Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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How many people are in the Sound Energy compliance department?
Fred Lacuha (General Counsel)
We have a corporate lawyer (myself) and a compliance officer (who is part of the finance team)
"Malcy" said in his blog today: " James stays as a consultant until next May to lead the deal behind the scenes". Is that true?
Mohammed Seghiri (Interim CEO)
We would refer you to the announcement dated 12 November which sets out the information on the resignation of Mr Parsons.
The Company will be aware that it has lost the confidence and trust of many Private investors who represent almost 50% of the Company’s share register. In a recent email response, James confirmed that if the currently proposed deal did not sign or shareholders did not vote for it then the Board would have the choice to either propose another transaction or to "go alone". He also advised that SOU has been working on a back up plan in case that was needed. Can you confirm that we have a number of acceptable opinions to fall back on? Also, irrespective of whichever deal is finally recommended, can the BOD provide an unequivocal assurance that any deal will have the best interests of Private investors at its core.
Mohammed Seghiri (Interim CEO)
It is correct we have been working a backup plan. We do not distinguish between any one shareholder or another and are not allowed to. We can confirm that any deal will be the Board’s view of the best deal for all shareholders. Thereafter every shareholder has a vote on the deal.
Can Marco Fumagalli be considered independent if Sound owe Greenberry Euro 28.8 mil. in bonds due June 2021. Surely he would be more amenable to accepting a deal which provides sufficient cash up front to retire these bonds. Were there other offers more beneficial to private shareholders that involved a free carry with no cash up front?
Garry Dempster (VP Finance & Commercial)
We confirm Marco is not considered independent. He is an interim Chairman until a new Chairman can be appointed. We have not and would not expect to provide commentary on other offers.
My final question. Can you see multiple drills at Tendrara to unlock the basin and has the team now got a much greater knowledge after having presumably more time to study the seismic acquired ? I thank you for your time in answering my questions.
John Argent (Exploration Manager)
From our continued evaluation of the data and samples obtained from the seismic surveys and wells we, and others historically, have drilled we believe that neither TE-9 and TE-10 failed by way of a lack of gas charge and as a consequence we maintain our confidence in our knowledge of the basin and the TAGI play. Although we continue maintain that the risk of encountering effective reservoir is high. We have multiple near term drill ready prospects located elsewhere in basin including SBK, Chiron and M5. We believe that further drilling is required to unlock the potential of our acreage and are very focused on drilling these and other exploration wells.
We issued shares to the value of about 9 mil pounds for Sidi Mokhtar. Shareholders have yet to see any return on this investment. What are the plans for this license which secures the Euro 28.8 mil bond?
Garry Dempster (VP Finance & Commercial)
We issued c.43 million shares in 2016. At the time of entering the respective SPAs the Sound Energy share price was c.17pps which implied a transactional value of approximately £7.4 million. 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.
The RNS dated 7 November 2019 states that Sound will “become a carried, non-operating company”. This was appended to the announcement of the CFO’s resignation, however it appears to be a material change in the nature of the company, given that it is currently the operator of two hydrocarbon exploration licenses and one production concession. If the company plans to no longer operate Sidi Moktar, shouldn’t that information be made explicitly clear to share-holders? Does the company envisage relinquishing the license, or transferring operatorship to another operator for a cash consideration?
Mohammed Seghiri (Interim CEO)
A position on Sidi Moktar will be taken in due course and announced, likely when we sign the Eastern Morocco transaction I can reassure you that whilst the Company has focussed on the sales process for the Eastern Moroccan Portfolio we still maintain activity on our Sidi Moktar permits in the west. We also continue to engage with potential farm-out candidates and we will provide an update once an agreement is reached. We are maintaining this as a competitive process it would not be appropriate, nor in our interests, to disclosure further information at this time on on-going discussions. We spent long time engaging with local communities to get EIA approved.. We are doing a competitive market enquiry to select a contractor for the 2D Seismic acquisition to be delivered..
Will Brian and the team stay on and do they still believe our license holds 31tcf ?
John Argent (Exploration Manager)
We have constrained our estimates of the exploration potential using a basin modelling study undertaken by a leading independent petroleum systems analysis consultancy (IGI Ltd). These estimates are stated as original gas in place (OGIP), unrisked without an associated geological Chance of Success and on a gross basis. The output of the basin modelling study provides an estimated exploration potential of the licences as 20 Tcf gas equivalent, mid case, unrisked original gas in place. The basin model further defines a possible range of estimated exploration potential across the entire permit area, with a 7 Tcf low case of unrisked original gas in place and, if all the key elements of the petroleum system’s model are present, an upside case of 34 Tcf of unrisked original gas in place. Whilst the results of the exploration drilling campaign were extremely disappointing for us and our shareholders we still believe in the potential of our licences. We believe that neither TE-9 and TE-10 failed by way of a lack of gas charge and as a consequence we maintain our confidence in the basin model. We have multiple near term drill ready prospects located elsewhere in basin including SBK, Chiron and M5. We believe that further drilling is required to unlock the potential of our acreage and are very focused on drilling these and other exploration wells. These opportunities were outlined by Brian Mitchener at the last AGM. With regards to the team, we continue, as it has always done, to right size our resources whilst we retain the appropriate skillset and continuity to deliver our operations both efficiently and safely.
Then why isn't the SP around 17p and not 3p?
If the Transaction is complete but FID is not reached, will sound have to repay the initial tranche (55%) plus cost?
Mohammed Seghiri (Interim CEO)
That is not the intention no. The upfront cash is not intended to be reimbursable. We will explain in detail how we protect Sound’s rights and entitlement to production cash flows when we sign the deal.
If Edison report valued sound at 27p why couldn't we get that basic value and more for exploration potential? the reality is the SP is sitting at 4p now and its looking like a downward spiral.
Garry Dempster (VP Finance & Commercial)
Valuation was done prior to TE-9 and TE-10 – independent valuation. Deal values it at 17p (19p less debt).
With our share price hammered and the only way to add real value at the drill bit can you see Sound in a JV drilling in 2020 ?Or do we have to wait for first gas revenues until we can explore?
John Argent (Exploration Manager)
Given that we still believe in the basin potential, we are working hard to enable further exploration drilling as soon as we are able.
Will any current Sound employees be employed Or contracted to the new joint venture (who)?
Mohammed Seghiri (Interim CEO)
The staffing plan is still being worked on and agreed but the intention is for Sound’s technical staff to work for the new JV, either by moving over or working in Sound but dedicated to and plan for by the JV.
Thre recent agreement RNS states about the receipt of cash "55% on completion of the Proposed Transaction (from which the Company will meet transaction expenses and related costs". This is nearly £30 mil. Are our transaction expenses and related costs £30 mil or will there be funds left over?
Garry Dempster (VP Finance & Commercial)
There will likely be material funds left over but the Board has yet to make a decision on what to do with them.
Please provide a list of all of the current institutional shareholders on the sound company register.
Mohammed Seghiri (Interim CEO)
Our principle cornerstone investor is OGIF with approximately 23%. Other shareholder information is available through the normal AIM channels.
I don't get this fireside chat. All the questions are known as its not live, all answers to questions seem to have been standardised, why not just release the answers in a PDF or rns, and then we wouldnt have to sit and stare at a screen while they take 5 minutes to answer each question. Dull.
Could you please provide the current cash position and monthly overhead expenditure.
Garry Dempster (VP Finance & Commercial)
I'm afraid we can't provide this outside of what has already been announced on RNS
I remember that too BigBench
Is Sound Energy paying 100% of the agreement transaction expenses and associated costs or will this be shared?
Mohammed Seghiri (Interim CEO)
Shared (each side pays their own)
All I remember over the years is the CEO saying he is here for the long term and till the job is done...……. I must of miss heard.....25times
What has been the involvement of ONHYM and Schlumberger with this deal? This is an important question as the funding of the infrastructure has undergone a massive change from BOOT to direct funding.
Sound Energy (Administrator)
We cannot comment on third parties positions I’m afraid.
Provide the details of Rothschild’s activity in relation to this deal. What costs have been incurred so far and what cost will be due to Rothschild on successful completion of the Agreement.
Mohammed Seghiri (Interim CEO)
The terms of the Rothschilds engagement have not been disclosed by RNS and are confidential but we do believe we secured very competitive terms.
So that's a new Bentley for JP
How many years has the “purchaser” been a register private company in the UK
Fred Lacuha (General Counsel)
The identity will be required to be announced once we sign a binding document. Until then we cannot guide I'm afraid.
The CEO exit has been long planned and has been signalled to the market multiple times over the years.
well, it seems it you become a CEO you becpme a liar by default.