(Alliance News) - Sound Energy PLC said Monday it has not yet seen proof of funds from a potential buyer of assets in eastern Morocco.
Shares were 23% lower on Monday morning in London at a price of 1.69 pence each.
In November 2019, gas company Sound said it would be selling most of its eastern Morocco portfolio for USD112.8 million. At the same time, a heads of terms was signed with a privately-owned UK-based energy firm.
This granted the buy exclusivity until Friday last week. Sound said Monday due diligence has been completed, but the buyer has not been able to show proof of funds "to the company's satisfaction".
While talks continue, Sound has decided to prioritise a "micro" liquefied natural gas production plan at the Te-5 Horst field on the Tendrara concession to generate early cash flow.
Sound hopes for first gas during 2021, and then a larger development can then proceed once the early production system is up and running.
Sound is in talks with industrial customers and distributors in Morocco, it said, and is also in talks with potential funding partners for a micro production plant.
As of January 31, Sound has cash of USD7.3 million, and this is enough to meet requirements through to a micro production plan investment decision before the end of the second quarter.
"While discussions with the potential purchaser continue, the board has been active in considering and refining in parallel other options to monetise its asset at Tendrara. We continue to believe that we have a valuable position in the Moroccan energy sector encompassing a significant discovery in Tendrara with exciting additional exploration upside potential," said acting Chief Executive Mohammed Seghiri.
"The micro LNG development plan has been identified as an initial and rapid development strategy to prioritise early monetisation of the existing gas discovery, which can in turn facilitate a larger ultimate development. I look forward to reporting further on our progress in due course."
Seghiri was appointed late in January, replacing James Parsons. The company's finance chief JJ Traynor left earlier in February, with his duties split amongst remaining staff.
By George Collard; georgecollard@alliancenews.com
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Sound Energy (SOU)