The OGIF transaction is highly accretive: it secures a 73% increase in Tendrara (from 27.5% to 47.5%) and a 36% increase in Meridja (from 55% to 75%) all in exchange in 24.5% equity dilution (fully diluted).
In Morocco (as elsewhere in the world) there are rules which require the relinquishment of a certain percentage of the licence at set points in time. (extension periods). In Morocco, it is 10% per period.
When Sound farmed into the licence, it was already advanced therefore there was an inherited need to relinquish. This was known at the time of purchase but is not seen as material as the purchaser can chose the area to be relinquished meaning core reservoir areas can be avoided.
The OGIF deal means that losing these areas is avoided. 95% of the merit of the deal is picking up more than a 70% increase of the Tendrara acreage and 36% of Meridja for only 24% equity dilution. (fully diluted). The benefit from keeping the relinquished area is small and not very material.
The extended well test results were exactly in line with Company expectations. The EWT objectives are to understand the reservoir performance over a longer period of flow (i.e. the pressure response and continuity of flow balanced against the pressure rather than the absolute flow rate). The original completion design of TE7 (designed before the TE6 result) did not anticipate such high flow rates from the well which therefore required the company to limit the draw-down to 40%. Future wells will of course be designed to maximize the flow rates and the pressure support in time.
The key messages from the flow period of the EWT are that we have a strong continuous flow with indications of significant connected volume. This is an important step in providing sufficient information for proper field development planning.