18 February 2019
Sound Energy plc
("Sound Energy" or the "Company")
TE-10 : Net Pay Upgrade and Volume Estimates
Sound Energy, the Moroccan focused upstream gas company, is pleased to provide a further update on operations in Eastern Morocco, following the Company's announcements of 27 December 2018, 7 January 2019 and 28 January 2019. The Company previously announced a discovery, and a planned stimulated well test, at TE-10, the second well in Sound Energy's current three well exploration programme in the Greater Tendrara area, onshore Morocco.
TE-10 Net Pay Upgrade
The Company announced on 7 January 2019 that the FMI (high definition formation micro-imager log), which provides a micro resistivity image of the well bore at a much finer resolution than the initial logging suite, had potentially identified the presence of additional thin bedded net pay within the previously identified potential gross reservoir interval between a measured depth ("MD") of 1,899m and 2,009m MD.
The Company recently commissioned the independent consultancy ERCE* to undertake a petrophysical analysis** of the gross reservoir interval encountered in TE-10. The analysis integrates a preliminary sample subset of the 57 side wall core samples with the wireline log data, including the FMI data and the high-resolution density logs.
Based on the results of this analysis the Company has made an upward revision of the previously announced net pay estimates, from up to 10.5m to up to 15.4m (a 47% increase), with a mid-case of 13.1m and a low case of 9.5m. This net pay is distributed throughout the 110m gross reservoir interval identified. The objective of the previously announced mechanical stimulation testing programme will be to access this distributed pay.
The Company has recognised the presence of a fracture network in both the FMI data and side wall cores. The potential for a positive impact of this fracture network on the net pay calculation was not included in the scope of the petrophysical analysis undertaken by ERCE but will be considered once the well has been tested.
TE-10 Volume Estimates confirming Multi Tcf Potential
The Company previously confirmed gas shows observed during drilling and calculated that net pay extended below the newly mapped structural closure at approximately 1,943m MD (updated from 1,958m MD communicated on 28 January 2019). These observations suggest that the gas accumulation most likely extends up-dip into the North East Lakbir structural-stratigraphic trap.
Following the latest seismic mapping, modelling and net pay analysis, the Company has now estimated the gas resources discovered by TE-10 across both the structural and stratigraphic trapping geometries.
The North East Lakbir structural-stratigraphic closure has been assessed with a mid-case potential on a gross (100%) basis of 1,430 bcf gas originally in place ("GOIP") with a 3,408 bcf GOIP upside case and a 584 bcf GOIP low case. As is always the case with new discoveries, a further reduction in this range of volume uncertainty will require appraisal drilling. The volume range in the structural closure alone has been assessed with a mid-case potential on a gross (100%) basis of 81 bcf GOIP, 170 bcf GOIP upside case and a 30 bcf GOIP low case. Whilst these structural closure volumes have already been demonstrated by the TE-10 well, a successful well test is always required to confirm reservoir deliverability and commerciality.
James Parsons, Chief Executive Officer, commented:
"We set out last year to deliver an ambitious three well exploration programme to further unlock the Tendrara Basin and our second well (TE-10) is a discovery.
Following our initial post drill technical analysis, we are delighted to materially upgrade our net pay and provide confirmation of the multi Tcf potential of this well. We now look forward to addressing reservoir deliverability and hence commerciality with the well test. "
TE-10 Well Test Timing
As announced on 28 January 2019, the testing and stimulation equipment has been mobilised from Libya and Tunisia. The Company has decided to utilise heavy duty perforating guns to maximise the gas flow rate and extra equipment has now been mobilised from the USA. The Company is expecting the equipment to arrive on location, and be rigged up and be ready to commence the test programme within four weeks. From mid-March, a series of unstimulated flow tests will be conducted on multiple intervals between 1,899m MD and 2,070m MD to establish the presence of deepest moveable gas. Stimulated production flow tests will then follow in late March, over the most prospective reservoir zones, and are expected to take at least 30 days. The Company expects the initial post stimulation flow rate around end March.
For further information please contact:
Vigo Communications - PR Adviser
Tel: 44 (0)20 7390 0230
James Parsons, Chief Executive Officer
JJ Traynor, Chief Financial Officer
Cenkos Securities - Nominated Adviser
Tel: 44 (0)20 7397 8900
RBC - Joint Broker
Tel: 44 (0)20 7653 4000
Macquarie Capital (Europe) Limited - Joint Broker
Tel: 44 (0)20 3031 2000
* ERC Equipoise Limited (www.erce.energy, 'ERCE') is an international energy consultancy providing technical and commercial services to the upstream industry.
** The petrophysical analysis ("Analysis") was prepared by ERCE for the sole use of Sound Energy PLC. The Analysis is not and does not imply a Competent Person's Report (CPR), a Qualified Person's Report (QPR) or a Technical Expert's Report (TER), and should not be relied upon as such. While the Analysis was prepared in good faith, using reasonable skill and care, reasonable assumptions, and professional judgement, it was based on information provided by others (the accuracy and completeness of which ERCE has not been asked to verify). The Analysis is predictive and forward-looking in nature and is based on opinions and professional judgement, so it is subject to various unknowns, including the inherent uncertainties in the interpretation of geological and technical data. Therefore, the Analysis should not be considered to be or interpreted to be a definitive, complete or accurate statement of hydrocarbon resource or any guarantee of results or performance. ERCE accepts no liability whatsoever for any errors or omissions in the Analysis (or for any responsibility for updating the Analysis, should further information become available).
The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
The information contained in this announcement has been reviewed by Sound Energy's Exploration Director, Brian Mitchener, a chartered petroleum geologist. The estimated volumes are made in accordance with SPE standards. Bcf means trillion standard cubic feet per day.