Proactive Investors
Ian Lyall
In layman’s terms, any discovery that runs into the trillions of cubic feet (Tcf) of gas is an internationally significant discovery.
Sound is looking to drill a third ‘outpost’ well in Morocco.
Sound Energy PLC’s (LON:SOU) Morocco gas field has “multi Tcf” potential, the company said Thursday as it revealed plans for a third company-drilled well on the site.
In layman’s terms, any discovery that runs into the trillions of cubic feet (Tcf) of gas is an internationally significant discovery.
So Sound’s update on the potential scale of its Tendara asset, contained in the firm’s interim results statement, will hearten investors.
Sound has drilled one well, which flowed 17mln cubic feet of gas – this was as a highly commercial and well ahead of expectations.
A second is currently underway and will go horizontal. Armed with the data from both, Sound should be able to give a more comprehensive assessment of what lies below the surface.
The AIM-listed explorer, in harness with its development partner Schlumberger, is currently mulling plans for a third “outpost” well.
Perhaps as far 30 kilometres north-east of the TE-6, Sound’s initial drill site, it will test whether the well reservoir extends beyond its current identified boundaries.
Given the success it has enjoyed in Morocco, the company in June exercised an option to buy a 55% stake in Meridja, the block next to Tendara. The pair share the “same fundamental geology”.
Followers of Sound will know it also boasts a portfolio of production and development assets in Italy.
In the half-year update, it said it was counting down to drilling the Badile well, which could move the dial if successful.
The net present value of this one asset is put around €486mln, which may explain why Schlumberger opted to extend its agreement with Sound and help fund Badile’s development in return for a 20% interest.
The financials, meanwhile, show the company is sitting on a cash cushion of €24mln, and has negotiated further headroom with a €28.8mln debt facility.
As is normal with companies at this formative stage of their development, Sound was loss-making in the six months ended June 30. The deficit widened slightly to €2.3mln.
Ian Lyall
