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Sound Energy considers selling up, suspends remainder of well programme

"We are now approaching the final stages of Sound Energy's strategy to drill a bold exploration programme in Morocco and then explore options for early monetisation,” said chief executive James Parsons.
oil and gas operations
Plans to drill the TE-11 well have been suspended

Sound Energy PLC (LON:SOU) shares rallied somewhat on Wednesday - 7% higher at 11.56p - after the explorer revealed it may hoist the ‘for sale’ sign over its operations in Morocco.

The hangover from Tuesday’s well result remains evident, however. Yesterday, the explorer’s share dropped 40% to a low of around 10p, from 17.35p, after it revealed that the TE-10 well had failed to yield commercial volumes of gas in tests.

In a strategy update, the company told investors that the TE-10 well result, announced on Tuesday, “does not diminish Sound Energy's overall assessment of its Eastern Morocco acreage”.

READ: Sound Energy’s TE-10 discovery fails to achieve commercial flow rates

The explorer said that after five wells it sees a number of remaining high impact plays in the region – including the TE-5 discovery and production concession, as well as additional upside in TAGI and Palaeozoic plays across multiple leads and prospects.

Internally, the company estimates that the up to 20 trillion cubic feet of gas originally thought to be in place may be present across these exploration opportunities.

Nevertheless, Sound Energy said, it is now considering whether a sale of the East Morocco acreage would be a preferred option ahead of the final investment decision for the Tendrara TE-5 production area. It added that Rothschild & Co will support the company in this process.

In the meantime, the group has suspended plans to drill the TE-11 well – the third in the current programme – as it advances a marketing exercise.

"We are now approaching the final stages of Sound Energy's strategy to drill a bold exploration programme in Morocco and then explore options for early monetisation,” said James Parsons, Sound chief executive.

“Should the board receive the right price for the company's East Morocco acreage, our intention would be to return the net proceeds of any divestment to Sound Energy shareholders in the most efficient manner possible."

 -- Updates with share price --

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