Member Info for AussieRidge

One finger at a time...

He clearly thinks it better to keep his head down...

What cash at hand and short term deposits are available to the Company as of today.

Garry Dempster (VP Finance & Commercial)

I'm afraid we can't provide this outside of what has already been announced on RNS.

Could you please provide an estimate as to how much it would cost for a 5 well exploration program based on our current ownership of Tendrara.

Garry Dempster (VP Finance & Commercial)

The exploration well costs range from between $7 and $10 million depending on the well depth, location and design.

Looks like he's changed his mind Joe!

A couple of questions re the potential part sale of Tendrara, assuming it goes through in its current form: What is the plan for the cash when received? On reading the RNS and the way the deal has been structured it seems the main focus of the company purchasing the asset is to build the required infrastructure and get to first gas, rather than further exploration. Can you please provide thoughts around timing for both an exploration program and FID and delivery of first gas. Could you also please provide an estimate as to how much of the US$58.5m carried amount will be allocated to each program.

Mohammed Seghiri (Interim CEO)

Questions on the detail of the transaction will be handled when and if we sign the transaction. Nevertheless, we can ensure that Sound Energy team will keep working to explore and to unlock further Tendrara basin.

Will minimum shareholder communications standards be included in the proposed deal with the unknown farm-in partner so that private shareholders do not only have an annual report to rely on for ongoing information.

Garry Dempster (VP Finance & Commercial)

As a listed company Sound will still be required to announce every price sensitive operation and yes Sound would expect to have rights to receive updates. So an investor can expect the information flow to remain largely unchanged.

What does it mean that the company will be non operational? Where will the company make its profit going forward? Will there be further expeditions going forward?

John Argent (Exploration Manager)

Thanks for this question, let me address the meaning of operator and non-operator in this context. Joint ventures (JV) are fairly ubiquitous in the oil and gas industry with around 70% of upstream investment provided through alliance or JV relationships. Companies will often enter into JVs to share the risk and sheer capital-intensive load associated with oil and gas projects. An oil and gas JV in its most basic form is fairly straightforward. One company within the JV will take on the operator role. The operator has the responsibility to manage and carry out the various exploration and production operations on behalf of the JV licence group and well as providing a share of the capital required. Examples of operations include geophysical surveying, drilling, facilities engineering and construction, all of which have been undertaken by Sound Energy on behalf of the existing joint venture group. The other joint venture participants are known as non-operating companies. A non-operator provides a share of the capital required, and in some circumstances expertise.

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.

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.