(Alliance News) - Moroccan-focused upstream gas firm Sound Energy PLC said Wednesday it has signed a letter of exclusivity with Italian exploration services provider Italfluid Geoenergy Srl.
Shares in Sound Energy were 15% higher at 1.50 pence early Wednesday in London.
Under the letter, both companies have agreed to negotiate and enter into a binding project contract which will commit Italfluid to design, construct, commission, operate and let to Sound Energy a micro liquefied natural gas plant.
The plant can produce LNG, and will treat and process raw gas from the phase one development project for TE-5 Horst at the Tendara production concession.
The period of exclusivity will last until the end of March 2021. The proposed project contract has an initial period of five years, with an initial payment of USD5 million to Italfluid within 30 days of the notice to proceed with phase one, and USD2 million within 30 days of the successful commissioning of the mLNG plant.
Additionally, following the entry into a heads of terms with a potential gas off-taker for the project in late June, discussions have progressed well, Sound Energy said, to the point that the period of exclusivity first granted until the end of December has been extended to the end of March.
"We are very pleased to announce the signature of this letter of exclusivity with Italfluid for the proposed provision and leasing of the mLNG plant. The company has worked with Italfluid in Morocco in the past, and I am pleased to continue developing our partnership with such a technically assured contractor in support of the phase one development of the TE-5 Horst," said Chief Operating Officer Mohammed Seghiri.
"The mLNG plant is the most complex element and most significant capital requirement of the proposed phase one development; therefore today's announcement of a proposed leasing structure, which when combined with the financing proposed to be provided by the gas offtaker, would secure the balance of funding required by Sound Energy for the phase one Development, is a key milestone for the company as we move towards FID," Seghiri added.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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Sound Energy (SOU)