22nd Oct 2015 07:44
LONDON (Alliance News) - Sound Energy PLC on Thursday said it has signed heads of terms with Maghreb Petroleum Exploration SA which will lead to the company acquiring a 25% stake in three onshore oil and gas exploration permits in the Sidi Moktar region of Morocco.
The signing comes after the pair opened up a deal in early September whereby Maghreb gave Sound Energy a two-month exclusivity period to negotiate the acquisition.
Under the heads of terms, Sound Energy has been granted an option to acquire the 25% stake held in the three permits by Maghreb any time before the first gas is produced from the area. If it takes up that option, Sound will issue Maghreb with shares in the company worth around GBP3.6 million.
Sound will also pay Maghreb a 1.6% net profit interest in any future cashflows derived from the two existing wells that have already been drilled on the permits.
"The transaction has been structured as an option to ensure that the 25.0% interests in the Sidi Moktar licences continue to benefit from the carry enjoyed by Maghreb (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," it said in a statement.
Sound will now finalise due diligence and work with Maghreb in the preparation and negotiation of contracts for execution.
The Sidi Moktar licences cover 2,700 square kilometres in the Essaouira basin in central Morocco. It has two wells already drilled, which led to one gas discovery. Initial estimates by Sound have indicated the Kechoula discovery could have around 293.0 billion standard cubic feet of gas in place, with a further 1.0 trillion cubic feet of further exploration potential.
On Wednesday, Sound Eenergy signed a memorandum of understanding with Schlumberger Oilfield Holdings Ltd, the world's largest oilfield services company. Under that deal, the pair will develop assets in Africa and Europe, with analysts suggesting it will materially de-risk all of Sound's existing and future assets, which now looks likely to include Sidi Moktar.
Sound shares were up 1.4% to 16.99 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Sound Energy