Proactive Investors
A disappointing two well programme was followed up with a monetisation programme, but Sound highlights that it is still confident in the Moroccan potential.
In Sound Energy PLC’s (LON:SOU) half yearly results the company told investors that it continues to expect completion of monetisation efforts for its Eastern Morocco portfolio before the end of 2019.
The asset sale process began earlier in the first half after two new wells failed to achieve commercial gas flow rates.
“The company remains confident in the potential of its Eastern Moroccan portfolio,” Sound said in the report on Thursday.
It highlighted that the portfolio retains “a number of high impact opportunities and plays, including the existing Tendrara Production Concession and the TE-5 Horst discovery”.
READ: Sound raises US$3mln in placing alongside executive pay cut
Sounds statement accordingly noted the continuing progress to advance the Tendrara TE-5 development where front end engineering design (FEED) work is ongoing and talks are underway over a possible gas sales agreement (GSA).
The company noted: “The GSA is a critical element required to support project sanction. The company has to date received a non-binding GSA offer from Morocco’s Office National de l’Electricité et de l’Eau Potable and negotiations on the terms of a GSA continue.”
Elsewhere in the Sound portfolio, the company said it continues to see the Sidi Moktar project as “an exciting opportunity to explore for high impact prospectivity” and noted that it continues to work on a farm-in partnership ahead of a seismic exploration programme.
Financially ‘well positioned’
In June, Sound raised US$3mln of new capital, via an equity sale, in a move to strengthen its financial position whilst it pursued monetisation of the Moroccan assets.
It retained US$11.1mln of cash at the end of the first half with the company describing itself as being “well positioned” for the second six months of the year.
On costs, Sound told investors: “The company continues to manage its cash resources prudently and accordingly, having paused its operational programme, the company initiated a structural cost reduction programme aimed at materially reducing the company’s ongoing operating expenditure during the period, including reductions in staff numbers and staff costs.
“Whilst these actions did not deliver a reduction in administrative costs during the period under review, the actions that have been and are being implemented are expected to deliver an annualised reduction in general and administrative expenses of over 50% from end 2019.”
First half financial results saw the company report an US$11.46mln loss from continuing operations, including US$6.49mln spent on exploration and US$3.99mln of admin expenses.
