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Tuesday, June 9, 2015
Sound Oil entered into a farm-in agreement with the Moroccan Oil and Gas Investment Fund (OGIF) in relation to the onshore Tendrara License in Morocco. The Tendrara License is currently, subject to completion of the agreement, owned 75% by OGIF and 25% by ONHYM, which has a 25% carried interest during the exploration phase. Sound Oil has, subject to regulatory approvals, agreed to assume operatorship of the Tendrara License and to take a 55% working interest (with OGIF retaining 20% and ONYHM the remaining 25%).
The 55% working interest will be granted in two tranches, with an initial 37.5% awarded on completion of the transaction and the remaining 17.5% being granted once Sound Oil commits on the second exploration phase (which would include a second well).
Under the terms of the agreement, Sound Oil will pay 100% of the cost of three wells, of which only the first well would be a firm commitment. The first well is to appraise the larger of two existing discoveries in the Tendrara License with a view to addressing the residual reservoir uncertainties (well deliverability and areal continuity) and proving up sufficient reserves to properly size the design of the infrastructure required to commercialize the gas. 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, costing approximately £6 million (100%), will commence in Q4 2015.
Sound Oil said that to date seven wells have been drilled on the license, five of which discovered hydrocarbons and two were tested successfully. The license already has 4,400 km of 2D seismic and 500 sq km of 3D seismic. Gas produced from the Tendrara is expected to either feed the gas hungry Moroccan domestic market or be connected to the Gazoduc Maghreb Europe (GME) gas export pipeline.
James Parsons, Sound’s CEO said, “This transaction is our first transformational deal in pursuit of our Mediterranean gas strategy. The Tendrara asset, with two existing discoveries and resource potential of multiple Tcf, has a very attractive risk / reward profile, builds on our core technical and commercial strengths and dovetails well with our Italian portfolio. The Company expects to share the resultant combined drill program and updated investor presentation with shareholders in due course.”
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