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Question from Richardlcullen
is it anticipated that sound will become a dividend machine after first gas? if so how long is it anticipated that the first dividend will be.
Garry Dempster (VP Finance & Commercial)
It will be up to the BOD with regards to the timing of the dividend. There is also a case to potentially pay a dividend once the deal completes.
Question from DavidLane
What does our cash and net cash position look like now / post deal closure?
Garry Dempster (VP Finance & Commercial)
We can only quote what is in the public domain and as at the last interims this was £11.1 million.
Question from Thorough
Please clarify the future intentions for sidi in terms of meeting its obligations to OHYMN and how it will be separated from the Tendrara transaction
Mohammed Seghiri (Interim CEO)
The proposed Tendrara transaction is unrelated to Sidi Mokhtar
Question from Thorough
Do we have any indication on how Sound intends to operate as a holding company? Are the subsidiary of the holding company expected to be UK or Moroccan domiciled and listed or not?
Fred Lacuha (General Counsel)
Sound Energy plc the holding company operates in Morocco through three UK subsidiaries, Sound Energy Morocco East Limited, Sound Energy Meridia Limited and Sound Energy Morocco South Limited. Each of these subsidiaries have branches in country to facilitate the operations. Currently there is no plan to have a separate listing in Morocco.
Question from DavidLane
Setting aside OGIF and Marco’s connections do we have any significant major fund investors?
Garry Dempster (VP Finance & Commercial)
As at the last share analysis earlier this year we had several funds invested – total of around 12-14% of the register.
Question from Ash
Was the deep dive arranged to lower expectations? It only took a few minutes to explain how much poorer our geology compare to Algeria
Brian Mitchener (Exploration Director)
The deep dive was organised at the request of shareholders to provide further geological information to shareholders and allow a better understanding of the predicted subsurface risk. We had many requests to organise it and hence we did. We explained that whilst the quality of the TAGI reservoir is lower in the Tendrara basin than Algeria, Sound Energy and our joint venture partner Schlumberger had demonstrated with TE-6 and TE-7 that the TAGI in Tendrara could flow at commercial rates, opening the potential of the region for further exploration.
Question from Ash
In hindsight would it have been better to not have gast tracked the seismic? Drilling would have taken longer but would we be any worse off than we are now
Brian Mitchener (Exploration Director)
Actually, we are pleased to have fast tracked the data, and we achieved this with no significant comprise to the imaging required to mature the prospects. The fast track dataset was a full processing sequence delivered by a leading seismic processing contractor, Shearwater. The outcome of the wells would not have changed but the cost of waiting for the final processing was very high (more expensive than drilling).
Question from Thorough
How will Sound ensure that our minority interests are protected and that we have the same level of visibility in the JV as current
Fred Lacuha (General Counsel)
The transactional documentation, when executed will set out the terms of Sound Energy's continuing interests with respect to the Eastern Morocco licenses
Question from DavidLane
We have debt in the form of bonds what is the plan to deal with this debt ?
Garry Dempster (VP Finance & Commercial)
This will be up to the JV once the deal is finalised. Repayment falls in summer 2021 so one option of course would be to repay this debt as it falls due or potentially roll it – but again this will be up to the JV.
Question from DavidLane
Thanks to the guys who have stepped up to take over from James and Simon and JJ
Mohammed Seghiri (Interim CEO)
Thank you for your kind words. We had many people write in with encouraging and kind words and we would like to thank them here.
Question from Ash
Brian when you said to Malcy "if Te9 doesn't work out then there is something very wrong "...what did you mean by that?
Brian Mitchener (Exploration Director)
At the time, from the evaluation of the data we had considerable confidence achieving success at TE-9. Our key risk was being unable to identify with confidence one risk element, that of reservoir effectiveness. Unfortunately, TE-9 failed due to this risk, the TAGI reservoir succession at the TE-9 lacked porosity, and therefore was not effective. However, we did detect very small levels of thermogenic gas proving support to there being a gas charge into the TE-9 area.
Question from Richardlcullen
has a share buy back been considered at any stage?
Garry Dempster (VP Finance & Commercial)
Not at this stage but thank you for the suggestion.
Question from Richardlcullen
will our new CEO be as contactable and respond to shareholder questions etc, or will shareholders be now kept at arms length?
Sound Energy (Administrator)
Mohammed will be available to respond to shareholders but as he beds down in his new role we politely request all questions be sent to questions@soundenergyplc.com Mohammed is looking forward to meeting with shareholders in due course. (and has met many in his previous role as country manager too)
Question from Richardlcullen
will sound energy be a completely carried entity as suggested in the last RNS or will we be expected to pay for costs such as drilling (post first gas) and exploration, staff etc.
Mohammed Seghiri (Interim CEO)
The key terms of the HOTs were announced in the RNS of 6 November 2019 including details of the proposed carry arrangement Sound will retain 23.3% of Eastern Morocco so will still be liable for costs in proportion this holding. Sound has been actively cutting costs as it entered into a non- operating stage and continues to do so. We will retain an office in Sevenoaks.
Question from Sound2017
Are schlumberger still invested? They can’t be to pleased to see where the share price is and seeing the CEO, CFO and chairman resign
Brian Mitchener (Exploration Director)
The current JV and partnering arrangements with Schlumberger remain unchanged.
Question from Mthane
What is the plan to develop the Sidi Mokhtar licence ?
Brian Mitchener (Exploration Director)
As we previously announced, we have been undertaking a farm-down exercise ahead of a potential seismic acquisition campaign, which is part of a phased approach through which we hope to unlock the exploration potential of the Sidi Mokhtar licences. We have also recently completed an EIA on the licence in readiness for the potential seismic acquisition campaign.
Question from emailedquestions
How much of the upfront cash component of the agreement (55% of $54.3m – approx. £23.23m) does the company envisage retaining after the payment of fees and expenses related to the deal? Will the remaining funds be earmarked for repayment of the outstanding debts, as was previously outlined by management? Given that the outstanding debt is currently larger than the proposed upfront cash component of the agreement, will the company need to raised capital in order to remain a going concern, and to participate in any exploration program that were to occur prior to FID and First Gas?
Garry Dempster (VP Finance & Commercial)
Good question. If transaction is done, we will revert back to you on due course on this matter. The Board will study different possible scenarios (including distribution of a part of the cash proceeds to the shareholders).
Did Brian sidestep the Schlum question there?
Question from Thorough
Do we have any indication of the kind of exploration drilling programme that we are to follow. This programme seems to be key rationale for the deal but as yet, we have no idea on what could be a way forward. Are Schulmberger expected to be involved going ahead in this programme?
Brian Mitchener (Exploration Director)
I hope that some of the previous answers have provided clarity around our thinking. We have multiple near term drill ready prospects including SBK, Chiron and M5. We believe that further drilling is required to unlock the basin potential and the team are very focused maturing our plans.
Question from Mthane
Why is our future involvement with Eastern Morocco described as being as a synthetic involvement?
Mohammed Seghiri (Interim CEO)
It is intended that Sound’s retained share is secured via contracts with the JV rather than direct licence ownership, hence synthetic.
Question from ingson
Has the Tendrara land which Sound Energy obtained from OGIF in exchange for 29.9% of the company been of any use of value to the company? Were Sound Energy wrong to do that deal?
Mohammed Seghiri (Interim CEO)
The OGIF deal was critical to the company to secure in country partners and also increase our percentage in all our Eastern Morocco licences, including the concession.
Is losing the CEO,CFO and chairman embarrassing for Sound Energy? Is it not a reflection of lack of trust in the company?
Mohammed Seghiri (Interim CEO)
The CEO's plans to exit has been telegraphed for over 18 months via RNSs. The Chairman was an unexpected health issue.
Question from Ash
Is there a prospect of a farm out and free carry at Sidi Moktar?
Mohammed Seghiri (Interim CEO)
We keep working on Sidi Mokhtar to deliver our work commitments. We have just received a formal EIA approval from the local authorities. We are making a market enquiry to select the best contractor to acquire 2D Seismic. In the meantime, we have engaged a selective and competitive process to bring a farminee. We are not allowed to disclose anything and we will do it in due course.
Question from DavidLane
We are moving through an energy transition it appears that many investors now view oil & gas E&P companies as toxic investment - how do you view the appetite of investors??
Brian Mitchener (Exploration Director)
One of the reasons we have remained gas focussed as a company is that gas is very much viewed as a transition fuel. So while oil and gas have lost favour amongst some investors we feel that there is a preference for gas over oil.
Is the plan to relinquish Sidi Moktar. Why has nothing meaning been done with it? Is it still a back up plan in the event of Eastern Morocco failure?
Mohammed Seghiri (Interim CEO)
No, we keep working on Sidi Mokhtar. There is no plan to drop Sidi Mokhtar.