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LONDON (Alliance News) - Shares in Sound Energy PLC plummeted Tuesday after a gas discovery in Morocco had not achieved commercial flow rates, whilst the firm also announced it was looking to "materially" reduce its cost base.
Shares in Sound were 42% lower at 10.00 pence each on Tuesday afternoon.
Sound explained that its TE-10 gas discovery at Tendrara had hydrocarbon gas flow to the surface. Despite this, it had "not achieved commercial flow rates following the stimulated well test." The firm explained the flow rate was below the 1.5 million to 2.0 million standard cubic feet of gas per day commercial threshold.
"Whilst clearly disappointed with the outcome of the recent well test at TE-10, the team and I are encouraged to have delivered gas to surface from another TAGI discovery and remain confident in the potential of our Eastern Morocco basin," Sound Chief Executive Officer James Parsons said. "We have now completed the TAGI element of our current exploration programme and expect to update shortly on our forward looking strategy."
Despite this, the firm remains confident that there is "considerable exploration potential remains within this acreage" with its expecting to "provide an update on plans for the third well in the exploration programme, TE-11, shortly."
Sounds also proposed a structural cost reduction programme aimed at "materially reducing" its operating expenditure. This is after it complete two of the current three well exploration programme underway at present.
As part of this, the firm will look to reduce staff number and costs and added that progress is "well advanced with actions recently implemented expected to result in an annualised reduction in general and administrative expenses of over 50%."
