22 October 2015
Sound Energy plc
("Sound Energy" or the "Company")
Acquisition of Sidi Moktar : Heads of Terms
Sound Energy, the Mediterranean focused upstream gas company, is pleased to announce that, further to its announcement of 7 September 2015, it has signed heads of terms with Maghreb Petroleum Exploration S.A. ("MPE") for the purchase of MPE's 25% carried working interests in three onshore oil and gas exploration permits located in the Sidi Moktar region of Morocco (together the "Sidi Moktar Licences").
The Sidi Moktar Licences cover 2,700 Km2 in the Essaouira basin, central Morocco. The Sidi Moktar Licences contain a material existing gas discovery in the Lower Liassic ("Kechoula") where two wells have already been drilled and a near term well test is awaited prior to possible commercial production. Kechoula is close to existing infrastructure. Initial Company estimates have confirmed Kechoula to have an unrisked mid case GOIP of 293 Bscf (100% working interest). There is also significant (in excess of 1 Tcf of unrisked GOIP; 100%) Triassic exploration potential.
Under the heads of terms MPE has agreed, subject to contract, to grant Sound Energy an option to purchase MPE's 25% carried working interest in the Sidi Moktar Licences for a price of Euro 1.00 at any time up to first commercial gas from a Sidi Moktar Licence (the "Option"). On grant of the Option, the Company will issue MPE with new ordinary shares in the Company with a market value of £3,576,000. The Company will also pay MPE a 1.6% net profit interest in any future cash flows from the two existing wells of the Kechoula discovery.
The transaction has been structured as an Option to ensure that the 25% interests in the Sidi Moktar Licences continue to benefit from the carry enjoyed by MPE (which would be lost if the Company purchased the asset directly prior to first commercial production). Any revenues prior to first commercial production will accrue to Sound, who will, on grant of the Option, also be appointed MPE's representative and technical advisor in the Sidi Moktar Licences prior to the Option being exercised.
The Company will now finalise due diligence and work with MPE in the preparation and negotiation of contracts for execution.
James Parsons, the Company's Chief Executive, commented:
"The Option will, when granted, enable Sound Energy to secure a 25% carried interest in an already successfully drilled gas discovery with potential near term production and significant deeper exploration potential. An interest in Sidi Moktar would also represent the second material asset in Sound Energy's onshore Moroccan gas portfolio, which is underpinned by strong European gas fundamentals.
The Company now plans to work with the other partners on the Sidi Moktar Licences, with a view to accelerating progress on the licence area."
For further information please contact:
Vigo Communications - PR Adviser
Tel: 44 (0)20 7016 9573
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser
Tel: 44 (0)20 7131 4000
Cantor Fitzgerald Europe - Broker
Tel: 44 (0)20 7894 8896
The information contained in this announcement has been reviewed by Sound Energy's Moroccan Managing Director, Luca Madeddu, a qualified petroleum geologist. Bscf means billion standard cubic feet of gas; Tcf means trillion cubic feet of gas; GOIP means gas originally in place; and mid case estimates refer to finding a given volume consistent with SPE (The Society of Petroleum Engineers) guidelines.