RE:Phase 129 Jul 2021 08:15
Execution of LNG Sale and Purchase Agreement
The Company is pleased to announce that Sound Energy Morocco East Limited ("SEMEL"), its wholly owned subsidiary, has entered into a binding and fully termed conditional LNG sale and purchase agreement with Afriquia Gaz S.A. ("Afriquia"), pursuant to which SEMEL will sell not less than 171,000 cubic metres of LNG per year (approximately 100 million cubic metres a year of gas to be produced and liquefied from the Phase 1 Development) on behalf of the Concession joint venture (the "LNG SPA").
Under the LNG SPA, SEMEL will commit, for 360 days of each year over a period of 10 years from first gas, to provide to Afriquia a daily quantity of between 475 and 546 cubic metres of LNG, and Afriquia will commit to an annual minimum "Take or Pay" quantity of 475 cubic metres per day of LNG.
Pricing under the LNG SPA will be within a range, the floor price being US $6 per mmBTU and the ceiling price commencing at $8 per mmBTU and increasing during the course of the LNG SPA to $8.346 per mmBTU and will be determined using an indexed formula which applies a combination of the European Title Transfer Facility and United States Henry Hub benchmark indices. The point of sale to Afriquia will be at the Tendrara (TE-5) field location following processing and liquefaction, with Afriquia having responsibility for transportation and delivery to its downstream customers.
The LNG SPA is conditional upon fulfilment of certain conditions precedent including:
· The approval of the LNG SPA by the Concession joint venture;
· The execution of a loan note agreement between the Company (as borrower) and Afriquia (as lender) setting out the terms of an US$ 18 million secured loan with a 6% annual coupon and a 12 year term;
· The execution of a project contract with Italfluid Geoenergy S.r.l (Italfluid) for the provision of a gas processing and liquefaction facility relating to the Phase 1 Development;
· Receipt by Afriquia of regulatory approvals for the transportation of LNG by tankers and the sale of LNG; and
· Afriquia having secured in principle agreement from downstream buyers to purchase not less than 60% of the Annual Take or Pay Quantity under the LNG SPA
such conditions to be satisfied by 29 October 2021.
Execution of Equity Subscription Agreement
In addition, the Company is pleased to also announce, subsequent to its announcement on 29 June 2020, that it has entered in an equity subscription agreement with Afriquia pursuant to which Afriquia has made a £2.0m subscription to the Company in consideration for which the Company has today issued for 159,731,651 new ordinary shares in Sound Energy at a price of 1.2521 pence per new ordinary share to Afriquia.
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