Sound Energy PLC Exploration Permit Update (6571K)

TIDMSOU

RNS Number : 6571K

Sound Energy PLC

22 December 2022

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law by the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

22 December 2022

Sound Energy plc

("Sound Energy", the "Company" and together with its subsidiary undertakings the "Group")

Exploration Permit Update

Sound Energy, the transition energy company, provides an update regarding its exploration permits at Grand Tendrara, Anoual and Sidi Moktar.

Highlights

   --      Grand Tendrara exploration permits (Sound Energy holds 75% interest and operatorship) 

o Morocco's L'Office National des Hydrocarbures et des Mines ("ONHYM") has approved the Company's application to enter the optional First Complimentary Period under the Grand Tendrara Exploration Permits consisting of 2 years to 1 October 2024 (the "Grand Tendrara First Complimentary Period")

o Work commitment for the First Complimentary Period comprises the drilling of one exploration well with a Triassic objective

o The entry of the First Complimentary Period remains subject to Moroccan Energy and Finance Ministerial approval

   --      Anoual exploration permits (Sound Energy holds 75% interest and operatorship) 

o ONHYM has approved the Company's application for a 12-month extension to the Anoual Exploration Permits initial period to 8 January 2024 (the "Anoual Initial Period")

o Remaining work commitment in the Anoual Initial Period is the drilling of one exploration well with a Triassic objective.

o Extension of the Anoual Initial Period is subject to Moroccan Energy and Finance Ministerial approval

   --      Sidi Moktar exploration permits (Sound Energy holds 75% interest and operatorship) 

o ONHYM has agreed a 12-month extension to the Sidi Moktar Exploration Permits Initial Period, which ended on 9 October 2022 (the "Sidi Moktar Initial Period"), to 9 October 2023 and has accordingly reduced the optional First Complimentary Period of 3 years by 12 months to 2 years. This is in order that the Company completes the committed work programme and progresses this highly prospective basin.

o Extension of the Sidi Moktar Initial Period is subject to Moroccan Energy and Finance Ministerial approval

Grand Tendrara Exploration Permits

Further to the Company's announcement of 20 October 2022, and subject to Ministerial approval, the Company is pleased to confirm that ONHYM has approved the Company's application to enter the optional Grand Tendrara First Complimentary Period consisting of 2 years to 1 October 2024.

The Grand Tendrara Permits cover approximately 14,411 square kilometres in Eastern Morocco and the Company has historically completed the full work commitment for the initial Grand Tendrara exploration period of 4 years, within the total duration of 8 years commencing on or about 1 October 2018, by previously drilling the TE-9 and TE-10 exploration wells with Triassic objectives.

The work commitment for the Grand Tendrara First Complimentary Period, which will run until or about 1 October 2024, will, subject to ministerial approval, comprise the drilling of one exploration well with a Triassic objective. The Company expects to fulfil this commitment from the planned subsalt drilling opportunities within the Trias Argilo-Gréseux Inférieur ("TAGI") gas reservoir detailed in the Company's announcement of 9 August 2022. The TAGI is the proven reservoir of the TE-5 Horst gas accumulation within the Tendrara Production Concession currently under development by the Company and its joint venture partner ONHYM.

The Company has high-graded the SBK-1 and TE-4 Horst structures, both of which were previously drilled, in 2000 and 2006 respectively,

The gross exploration potential, expressed as Gas Initially-in-Place ("GIIP"), of the high-graded structures currently considered by Sound Energy to be the structures to be considered for the meeting of the Grand Tendrara First Complimentary Period work commitment are as follows:

 
 Target name                  Unrisked Volume Potential        Chance of 
                             Gas Initially-in-Place (Bcf)       Success 
                                 Gross (100%) basis 
                        ------------------------------------ 
                          Low      Best      High      Mean 
                        -------  --------  --------  ------- 
 TE-4 Horst Structure     153       260       408      273        36% 
                        -------  --------  --------  -------  ---------- 
 SBK-1 Structure           71       130       225      140        50% 
                        -------  --------  --------  -------  ---------- 
 

The Company also announces that ONHYM has approved an amendment to the governing Petroleum Agreement to the Grand Tendrara Exploration Permits. This amendment, subject again to Moroccan Energy and Finance Ministry approval, will comprise an amendment to the Bank Guarantee and Parent Company Guarantees required to be placed by Sound Energy Morocco East.

On entry to the Grand Tendrara First Complimentary Period, the Company will be required to relinquish a portion of the permitted Grand Tendrara acreage. The currently proposed retained area (60% of the current permit area) includes all Company recognised prospectivity.

Anoual Exploration Permits

The Company is also pleased to report that ONHYM has approved a 12-month extension to the Anoual Initial Period to 8 January 2024.

The Anoual Permits cover 8,873 square kilometres in Eastern Morocco and the Company, as operator, holds 75% interest in the Anoual Permits, with the remaining 25% interest held by joint venture partner, ONHYM.

Subject to Moroccan Energy and Finance Ministry approval, the length of the Anoual Initial Period defined under the Petroleum Agreement will now be 6 years and 4 months, commencing on or about 8 September 2017. The work programme commitments for the Anoual Initial Period, details of which are provided below, remain unchanged.

In providing its approval, subject to Ministerial approval, for the extension to the Anoual Initial Period, the length of the first Anoual complimentary period, which would commence upon the successful completion of the now extended Anoual Initial Period, will be reduced to 1 year and 2 months and the second complimentary period will remain unchanged at 2 years and 6 months. The work programmes for each of the complimentary periods will remain unchanged.

As a result, the Anoual Permits now have a total duration of 10 years (in place of 9 years previously announced by the Company on 1 September 2021) and, following the Company having historically fulfilled the requirements under the Anoual Initial Period to acquire FTG-aerogradiometry and 600 kilometres of 2D seismic, the unchanged remaining work commitments under the Anoual Permits are as follows:

   --      Anoual Initial Period of 6 years and 4 months from 8 September 2017 : 

o 1 exploration well with Triassic objective to be scheduled in 2023

o The Company's estimation of the gross exploration potential of the M5 exploration prospect, a possible candidate for the exploration well, expressed in GIIP is as follows.

 
 Target name            Unrisked Volume Potential        Chance of 
                       Gas Initially-in-Place (Bcf)       Success 
                           Gross (100%) basis 
                  ------------------------------------ 
                    Low      Best      High      Mean 
                  -------  --------  --------  ------- 
 M5 Exploration     332       800      1728      943        21% 
                  -------  --------  --------  -------  ---------- 
 
   --      Optional First Anoual Complimentary Period of a further 1 years and 2 months : 

o Should the results of the drilling of the exploration well drilled during the Anoual Initial Period be likely to constitute a commercially exploitable discovery, the Company will be required to acquire 150 square kilometres of 3D seismic or its equivalent in 2D seismic data. If the results of the exploration well drilled in the Anoual Initial Period are not likely to constitute a commercially exploitable discovery, the Company will undertake further geological and geophysical studies but will not be required to acquire this additional seismic.

   --      Optional Second Anoual Complimentary Period of a final 2 years and 6 months: 

o A further single exploration well with Triassic objective.

Sidi Moktar exploration permits

The Company is also pleased to report that ONHYM has agreed a 12-month extension to the Sidi Moktar Initial Period to 9 October 2023.

The Sidi Moktar exploration permits cover approximately 4,712 square kilometres in Southern Morocco with an initial period of 4 years and 6 months (the "Initial Period") within the total duration of 10 years commencing on or about 9 April 2018. The Initial Period was to end by 9 October 2022. ONHYM has agreed to a 12-month extension to the Sidi Moktar Initial Period to 9 October 2023 and has accordingly reduced the optional First Complimentary Period of 3 years by 12 months to 2 years. The Company will now seek to complete the committed work programme within the Initial Period and progress the exploration of this highly prospective basin. The work commitments for the Initial Period of the Sidi Moktar permits remain to acquire and process 500 kilometres of 2D seismic, a short well test of the Koba-1 well and abandonment of Koba-1 and Kamar-1, if required.

Cautionary statement

The Company cautions that notwithstanding its internal estimates for the exploration potential of the high-graded work programme prospects across the Grand Tendrara, Anoual and Sidi Moktar exploration permits set out above, further exploration activity, including drilling, will be required to substantiate the estimated exploration potential and that general exploration in the oil and gas industry contains an element of risk and there can be no guarantee that the Company's current estimates of volumes of gas originally in place will be substantiated by exploration drilling or that any volumes encountered would actually be available for extraction.

Graham Lyon, Sound Energy's Executive Chairman, commented:

"Whilst we continue to manage the legacy fallout of COVID 19 on business environment and our supply chains to undertake exploration activities the situation is improving. We are now making good progress with our farm-out process to secure partner participation for our next exploration drilling campaign which will target near-field opportunities within the TAGI play in Eastern Morocco assets of Grand Tendrara and Anoual but also progress our seismic campaign in Essaouira Basin covered by Sidi Moktar. We thank ONHYM and the Ministry of Energy for their strong and continuing support."

Further announcements will be made, as appropriate, in due course.

For further information please contact:

 
 Vigo Consulting - PR Adviser              Tel: [phone] 
  Patrick d'Ancona 
  Finlay Thomson 
                                           [e-mail] 
   Sound Energy 
   Graham Lyon, Executive Chairman 
 
   Cenkos Securities - Nominated Adviser     Tel: [phone] 
   Ben Jeynes 
   Peter Lynch 
 SP Angel Corporate Finance LLP -         Tel: [phone] 
  Broker 
 Richard Hail 
 
 Gneiss Energy Limited - Financial        Tel: [phone] 
  Adviser 
  Jon Fitzpatrick / Paul Weidman 
 

The information contained in this announcement has been reviewed by Sound Energy's Vice President, Geoscience, Dr John Argent, who is a Chartered Geologist, a Fellow of the Geological Society of London and a Member of the Petroleum Exploration Society of Great Britain, with 25 years of experience in petroleum geology and management and who is the qualified person as defined in the guidance note for mining, oil and gas companies issued by the London Stock Exchange in respect of AIM companies.

Bcf means billion standard cubic feet of gas; Tcf means trillion standard cubic feet of gas; and best case, high case and low case estimates are consistent with SPE (The Society of Petroleum Engineers) 2018 PRMS (Petroleum Resource Management System) guidelines.

Petroleum is defined as a naturally occurring mixture consisting of, but not limited to, hydrocarbons in the gaseous, liquid, or solid phase. Petroleum may also contain non-hydrocarbon compounds, common examples of which are carbon dioxide, nitrogen, hydrogen sulfide, and sulfur.

Reservoir is a subsurface rock formation that contains an individual and separate natural accumulation of petroleum that is confined by impermeable barriers, pressure systems, or fluid regimes (conventional reservoirs), or is confined by hydraulic fracture barriers or fluid regimes (unconventional reservoirs).

Resources are all quantities of petroleum (recoverable and unrecoverable) naturally occurring on or within the earth's crust, discovered and undiscovered, plus those quantities already produced.

Gas Initially-in-Place (GIIP) is the total quantity of gaseous petroleum that is estimated to exist originally in naturally occurring reservoirs, as of a given date.

Forward looking statements

Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. Generally, the words 'will', 'may', 'should', 'continue', 'believes', 'targets', 'plans', 'expects', 'aims', 'intends', 'anticipates' or similar expressions or negatives thereof identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that would cause actual results or events to differ from current expectations, intentions or projections might include, amongst other things, changes in oil prices, changes in equity markets, failure to establish estimated petroleum reserves, political risks, changes to regulations affecting the Company's activities, delays in obtaining or failure to obtain any required regulatory approval, failure of equipment, uncertainties relating to the availability and costs of financing needed in the future, the uncertainties involved in interpreting drilling results and other geological, geophysical and engineering data, delays in obtaining geological results and other risks associated with exploration, development and production. Given these risks and uncertainties, readers should not place undue reliance on forward-looking statements.

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

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This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [e-mail] or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

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December 22, 2022 07:30 ET (12:30 GMT)