Petroleum Africa
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Sunday, January 3, 2016
Sound Energy has found a backer for its drilling program in Morocco, oil service firm Schlumberger. The company revealed that further to the MoU and term sheet previously signed with Schlumberger, it has entered into a Field Management Agreement (FMA) with an affiliate of Schlumberger Oilfield Holdings Ltd. in relation the Tendrara license.
Under the FMA Schlumberger will provide integrated technical services, equipment and personnel to Sound Energy and will also fund a substantial portion of the capital expenditure for the first three Tendrara appraisal wells, and of the development of the license area thereafter. For its backing Schlumberger will be granted an upside linked to production performance.
As announced by Sound in June 2015, as part of its entry into Morocco and farm-in with the Moroccan Oil and Gas Investment Fund the company is required, in accordance with the terms of the farm in, to fund 100% of the costs of the first three appraisal wells on the Tendrara License. Under the FMA, Schlumberger has now agreed to fund proportions of the first three Tendrara appraisal wells; 80% of the capital expenditure of the first Tendrara appraisal well; 75% of the capital expenditure of the second Tendrara appraisal well; and 75% of the capital expenditure of the third Tendrara appraisal well.
Sound Energy will continue to be required to fund the remaining costs on the first three appraisal wells under the deal. Thereafter, or if earlier, on commerciality of the Tendrara License having been declared, Sound Energy and Schlumberger shall fund the company’s costs under the farm in in equal shares, with each party funding 50% of the company’s participating interest costs under the farm in.
Under the FMA the company has granted Schlumberger a net profit interest of half of its interest (which equates to 18.75% initially increasing to 27.5% after the first well). Schlumberger will provide integrated technical and drilling services, equipment, and personnel to Sound under the FMA. The services will be funded directly by Schlumberger up to the maximum Schlumberger funding commitment percentages. Schlumberger will also have a right of first refusal to provide additional services to Sound on the Tendrara under the FMA.
James Parsons, Sound Energy’s CEO commented, “I am delighted to announce signature of our first transaction with Schlumberger, a leading oil and gas services company, which will propel us towards becoming one of the leading Mediterranean and North African gas companies. This transaction significantly reduces our financial exposure to the drilling program while maximizing the potential upside relating to drilling and development success. The involvement of Schlumberger in this project also helps de-risk the asset and further supports the quality of our technical work.”
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