Sound Energy Reports on Heads of Terms: Sidi Moktar Acquisition
The Sidi Moktar Licences cover 2,700 Km2 in the Essaouira basin, central Morocco. The Sidi Moktar Licences contain a material existing gas discovery in the Lower Liassic ("Kechoula") where two wells have already been drilled and a near term well test is awaited prior to possible commercial production. Kechoula is close to existing infrastructure. Initial Company estimates have confirmed Kechoula to have an unrisked mid case GOIP of 293 Bscf (100% working interest). There is also significant (in excess of 1 Tcf of unrisked GOIP; 100%) Triassic exploration potential.
Under the heads of terms MPE has agreed, subject to contract, to grant Sound Energy an option to purchase MPE's 25% carried working interest in the Sidi Moktar Licences for a price of Euro 1.00 at any time up to first commercial gas from a Sidi Moktar Licence (the "Option"). On grant of the Option, the Company will issue MPE with new ordinary shares in the Company with a market value of 3,576,000. The Company will also pay MPE a 1.6% net profit interest in any future cash flows from the two existing wells of the Kechoula discovery.
The transaction has been structured as an Option to ensure that the 25% interests in the Sidi Moktar Licences continue to benefit from the carry enjoyed by MPE (which would be lost if the Company purchased the asset directly prior to first commercial production). Any revenues prior to first commercial production will accrue to Sound, who will, on grant of the Option, also be appointed MPE's representative and technical advisor in the Sidi Moktar Licences prior to the Option being exercised.
The Company will now finalise due diligence and work with MPE in the preparation and negotiation of contracts for execution.
James Parsons, the Company's Chief Executive, commented:
"The Option will, when granted, enable Sound Energy to secure a 25% carried interest in an already successfully drilled gas discovery with potential near term production and significant deeper exploration potential. An interest in Sidi Moktar would also represent the second material asset in Sound Energy's onshore Moroccan gas portfolio, which is underpinned by strong European gas fundamentals.
The Company now plans to work with the other partners on the Sidi Moktar Licences, with a view to accelerating progress on the licence area."