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Thursday, April 14, 2022
Sound Energy provided the following operational and strategic update.
Tendrara Phase 1 mLNG Development
Following the Company’s announcement on 15 February 2022 that Sound Energy Morocco East Limited (SEMEL), Sound Energy’s wholly owned subsidiary, had issued a Notice to Proceed to Italfluid Geoenergy S.r.l. (Italfluid) in respect of the Phase 1 mLNG development of the Tendrara Production Concession, the Company is pleased to provide the following update on project progress:
– mLNG equipment and services provider Italfluid, has confirmed the issuance of purchase orders for the gas processing and liquefaction packages together with the LNG storage tank;
– Site preparation activities by Italfluid and Sound Energy at the Tendrara site location have commenced and are ongoing;
– Italfluid is advancing engineering in line with project schedule;
– Selection, by SEMEL, of engineering contractors for flow assurance, flowlines and owner engineering nearing completion;
– Wellhead servicing scope finalized and contractor appointment progressing; and
– Contract awarded by SEMEL to Petroleum Equipment Supply Engineering Company Limited to undertake scheduled inspection and routine maintenance of the wellhead Christmas tree assemblies on TE-6 and TE-7, the wells to supply the raw gas to the mLNG facility, with planning now underway for inspection and maintenance.
Over the next 6 months, the following milestones are scheduled:
– Completion of site access road improvements;
– Placement of purchase orders for and execute flow assurance, flowlines and owners engineering scopes;
– Execution of TE-6 and TE-7 wellhead inspection and servicing;
– Flowline and associated equipment procurement process to commence; and
– Italfluid will undertake the following:
o Complete Preliminary Engineering and progress Detailed Design
o Place remaining purchase orders for equipment/packages and bulks
o Complete site preparation and commence civils (foundations) works
Tendrara Phase 2 Development Financing Update
Following the execution of the conditional binding 10-year gas sale and purchase agreement with ONEE announced on 30 November 2021 in respect of the proposed Tendrara Phase 2 gas development (Tendrara Phase 2 Development), the Company has been able to advance discussions with a broad range of financing partners.
Consequently, the Company has received non-binding terms sheets from a number of parties including banks and mezzanine financiers relating to potential capital provision for the proposed Tendrara Phase 2 Development. The Company is currently evaluating the term sheets and looks forward to providing further updates in due course.
In parallel, the Company is also progressing discussions with a number of international upstream service providers in relation to the potential provision of EPC services and vendor financing for the development of the proposed central processing facility (“CPF”) and gas export pipeline, associated with the Tendrara Phase 2 Development. There has been strong interest from credible counterparties offering the potential to mature alternative or complementary financing to debt and/or mezzanine financing.
Eastern Morocco Exploration Update
While the company has strategically prioritized its gas monetization strategy through the phased development of the TE-5 Horst (Tendrara Production Concession), the Company has also re-evaluated the extensive exploration portfolio within the Greater Tendrara and Anoual exploration permits surrounding the Tendrara Production Concession. By integrating the acquired data and learnings from previous drilling campaigns with acquired and reprocessed seismic datasets, the Company has high graded several potential near term subsalt drilling opportunities within the Trias Argilo-Gréseux Inférieur (TAGI) gas reservoir, the proven reservoir of the TE-5 Horst gas accumulation.
These targets include the exploration prospect ‘M5’ located on the Anoual permits, together with the potential of the structures previously drilled on the Greater Tendrara permits, SBK-1 and TE-4. Both SBK-1 and TE-4, drilled in 2000 and 2006 respectively, encountered gas shows in the TAGI reservoir. SBK-1 flowed gas to surface during testing in 2000 at a peak rate of 4.41 mmscf/d post acidification but was not tested with mechanical stimulation. Mechanical stimulation has proven to be a key technology to commercially unlock the potential of the TAGI gas reservoir in the TE-5 Horst gas accumulation and accordingly the Company believes this offers potential to unlock commerciality elsewhere in the basin.
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