Sound To Buy Moroccan OGIF Stake
UK-listed Sound Energy has announced a planned roughly $150mn all-share acquisition of partner OGIF’s stake in its licences onshore Morocco. It also said its extended TE-7 well test on the Tendrara licence was successful and that it will start drilling the TE-8 appraisal well next month.
Sound announced January 19 it will buy a further 20% interest in Tendrara, 75% in Meridja and an application for a 75% stake in the relinquished area close to Tendrara from Moroccan fund OGIF. Payment will be in the form of 272mn new ordinary shares in Sound, subject to shareholder approval. Sound said this would represent 24.5% of its fully diluted share capital – which NGW estimates at £120mn ($148mn).
OGIF, which would also have a non-executive seat on Sound’s board, is owned by seven Moroccan financial institutions: Attijariwafa Bank Group (Morocco’s largest bank), CIMR and CDG Group (the largest Moroccan pension funds), Finance Com and Advisory and Finance Group (investment companies), Mamda-Mcma and Saham (insurance companies).
OGIF would agree to hold no more than 29.9% of Sound for three years. Also further to OGIF’s expression of interest six months ago in funding and building a new pipe to connect Tendrara to the Maghreb Europe pipeline, OGIF and Sound have now agreed to secure a low cost and high quality solution for Tendrara infrastructure, which may include using OGIF's shareholders to fund the pipe.
The TE-7 extended well test as at December 24, 2016 on a snowy Tendrara day (Photo credit: Sound Energy / Twitter)
Following the deal, Sound will hold 75% of Tendrara and 75% of Meridja on a gross basis – representing 47.5% of Tendrara on a net basis (after the Schlumberger quasi farm-in announced late 2015) and 75% of Meridja on a net basis. Remaining 25% interests in Tendrara and Meridja are held by Morocco's state Office National des Hydrocarbures et des Mines (ONHYM).
TE-7 meanwhile flowed just under 1bn ft³ from TE-7 over 56 days' continuous flow and has now started a final pressure build-up phase, which it said was “consistent with the company's estimates”. This represents an average flow rate of 17mn ft³/d. Flow rate was limited at a maximum 40% drawdown to preserve completion integrity.
Sound said it has started civil works at its TE-8 appraisal well site, some 12 km northeast of TE-7, and expects to start drilling TE-8 in February 2017.
Shares started trading January 19 at £0.74/share, almost 5% above the previous day's close, but slipped back to £0.7182 at 9.30am GMT.
Mark Smedley