will also be provided, and funded, by Schlumberger in accordance with the terms of the Schlumberger commitments announced by the Company on 25 April 2017. After the 1 year period of the Matarka Licence, the Company has the right to apply for a full exploration permit.

Eastern Moroccan Geophysical Programme

The Company is progressing seismic and gradiometry surveys which will generate a robust prospect inventory with a view to determining the extent and volume potential of areas not previously surveyed to the North-East and updip of the Lakbir High and to the West on a series of structural highs. The entire programme is funded by Schlumberger.

Gradiometry

The gradiometry programme will include; FTG, Scalar Gravity, Magnetics and LiDAR surveys.  The programme is being initiated in July 2017 over an area of circa 24,000 square kilometres, with the aim of developing a basin scale model to evaluate the Paleozoic and Triassic petroleum systems and basin potential. These operations will be delivered by one twin-turbine light aircraft, carrying multiple sensors, flying at an altitude of 200 metres.  These operations, as planned, are expected to take 3 months - with the full interpretation being available during November 2017. The data collected will also guide and enhance the forthcoming Eastern Moroccan 2D seismic programme. 

2D Seismic

In parallel, a state of the art Schlumberger WesternGeco seismic crew equipped with single source/sensor (UniQ™) recording equipment is being mobilised to Eastern Morocco.  The output from the newly acquired 2D seismic will be augmented with co-acquired Time Domain Electro Magnetic (TDEM), and Magneto-Telluric (MT) measurements. The seismic shooting is being parcelled into 3 areas, with the first starting late August and most likely targeting the Tendrara/Anoual border area to better define a series of structural leads. The second will follow in November attempting to define the north-east updip closure of the Te-5 Horst and Lakbir highs, whilst the third seismic parcel, to be shot in Q1 2018, will seek to better define the underlying Paleozoic structural trends across a broad regional grid to enhance the basin model. 

As each of these seismic phases is completed and interpreted, a robust high graded prospect inventory will be built.  The expectation is that the prospect inventory will be assured by a series of Competent Persons Reports at the end of Q1 and at the end of Q2 2018, in addition to the completion of a Competent Persons Report on the Tendrara discovered resources to be completed at Final Investment Decision for the development project.

James Parsons, Chief Executive Officer of Sound Energy, commented:

"Following the recent confirmation of the plan for Tendrara development with the successful TE7 pressure build up, I am very pleased to report excellent progress on the OGIF acquisition and our geophysical programme. 

We, together with our strategic partner Schlumberger, are opening a new hydrocarbon province in Eastern Morocco, which we absolutely expect to be transformational for both Sound Energy and Morocco.

The agreements entered into with ONYHM in relation to the OGIF Acquisition and the grant of the new Anoual and Matarka licences (on receipt of Moroccan ministerial approvals) will further strengthen the Company's regional position as we execute our strategy.

In the meantime, we look forward to updating shareholders on our future drilling plans in Eastern Morocco and the extended well test in Southern Morocco, and to continuing to advance the Company's position in the region.  We expect the third and fourth quarters to be a busy operational period."

Note to Editor:

*In accordance with the Moroccan Hydrocarbon code, all operators in Morocco are required to relinquish a proportion of all its licence over time, subject to a maximum relinquishment of 50% of the licence acreage over the 8 year term.

For further information please contact:

Vigo Communications - PR Adviser Patrick d'Ancona Chris McMahon Alexandra Roper	Tel: [phone]
Sound Energy James Parsons, Chief Executive Officer	[e-mail]
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones Ben Jeynes	Tel: [phone]
RBC Capital Markets - Broker Matthew Coakes Martin Copeland Laura White	Tel: [phone]

 

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