28 March 2017
Sound Energy plc
("Sound Energy" or the "Company")
Tendrara : TE-8 Results
Paleozoic Play Opener and Extension of TAGI Reservoir
Sound Energy, the African and European focused upstream gas company, is pleased to announce the results of its third well at its Tendrara licence, onshore Morocco, which both establishes the Westward extension of the primary hydrocarbon system proven in Algeria into Morocco, and further confirms the potential of the TAGI play in-country.
The Company had previously announced that it had completed the drilling of TE-8 by reaching Target Depth for the well at 3,120 metres, some 359 metres into the Paelozoic (which was previously undrilled at Tendrara and Meridja). Sound Energy has now completed logging, including the use of the Saturn 3D Radial Probe MDT.
The Company is delighted to report that the TE-8 well has successfully identified and penetrated the full sequence of Westphalian sands in the Paleozoic (between 2,762 metres through to 3,120 metres) beneath an intraformational seal with gas shows observed during drilling. The Saturn MDT was unable to test these sands (the tool being unable to provide a reading given the rugosity of the hole and relative low permeability) however they are believed to be permeable and likely able to be produced across the Tendrara and Meridja licences with mechanical stimulation.
The existence of the Westphalian sands (a proven producing Paleozoic sequence in neighbouring Algeria) in a separate petroleum system establishes the Westward extension of the primary hydrocarbon system proven in Algeria into Morocco. The Company therefore confirms a material derisking of the 3 Tcf low case to 10 Tcf upside case original gas in place (gross) Paleozoic potential captured in Sound Energy's Eastern Morocco preliminary volume estimates (announced on 1 February 2017*).
The Company also confirms the identification of the full sequence of thick TAGI reservoir sands (between 2,642 metres through to 2,762 metres) extending some 12 Km to the north-east of the Company's previous two wells at Tendrara. Gas shows in the TE-8 well, confirm the presence of the four-way dip closed trap mapped on seismic. The Saturn MDT has confirmed the TAGI sands at the TE-8 location are likely tight and the extent of the gas column in TE-8 is therefore still under evaluation. The TE8 logging results are still consistent with a very significant single gas column across Tendrara and Meridija with a continuous extended structure, which can be validated with the TE1 re-entry.
The Company will now take sidewall core samples and then suspend TE-8 in preparation for future operations, which may include mechanical stimulation of this well or a sidetrack. The Company will also update its static geological models and volumetric evaluation. This is likely to include an immediate re-entry of the TE-1 well, in the South of the Tendrara licence area, drilled by Agip in 1966.
*As announced by the Company on 1 February 2017, the Company preliminarily estimates a range of volumes across the entire Tendrara and Meridja permit areas, with a 9 Tcf low case for unrisked original gas in place (gross) and, if all the key elements of the petroleum system's model are present, an upside case of 31 Tcf of unrisked original gas in place (gross). The Company cautions that notwithstanding its internal estimates for the exploration potential of the Tendrara and Meridja permit areas (the "Basin"), further exploration activity, including the acquisition of additional 2D and 3D seismic and the requirement for further drilling, will be required to substantiate the estimated exploration potential of the Basin. A Competent Person's Report to substantiate the Company's estimated volumes is planned prior to Final Investment Decision at the end of 2017.
This announcement is inside information for the purposes of Article 7 of Regulation 596/2014.
James Parsons, the Company's Chief Executive, commented:
"TE-8 is a highly significant well for the Company as we seek to derisk our transformational Eastern Morocco position.
Sound Energy's first two wells at Tendrara unlocked the TAGI play. TE-8 has now established that the primary hydrocarbon system proven in Algeria extends into the more favourable Moroccan licence and fiscal regime.
I believe therefore that TE-8 will prove to be the Paleozoic play-opener in Morocco.
I am also pleased to confirm TAGI sands some 12 Km away from our previous discovery, which, although lower quality at this specific location, is expected to materially uplift our discovered volumes. We will provide an update to shareholders once our geological models have been updated and the sidewall core samples analysed."
For further information please contact:
Vigo Communications - PR Adviser
Tel: 44 (0)20 7830 9700
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser
Tel: 44 (0)20 7131 4000
RBC - Broker
Tel: 44 (0)20 7653 4000
The information contained in this announcement has been reviewed by Sound Energy's Executive Vice President, Brian Mitchener, a chartered petroleum geologist. The Company's internal estimates are made in accordance with SPE standards.
Tcf means trillion cubic feet of gas.