29th Jun 2020 11:09
(Alliance News) - Shares leapt in Sound Energy PLC on Monday as it entered exclusivity discussions with a Moroccan conglomerate for the sale of liquefied natural gas from Sound's TE-5 Horst gas development in the Tendrara concession, onshore Morocco.
Shares in the Morocco-focused upstream gas firm were 53% higher at 2.00 pence on Monday in London. The stock jumped to a intraday high of 2.67p earlier Monday morning.
The unnamed partner has been granted exclusivity for the proposed gas sales agreement until the end of 2020, during which it and Sound Energy will endeavour to finalise the deal.
Under the agreement, Sound Energy is to produce and sell gas to the partner for a period of ten years, at a rate of 100 standard cubic metres of gas per year.
The partner itself will commit to an annual minimum 'take or pay' quantity of 90 million standard cubic metres of gas, priced within a range of USD7 to USD9 per million British Thermal Units.
In order to accelerate the delivery of first gas under the phase one development plan, the partner will look to provide partial financing for the development.
This will be done through a GBP2 million subscription for 159.7 million Sound Energy shares at a price of 1.2521 pence each, and a secured commercial loan of USD13.5 million, with a 11.5% coupon and 12-year term.
Looking ahead, Sound Energy said that despite Covid-19 lockdown restrictions, it aims to take a final investment decision during the second half of 2020.
The deal between Sound Energy and its partner is subject to the approval of concession joint venture partners, and the final investment decision on TE-5.
"In spite of challenging current market conditions we have made significant progress, and these heads of terms, mark an important step forward towards the delivery of the company's phase one production development plan for the TE-5 Horst at the Tendrara concession," said Sound Chief Operating Officer Mohammed Seghiri.
By Dayo Laniyan; [email protected]
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