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Tuesday, May 12, 2015
Sound Oil was granted a 30-day exclusivity period by the Moroccan Oil and Gas Investment Fund (OGIF) in relation to a potential farm-in to the Tendrara License onshore Morocco. The grant of exclusivity initiates exclusive negotiations between Sound Oil and OGIF and follows the submission of an indicative offer letter from Sound Oil to OGIF for the license.
The Tendrara has a large scale onshore Moroccan gas discovery with very significant exploration upside with a proven hydrocarbon system. Seven wells have been drilled to date, five of which encountered hydrocarbons and two were tested successfully. The license already has 4,400 km of 2D seismic and 500 sq km of 3D seismic.
Subject to final agreement, Sound Oil will acquire a 55% net working interest and operatorship of the Tendrara license; currently the license is owned by OGIF with a 75% stake and ONHYM holding the remaining 25%.
Under the proposed deal Sound has offered, subject to contract and regulatory approvals, 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 would be granted in two tranches, with the initial 37.5% being awarded immediately 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 proposed farm in, 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 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 would depend upon the results of that first well.
It is anticipated that drilling of the first well, costing approximately £6 million (100%), would commence in Q4 2015.
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