LNG

March 24 (LNGJ) - Sound Energy, the UK company with natural gas assets in Morocco and a micro-LNG production project, reported progress on several fronts, including sales, finance and engineering. Sound Energy executed an $18.0 million loan facility from Afriquia Gaz, the Morocco-based company which has also signed a 10-year, take-or-pay LNG sale and purchase and taken a stake in Sound Energy.

   The London-listed company is planning to develop a micro-LNG plant for the Tendrara 5-Horst gas well in its Tendrara production concession in eastern Morocco, near the Algerian border. The company also extended its Moroccan Anoual exploration permit duration from eight to nine years. “During 2022, we will continue to work tirelessly to deliver additional value for our shareholders through meaningful progression on both the Phase 1 of the micro-LNG project and the Phase 2 of the gas pipeline development to deliver increased future company growth,” said Graham Lyon, Executive Chairman.

Sound Energy, the UK company with natural gas assets in Morocco and an LNG production proposal, has reported progress on several fronts, including sales, finance and engineering.

The company is planning to develop a micro-LNG plant for the Tendrara 5-Horst gas well in its Tendrara production concession in eastern Morocco, near the Algerian border.

The micro-LNG plant is part of a full field development plan centred around the construction of a 120-kilometre pipeline going north to link with the Maghreb-Europe pipeline.

Graham Lyon, Executive Chairman, said that there had been positive developments for the Tendrara concession, including on a commercial gas sales contracts and Phase 1 engineering of the micro-LNG plant.

A company called Afriquia Gaz SA has signed a conditional LNG sales agreement.

Afriquia Gaz  is Morocco-based and is currently engaged in the refining and marketing of liquefied petroleum gas (LPG).

“The agreement covers a 10-year, take-or-pay LNG sale and purchase at Tendrara,” said Lyon.

Sound Energy is also negotiating an $18 million loan from Afriquia Gaz.

The company added that there has also been activity covering the pipeline development discussions.

“A huge amount of work has been completed so far this year and much remains to be concluded during the remainder of 2021,” said Chairman Lyon.

“Having secured a long-term LNG sales agreement with Afriquia Gaz, we have established a route to market for our gas and following completion of the proposed $18M loan from Afriquia Gaz, the company will have financing for the Sound Energy share of the Phase 1 development,” he explained.

Afriquia Gaz has received £2.0 million ($2.8M) of share equity at 1.25 UK pence per share in connection with the LNG sales agreement, thus providing Sound Energy with more liquidity.

The LNG sales agreement with Afriquia Gaz commits the buyer to purchase not less than 100,000 cubic metres per annum produced and liquified from the Phase 1 development concession joint venture.

“With important catalysts to come in the near term, I look forward to updating shareholders further as we progress towards the development phase of the project and to becoming a revenue generating business,” he stated.

The company said the Tendrara Horst field would help provide domestic LNG to industrial users in Morocco, displacing presently imported fuels with a deeper carbon footprint.

Sound Energy was also able to successfully restructure its Luxembourg-listed €28.8M, 5-percent senior secured notes by engaging proactively with noteholders to agree a suitable restructuring without substantial equity dilution.

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.

UK-listed upstream natural gas company Sound Energy said it planned to set up a small LNG production project in the North African kingdom of Morocco from its assets there.