Sound Energy, the UK company with natural gas assets in Morocco and an LNG production proposal, has held a share placement and is considering another to raise more cash for operations.
The company is planning to develop a micro-LNG plant for the TE-5 Horst gas well in its Tendrara Production Concession in eastern Morocco, near the Algerian border.
The LNG plant is being pursued alongside a full field development plan centred around the construction of a 120-kilometre pipeline going north to link with the Maghreb-Europe pipeline.
“The placement and announcement of an opportunity for existing shareholders to participate under the same terms and conditions provides Sound with a stronger financial base to progress our planned activities,” said Graham Lyon, Sound Energy's Executive Chairman.
“We have confidence in our strategy to bring Sound into a cash generating position and look forward to updating the market as future milestones are met,” added Lyon.
The company at the end of June 2020 entered into a deal with a Moroccan fuel distribution group for the purchase of the LNG from the TE-5 Horst well development, as well as the partial financing by the partner.
Exclusivity has been granted to the partner in relation to the proposed transaction until 31th of December 2020.
Sound Energy is listed on the Alternative Investment Market of the London Stock Exchange.
The company has now placed 129.4 million new ordinary shares at a price of 2.125 UK pence to raise £2.75M million ($3.56M) before costs.
The company also announced a proposal to raise up to a further £1.75M by way of a broker option through the issue of up to 82.35M additional new ordinary shares.
Sound Energy noted that front-end engineering and design is underway for both the gas processing facility and the pipeline.
The company bought into the Tendrara licence in June 2015, taking a 55 percent working interest and assuming operatorship.
Its partners are the Moroccan state company for hydrocarbons, ONHYM with 25 percent and the Oil & Gas Investment Fund with 20 percent.
The forward Tendrara-Anoual work programme is focused on accelerating the exploration activity to unlock the ultimate potential of the Basin and advancing preparations to early first gas.
The net proceeds of the £2.57M share placement and any additional proceeds will be used to strengthen the company's cash position in adding to its unaudited cash balances of approximately £4.2M at the end of June 2020.
The Anoual exploration permit terms have been restructured while the company continues to progress its phased development strategy.
Sound Energy said it continued to engage with multiple other potential farm-in stakeholders who have expressed interest in supporting the company's strategy.