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(Sharecast News) - Morocco-focussed upstream gas company Sound Energy responded to media reports in the north African country on Friday, confirming that it had not signed an agreement on a proposed liquefied natural gas project.
The AIM-traded firm said there had been recent media speculation in Morocco in relation to its proposed micro liquefied natural gas (mLNG) first phase development project for the TE-5 Horst at the Tendrara Production Concession.
As it had previously indicated, the company was in exclusive discussions with Italfluid Geoenergy, under which the parties had agreed to use their "reasonable endeavours" to negotiate and enter into a binding project contract.
Such a contract would, on entry, commit Italfluid to design, construct, commission, operate, maintain and let to the group an mLNG plant which can produce liquefied natural gas (LNG).
"The company is not party to Italfluid's own financing arrangements," the board said on Friday.
"The mLNG Plant, which would also treat and process raw gas from the phase 1 development prior to liquefaction, is a substantial part of the surface facilities required to be built and operated as part of the development.
"As previously announced on 23 December, Sound Energy contract negotiations with Italfluid include part capital and part leasing arrangements to cover provision of plant and operation and maintenance contracts."
Sound Energy described Italfluid as an integrated service company providing upstream petroleum services, including the design, construction, commissioning and maintenance of process plants and hydrocarbon processing, including gas liquefaction to produce LNG.
"The company confirms that exclusive discussions with both Italfluids and with the prospective phase 1 development LNG offtaker continue positively and are well-advanced, with a view to seeking to reach contemporaneous agreement in due course," the board explained.
"However, the company cautions that no agreements have yet been reached and that exclusivity between Sound Energy, Italfluid and the offtaker is expected to expire, as previously announced, on 31 March.
"Additionally, the negotiation of and entry into binding agreements remains subject to the approval of the concession joint venture partners and to a final investment decision on the phase 1 development being taken."
Sound Energy said negotiations between the parties would continue following the expiry of exclusivity.
At 1425 GMT, shares in Sound Energy were down 5.83% at 1.7p.
4 May 2023 14:40
IN BRIEF: Sound Energy shares up as annual profit jumps
Sound Energy PLC - Morocco-focused upstream gas company - Posts annual results for 2022. Records no revenue, like in 2021. Pretax profit grows to GBP6.6 million from GBP2.5 million in 2021. This is mostly due to a foreign exchange gain of GBP5.5 million. In 2021, foreign exchange gain was GBP2.2 million. "2022 was a year of real tangible progress for Sound Energy, with the micro-[liquefied natural gas] development at Tendrara contracted to deliver maiden revenue in early 2024," says Executive Chair Graham Lyon.
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