Member Info for ericnat17

While it is understandable that concerns have been raised regarding the potential challenges and increased costs associated with the pipeline construction for Phase 2, it is essential to consider a more balanced perspective on the situation.

Firstly, it's not uncommon for large infrastructure projects to face unforeseen challenges and fluctuations in material and labor costs. The dynamics of the global economy, as well as external factors such as geopolitical events and the COVID-19 pandemic, can contribute to these uncertainties. Companies often factor in a degree of contingency in their project planning to address such issues.

Additionally, it's important to acknowledge that management teams regularly reassess and update cost estimates based on the current economic climate. While there may be concerns about the timeline and costs associated with the pipeline, it's crucial to allow the company to address these challenges and present updated plans to shareholders.

Furthermore, attributing the delay and potential cost increases solely to the management's lack of transparency might oversimplify the situation. Management decisions are often guided by a variety of factors, including legal, regulatory, and financial considerations. Engaging with shareholders is undoubtedly crucial, but it's possible that the company is navigating complex negotiations or regulatory processes that may limit the information that can be shared at a given time.

In conclusion, while acknowledging the concerns raised, it's important to give the company an opportunity to provide updated information and address potential challenges. A more comprehensive understanding of the situation, including ongoing negotiations, regulatory hurdles, and updated cost assessments, may provide a clearer picture of the company's path forward. Making conclusions solely based on current uncertainties might not capture the full complexity of the situation.

At the current MC sound management team may be keen to bail if a half decent offer was on the table.

Last time I spoke to GL he said it would need to be well above SP…..and that was over a year ago.

News soon

Https://www.woodmac.com/news/opinion/upstream-ma-2024-outlook/

Https://oilprice.com/Energy/Energy-General/Oil-and-Gas-Merger-Mania-To-Continue-in-2024.html#:~:text=2024%20Could%20Be%20Another%20Banner%20Year%20for%20M%26A&text=The%20deal%20announced%20in%20the,latest%20Dallas%20Fed%20Energy%20Survey.

With the acerage and connections

RNS 30th Mar 2021

5% repayment start 21 December 2023. That is what the 1.5 million second tranche of the convertible bond is for, that’s my guess.

RNS 30th Mar 2021

5% repayment start 21 December 2023. That is what the 1.5 million second tranche of the convertible bond is for, that’s my guess.

“Partially amortize the outstanding principal amount of the Notes, at a rate of 5% every six months, commencing on 21 December 2023.”

This is from the note holder agreement from a couple of years ago. That’s approx £1 million every six months, for. December.

How is GL going to find the this I asked Graham about this face to face and his response was we will deal with that payment when the time comes…

KTF

GL says one thing in emails and face to face. But in the official RNS he states

“ With Sound Energy deep into its micro-LNG project development and on the cusp of sanctioning a large pipeline development these distractions are jeopardizing their successful undertaking.”

Looking like trouble now. The company did not deny the Tax liability could be over 20 million. But they did infer it was going to be a lot less (3 million) when openly discussed at the AGM Q&A.

We have license commitments due in rapid succession starting very soon. The work to fulfill these requirements has not been funded or planned. The Morocco authorities could choose not to extend due to the ongoing Tax issue. That would result in the loss of the Sidi license followed by the Anoual licensed area.

We are due to pay the next 3 mouth interest payment sound and we have to pay the 5% debt charge in 2023….with no cash to pay it. Would be nice to get those license extensions.

Don’t forget that Coro has over 20 million in debt. With a massive 10% coupon. Which is all due in approximately 18 months. That is why there is very little money coming in on this news. Also it looks like they have sold the asset to pay for the funding of the Pre FID Durong cost. The start up cost for the solar and wind projects will also have grown significantly due to worldwide inflation.

Well Utility that is an uncomfortable question and I really don’t have a complete answer to that. But as you say I do have an opinion of the worse case. The 22 million goes to court and we lose the appeal. They use the previous judgment to fast track/determine outcome. So we could be asked for a full repayment well before any income (best case scenario for income is early 2024…worst case late 2024).

But don’t forget we have equity raised recently. This will take us to early next year…we will probably raise again for running costs, hopefully the SP will be higher.

Also the interest payments are required on the Bond debt every 3 months. We also have a responsibility to pay 5% of the outstanding bond debt from December 2023 “ Partially amortize the outstanding principal amount of the Notes, at a rate of 5% every six months, commencing on 21 December 2023”

This debt repayments will need to be funded prior to any income….so again another equity raise I guess.

So worst case scenario is equity raises for at least three items (other items may also materialise) before any income.
25 million + of Tax
ongoing running cost
commencement of the Bond Debt repayments

Hi Smith

If only it was as simple as that.

Utility- I expect that the tax has a good chance of being paid of over a few years…..but there is no guarantee that Morocco will permit a payment plan.

Hi Smith

I think the issue is that the license may be intangible, but I think our balance sheet has the license as property. And is valued on the sound balance sheet at well over over $100million. They Morocco tax authorities are going to use that definition and defined value of the asset against us. That is my understanding anyway.

Agree PS

So we think this is the the potential additional outstanding

“ According to the Moroccan Tax Authority, its assessment of items 3 and 4 above are such that the payment of Corporate Tax, VAT and Withholding Tax are triggered, claiming that for SARL AU alone, additional 2017 liabilities of approximately US$22.5 million are due”

Hi Green

Thanks for that summary. The reason I thought it was $14 million was a conversation at the AGM and a follow up initial email with the company.

But your reading of it looks correct. So 2.5 + 22.5 = a potential bill of 25 million to be decided relatively soon. I think that this may not be fully appreciated by all of the Share holders, do news needs to be managed. I am sure GL has some good ideas.

Hi Utility

Yes you are right they are waiting for the details.

But I have asked them a different question. I have asked them to detail the value of the other Claim that they referred to in the recent RNS. It is believed to be either $14 or $22 million, they have just sent me a link to an RNS dated in July 21, which seems to indicate $22 million. That would be a surprise to me as I thought is $14 million. The reason for the 2.5 million judgement looks unrelated to the outstanding claims that are in Due process.

Hi Johnny

Sound team say they had mitigation plans in place, so I should imagine they can pay it off if we can organise a payment plan (not a guarantee)

My concern is that we have x2 big pieces of license work to complete. One within 12weeks and the other by the end of the year. ….the chance of getting a third extension on the license looks a challenge, but not impossible. Now we have a bit of confusion about the TAX of $22 million.

They have to keep a lot of plates spinning….I am sure they have the bandwidth to deal with it all.

If we a couple of bits of not so good news….the SP will take a hit. But if they can get over the tax and licences issues then the SP will recover to a very decent level.

This is from the link that as sent to me by Sound.

“According to the Moroccan Tax Authority, its assessment of items 3 and 4 above are such that the payment of Corporate Tax, VAT and Withholding Tax are triggered, claiming that for SARL AU alone, additional 2017 liabilities of approximately US$22.5 million are due. These amounts are claimed to be in addition to the approximately US$14 million claimed under the September 2020 Notification in relation to SEMEL. “

Hi Job

I got a response from Sound. Not much in the form of a clarification it is just a link to the 1Jun 21 RNS. Sound don’t appear to be keen on sorting out this confusion. I asked a very clear question about the full potential amount of exposure we have on the Tax issues.

From that RNS the additional amount of liability looks like $22.5 million. As they have sent that link I think we are being asked to assume that is the outstanding amount.

Have you asked for clarification as well?