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I think Daddyo you make a good case for the path Sound decided to take. If it is so blindingly obvious to laymen that an easy win could could be obtained at SBK-1 then it will also be so for seasoned experts at the companies which might be interested in buying Sound. Therefore there was little upside for an exploration company. Exciting times.
Hindsight is great huh! The sex and violence path hasn't worked out too well....
I thought it was a shame that we chose never to appraise SBK-1 while we were waiting for the seismic to be delivered. We had a good 1-2 years between TE-8 and TE-9 to drill a well there and prove up some volume, but for some reason SOU had modeled SBK as almost worthless despite Fastnet having it as 800-odd BCF potential. I remember it was even raised in an FSC and JP/BM rather dismissively questioned why we'd bother drilling something so immaterial. I thought that comment very odd at the time but hey-ho. Another of JP's strategic masterstrokes. If i recall correctly they actually now think SBK could be material again after the final seismic re-processing.
Anyway, thanks for your answer.
WTD
Good question.
Onshore exploration in Morocco stalled around 2007 because there was a rush to licence and drill offshore. But that campaign saw more than a billion dollars spent in 10 years failed to find anything big enough to develop. Onshore, TE-5 had been tested at sub-commercial rates and everyone knew the Tagi reservoir was tight just about everywhere.
Sound’s breakthrough was to demonstrate that staged fracks in sub horizontal wells TE-6 and TE-7 worked really well, but only where the Tagi reservoir pores weren’t cemented before the gas migrated from the source. Maghreb Petroleum’s early work suggested the two best areas to produce gas were TE-5 and SBK.
In my opinion, Sound then threw away a great chance to commercialize TE-5 and went off on a wild goose chase of high risk exploration. To be fair it was really Onhym and AFG who pushed for a TE-5 development and Sound Energy who slowed it down.
@Exploration - while I'm sure that the Moroccan authorities are keen to progress TE-5 and Tendrara generally, nothing points to a speedy development so far despite the involvement of AFG and the continuous line of interested foreign oil companies. Genuine question, how do you explain the tardy pace of development of TE-5 (discovered in 2007, horizontal concept proved by SOU in 2016 etc) in light of the apparent interest in getting it developed ASAP?
As an example HUR found oil, funded 400m development, commissioned an FPSO, got it delivered, hooked it up and delivered first oil in an extremely challenging offshore environment, whilst proving up an entirely new play concept - all since 2016 when we drill TE-6 and 7. We have literally done no development work on TE-5 since we drilled TE-7.
Lyndondavies
I think we can count on Mohammed Benslimane and his team at AFG to help sort out the mess we’re in. AFG is the predominant advisor for all types of buy-side and sell-side deals in Morocco. AFG will also be keen to preserve OGIF’s interest in Tendrara.
AFG created the pipeline/CPF deal and lined up the money for it. Of course, Sound can’t sign the GSA with ONEE because they would be contractually obliged to start the development of TE-5 ‘without delay’ - according to their agreement with Onhym. But with no money of expertise Sound could not start a development.
There is a continuous line of foreign oil companies visiting Onhym in Rabat looking for opportunities. AFG will know who they are and redirect likely candidates to Rothschilds. I’m not suggesting AFG will determine a sale price for Sound, but OGIF’s sizeable shareholding will come into play to select a buyer who gets exclusive rights to negotiate. AFG May also facilitate a speedy closure of any transaction including government approvals.
jacklevi, there are so many people and organisations here, it must be very complicated. All the big fish like OGIF,ONEE,SHLUM ,ROTH, not to mention all us PIs. The BOD could not even get up to speed on the GSA,let alone do a Company sale. I always thought (after reading the Ducati postings)that there would be interest from the Middle East ,and China,maybe even Russia. Problem is that the Moroccan Government may not approve,they would want a big say in who provides their gas. I think the BOD will be busy now,they all have a lot invested here,Simon Davies in particular. Something could drop any day,but if the past is anything to go by, we will be still her for some time. The timelines quoted are only for the marketing process I believe, not the final outcome.
I can’t see a decent return without contingency.
Would love to be a fly on the wall.
lyndon Have to agree i posted the other day with similar thoughts i`m no longer to fussed what the eventual outcome is so long as its clear cut and as you say no strings attached.