6 August 2020
Sound Energy plc
("Sound Energy" or the "Company")
Pre-Sale Agreement for Disposal of Badile Land
Sound Energy, the Moroccan focused upstream gas company, announces that it has been notified that it's Italian former subsidiary, Apennine Energy SPA ("Apennine"), has entered into a Pre-Sale Agreement with a buyer pursuant to which Appenine has agreed to sell the area of land upon which the Badile exploration well was drilled in 2017 (the "Badile Land").
On 8 April 2018, the Company completed the disposal of its former Italian portfolio (the "Disposal") through the sale of Sound Energy Holdings Italy Limited ("SEHIL") to Coro Energy PLC ("Coro"). Apennine is a wholly owned subsidiary of Coro. As part of the Disposal, Coro agreed to undertake the restoration and subsequent sale of the Badile Land and to remit any net proceeds from a sale of the Badile Land to the Company following completion. Pursuant to the Disposal the Company had agreed to pay the Badile Land restoration costs (EUR 870,000) to Coro. To date, the Company has paid EUR 237,000 in administrative, permitting and preparatory costs in relation to the proposed restoration activities.
Apennine has now entered into a binding Pre-Sale Agreement with a buyer in respect of the proposed sale of the Badile Land pursuant to which the buyer has agreed, in addition to purchasing the Badile Land, to take responsibility for meeting the remaining costs of the restoration of the Badile Land associated with the historical drilling activity on the site. The restoration works will continue to be carried out by Apennine but the costs of these activities will, under the terms of the Pre-Sale Agreement, now be invoiced directly to the buyer and not the Company.
Under the Pre-Sale Agreement, the sale of the Badile Land will proceed in two independent stages, being an initial sale of "Area 1", on which there are no restoration works to be undertaken, for a consideration of EUR 300,000 and a subsequent sale of "Area 2", which remains subject to the requirement for restoration works to be carried out and certified as complete, for a consideration of EUR 350,000. The restoration works on Area 2 are pending a decision of the Italian local authorities as to the proposed scope of the restorative actions. The completion of the sale of Area 1 is not conditional on the completion of the sale of Area 2.
Whilst the Pre-Sale Agreement is binding as to its terms, the sale of Area 1 is subject inter alia to the entry of a further definitive Area 1 land sale contract prior to 10 October 2020 and the sale of Area 2 is subject to inter alia receipt of Italian ministerial certification of the satisfactory completion of restoration activities (with a longstop date of 31 December 2023) and to the entry of a further definitive Area 2 land sale contract.
Upon successful completion of the sale of Area 1 and Area 2, the Company would anticipate receiving a total net consideration of EUR 600,000, net of administrative and legal costs.
Graham Lyon, Sound Energy's Executive Chairman, commented:
"Confirmation that Sound Energy will not, pursuant to the Pre-Sale Agreement, be exposed to the ongoing restoration obligations in Italy, and that Sound is expected to benefit from the terms of the sale of the Badile Land between Appenine and the buyer, will enable our small team to focus entirely on the Company's strategy of transitioning the Company into a cash generating business with significant exploration potential."
For further information please contact:
Vigo Communications - PR Adviser
Tel: 44 (0)20 7390 0230
Graham Lyon, Executive Chairman
Cenkos Securities - Nominated Adviser
Tel: 44 (0)20 7397 8900
Turner Pope Investments (TPI) Ltd - Broker
Tel: (0)20 3657 0050
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.