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Sunday, October 25, 2015
Sound Energy signed a heads of terms with Maghreb Petroleum Exploration (MPE) for the purchase of MPE’s 25% stake in the Sidi Moktar Licenses. The Sidi Moktar Licenses are three onshore concessions located in the Sidi Moktar region of Morocco.
The licenses cover 2,700 sq km in the Essaouira basin of central Morocco.
The purchase of the 25% stake from MPE will give Sound access to an existing gas discovery in the Lower Liassic, the Kechoula discovery. A well test will be conducted prior to possible commercial production.
Under the heads of terms MPE has agreed, subject to contract, to grant Sound Energy an option to purchase MPE’s 25% carried working interest in the licenses. On grant of the option, Sound will issue MPE with new ordinary shares in the company with a market value of £3,576,000. The company will also pay MPE a 1.6% net profit interest in any future cash flows from the two existing wells of the Kechoula discovery.
The transaction has been structured as an option to ensure that the 25% interests in the Sidi Moktar Licenses continue to benefit from the carry enjoyed by MPE (which would be lost if the company purchased the asset directly prior to first commercial production). Any revenues prior to first commercial production will accrue to Sound, who will, on grant of the option, also be appointed MPE’s representative and technical advisor in the Sidi Moktar Licenses prior to the option being exercised.
The company will now finalize due diligence and work with MPE in the preparation and negotiation of contracts for execution.
James Parsons, the Company’s Chief Executive, commented:
“The option will, when granted, enable Sound Energy to secure a 25% carried interest in an already successfully drilled gas discovery with potential near term production and significant deeper exploration potential. An interest in Sidi Moktar would also represent the second material asset in Sound Energy’s onshore Moroccan gas portfolio, which is underpinned by strong European gas fundamentals.
“The company now plans to work with the other partners on the Sidi Moktar Licenses, with a view to accelerating progress on the license area.”
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