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Question from ingson
I thought, according to quarterly updates, there are at least two ready to drill targets at Sidi. Why the seismic? How can there be targets if no seismic has been carried out?
Brian Mitchener (Exploration Director)
We have two preferred leads based on the interpretation of the historical seismic coverage both of which require further seismic to mature these leads into potentially drillable prospects.
Question from MattSherman75
Can you please illustrate the possible scenarios under the HOT deal, as to how we could benefit financially as shareholders from the exploration upside? Are contingent payments still a possibility despite not being mentioned in the HOT?
Mohammed Seghiri (Interim CEO)
Under the terms of the potential transaction announced on RNS on 6 November 2019, it is anticipated that Sound Energy would retain a 23.3% interest in the Eastern Morocco portfolio through which shareholders would be in a position to benefit from any future exploration upside.
Question from pablo2
If the agreement goes through, when is it proposed to undertake further drilling? and where? Are we after low-hanging fruit? Are there any plans to explore the paleozoic soon?
Brian Mitchener (Exploration Director)
The preferred plans, as per previous answers, are to drill M5, SBK and Palaeozoic. 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.
Question from crudehope09
I would like to start by greeting new CEO Mohamed Seghiri & wish him the best of luck as the new (temp. until voted on by the 'Nominations Committee) CEO of Sound Energy. My question is as follows: Why was it deemed expedient to go down the route of closed bids when marketing the company instead of inviting public offers & maybe counter offers? Could it be that the Moroccans insist their hydrocarbon assets are 'husbanded' by interested parties such as our new CEO, Mohamed Seghiri? Maybe it was never the intention that international super majors got a look in? Under this process a bidding war is avoided & the strategically important Moroccan assets come under much tighter control than they would with the likes of Shell, for instance? We don't know who the 'money' is behind the proposed deal so I guess that is one thing that may be causing some concern among shareholders.
Mohammed Seghiri (Interim CEO)
thank you for kind wishes. With respect to the marketing process please refer back to the RNS dated 6 November 2019 in which we provided a summary of a comprehensive and thorough marketing exercise through which we entered into 23 NDAs, conducted some 15 management presentations and received a number of non-binding offers.
Question from Boderisimus
Will the proposed deal enable Sound to meet Sidi Moktar license obligations (seismic) and so retain this asset?
Brian Mitchener (Exploration Director)
Proposed deal is related to Eastern Morocco. Sidi Moktar is a separate licence. We announced yesterday that we received the EIA for the seismic. We will announce further information to shareholders in due course as appropriate via the usual channels.
Question from Ash
James often referred to possible Moroccan consolidation....what was that referring to?
Brian Mitchener (Exploration Director)
James is referring to business development opportunities in Morocco, of which there are a good few.
Question from Daniel
Good morning - my question is whether this deal offers best value - is the maximum return per share going to be 17p or is there potential to achieve the legacy for our families that was claimed. If there is any sort of return will this be via dividends and over what time frame? The board must admit that this offer is so opaque from the recent RNS that it might as well not hae been released as there are now more questions to be answered. I fail to see where long term holders who bought in as the SP was climbing and based on the promises made will not be left out of pocket. What we watn now is honesty, transparancy and the option to not dilute through becoming a subsidiary company.
Garry Dempster (VP Finance & Commercial)
All equity transactions by directors and associated parties are subject to RNS.
Question from ingson
It is sad to see the chairman leave due to sudden illness. I wish him well. Will be be resigning from all his executive positions?
Mohammed Seghiri (Interim CEO)
Thank you for these wishes. We don’t follow Mr. Davies’ other Directorships.
Question from Ash
Why did you push straight onto Te10 regardless of the result at Te9?
Brian Mitchener (Exploration Director)
When evaluating the results of TE-9, the drilling data and formation evaluation, none of our interpretations and learnings directly contradicted our original decision to drill TE-10 back-to-back with TE-9.
Question from MACZUBA
Is there no possibility of Sound raising more funds and continue to drill themselves?
Mohammed Seghiri (Interim CEO)
This is always a possibility.
Question from Cheemap
Why has all the social media been shut down after all the hype? Winning communications award previously etc.
Sound Energy (Administrator)
The last 6 months during the marketing process during which we have paused operations but we continue to Tweet our newsflow as events arise. Unfortunately we are unable disclose on-going commentary on the marketing process during this period.
Question from RichDennis
I appreciate you cannot speak for the incoming party - BUT - in what scenario would they not exercise the option for the additional 9%? The RNS suggests the 9% would be available on the same terms as the original tranche so with any success with the drill bit surely it would be a certainty to exercise?
Sound Energy (Administrator)
As you rightly point out, unfortunately we cannot comment on third parties.
Question from RichDennis
Thanks for all your efforts so far in progressing the opportunity. It is unfortunate that the 9 and 10 wells were not successful as I imagine the sentiment and SP may be significantly different from where they languish today. In the event of completing the JV deal: What can you tell us about the planned drill programme? Can you give us an idea of targets? Assumed volumes? Location? Timescale for each well?
Mohammed Seghiri (Interim CEO)
Pursuant to the potential transaction announced on 6 November 2019, the specific timing of future Eastern Morocco activities would be a matter for consideration of the JV.
Question from Boderisimus
Have Schlumberger and ONHYM committed to pay their share of costs to bring the TE5 horst into production?
Garry Dempster (VP Finance & Commercial)
All parties have to find their own share of the spend on the concession. This is a contractual requirement under the concession agreement.
Question from shaungreen47
Does 3.5p per share accurately value the Company? In negotiating the deal, the BoD would have had to value the company as it currently is. What value did you attach?
Sound Energy (Administrator)
Unfortunately, we are unable to comment on the Sound Energy share price.
Question from Ash
Brian has said that the potential of the Paleozoic could dwarf the tago, as in Algeria. ..does he still believe this?
Brian Mitchener (Exploration Director)
Yes, I do Ash.
Question from shaungreen47
This isn't s live q and a...because we have been prevented from asking questions "live". Why is this?
Sound Energy (Administrator)
We have hundreds of questions which require responses, therefore following feedback from investors, we have moved away from the live sessions to ensure we have sufficient time to answer questions.
Question from Ash
Brian how confident are you still in the potential of Tendrara and in the Paleozoic in particular. What gives you confidence despite recent results?
Brian Mitchener (Exploration Director)
I hope that some of our previous answers have helped. We remain very confident in the potential of the basin. 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 (Palaeozoic) 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.
Question from ingson
How many people are employed by Sound Energy at present? Who will take up the duties of JJ Traynor in February. Has Mr Traynor had time to calculate the present cash position?
Garry Dempster (VP Finance & Commercial)
Question #2643 #question_2681
Question from MattSherman75
Is OGIF supportive of this deal?
Mohammed Seghiri (Interim CEO)
The Company cannot comment on the views of its shareholders. There will be a vote which will determine the shareholder position.