Morocco Update: Tendrara Technical Evaluation

RNS Number : 3392Y

Sound Oil PLC

08 September 2015

 

8 September 2015

Sound Oil plc

("Sound Oil" or the "Company")

Morocco Update: Tendrara Technical Evaluation and Rabat Office

Sound Oil, the Mediterranean focused upstream gas company, is pleased to announce the results of a technical evaluation of the onshore Tendrara licence, Morocco (the "Tendrara Licence") and provide an update on preparations for the forthcoming well.  The evaluation was completed by SLR Consulting Limited ("SLR").

Tendrara Technical Evaluation

As announced on 8 June 2015, the Company has agreed to farm in to the Tendrara Licence. Sound Oil will, on completion of the farm in, acquire a net working interest of 55% in, and operatorship of, the Tendrara Licence. Sound Oil's 55% working interest will be granted in two tranches, with an initial 37.5% awarded on completion of the farm in and the remaining 17.5% being granted once Sound Oil commits to a second exploration phase (which would include a second well).

SLR has estimated the following in relation to Sound Oil's working interest in the Tendrara Licence (net attributable based on a 55% working interest):

·    An existing gas discovery (TE-5/Lakbir structure) with Best Estimate Contingent Resources of 170.8 Bscf of gas (High Estimate of 490.6 Bscf and Low Estimate of 16.6 Bscf) and 0.47 MMbbl of condensate (High Estimate of 4.2 MMbbl and Low Estimate of 0.39 MMbbl);

·    22% chance of success for the Best Estimate Contingent Resource; and

·    Additional exploration Best Estimate Prospective Resource of 740.2 Bscf (2.4 Tcf High Estimate and 200 Bscf Low Estimate) across the remainder of the licence area.

At the Company's request, SLR has run an economic analysis using a number of gas price scenarios (with a constant US$75 per bbl condensate price). The risked Best Estimate NPV10 in respect of Sound Oil's net attributable interest in the TE-5/Lakbir structure at these gas prices, based on an existing 2013 development plan, is set out below.  These numbers exclude the exploration potential and associated volumes.

Eurocent per scm	US$ per mcf	Net attributable Best Estimate NPV10 Risked*
23.00	7.10	EUR 64.18 million
25.00	7.72	EUR 73.22 million
27.00	8.33	EUR 82.41 million
29.00	8.95	EUR 91.58 million
31.00	9.57	EUR 100.79 million

*The risked Best Estimate NPV10 values included above are arrived at by applying a chance of success/risk factor of 22% to unrisked Best Estimate NPV10 values.

Tendrara Operational Update

The Company is also pleased to announce that preparations for the forthcoming well at the Tendrara Licence are at an advanced stage. 

In anticipation of the drill, the Company has now opened an office in Rabat and has completed the recruitment of an in-country technical team.  The Moroccan team, led by the Company's Moroccan Managing Director, Luca Madeddu, now includes a Drilling Manager, a Permitting Liaison Manager and a Finance Manager.

James Parsons, Sound Oil's Chief Executive Officer commented:

"I am pleased to report that this evaluation validates the scale of both the existing gas discovery and the exploration upside at the Tendrara licence. We believe this asset provides a compelling risk / reward balance and a strong platform for further consolidation in country."

For further information please contact:

Vigo Communications - PR Adviser Patrick d'Ancona Chris McMahon	Tel: [phone]
Sound Oil James Parsons, Chief Executive Officer	[e-mail]
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones Ben Jeynes	Tel: [phone]
Cantor Fitzgerald Europe - Broker Sarah Wharry David Porter	Tel: [phone]

The information contained in this announcement has been reviewed by Sound Oil's Moroccan Managing Director, Luca Madeddu, a qualified petroleum geologist.  NPV10 refers to a net present value at a discount rate of 10%; Bscf means billion standard cubic feet of gas; Tcf means trillion standard cubic feet of gas; bbl means barrel; MMbbl means million barrels. Best, High and Low case estimates refer to finding a given volume consistent with SPE (The Society of Petroleum Engineers) guidelines.

 

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