Sound Oil Farms Into Morocco Gas Asset

Sound Oil has entered into a farm in agreement with the Moroccan Oil and Gas Investment Fund (OGIF) in relation to the Tendrara licence, onshore Morocco.

The Tendrara licence includes two stranded gas discoveries with low risk appraisal potential and significant exploration upside, the company said Monday adding that preliminary internal estimates of existing discovery volumes are broadly comparable to estimated volumes at the company's Badile licence in Italy.

The licence is currently owned 75 percent by OGIF and 25 percent by the National Office of Hydrocarbons and Mines (ONHYM), the Moroccan national hydrocarbon and mineral company - which has a 25 percent carried interest during the exploration phase.

Sound Oil has, subject to regulatory approvals, agreed to assume operatorship of the Tendrara licence and to take a 55 percent working interest (with OGIF retaining 20 percent and ONYHM the remaining 25 percent).  The 55 percent working interest will be granted in two tranches, with an initial 37.5 percent awarded on completion of the transaction and the remaining 17.5 percent being granted once Sound Oil commits on the second exploration phase (which would include a second well).

The licence area covers eight blocks across a total of 14,500 sq kms in the north east of Morocco.  Seven wells have been drilled on the Tendrara licence to date, of which five discovered hydrocarbons and two were tested successfully.

Gas produced from the licence is expected to either feed the Moroccan domestic market or be connected to the Gazoduc Maghreb Europe (GME) gas export pipeline.

Under the terms of the farm in agreement, Sound Oil will pay 100 percent of the cost of three wells, of which only the first well would be a firm commitment. Sound Oil's commitment to fund the second and third wells will depend upon the results of the first well.   

It is anticipated that drilling of the first well will commence in fourth quarter of 2015.