Member Info for Exploration

Lone Star still in court. Lone Star became Maghreb and then morphed into OGIF.

Note, this involved SBK/Tendrara. The lawsuit, dating back 20 years, which was supported by the Moroccan royal family, alleged DeJoria mismanaged the company, inflated expectations and convinced Moroccan participants to invest in the venture.

https://www.chron.com/business/article/John-Paul-DeJoria-s-Moroccan-morass-14364941.php

https://ir.q4europe.com/Tools/newsArticleHTML.aspx?solutionID=2064&customerKey=lekoil&storyID=14421504&language=en

Thanks a1m1 - good to see you back. Where is Amtech?

FD

Oiler/Edward/a1m1/etc doesn’t pay much attention to the wider picture. The posts are designed to provoke responses.

But here’s the situation;

Drilling on CNRL’s Zechstein play has seen two wells on trend in recent months. The first was Union Jack’s West Newton onshore appraisal well which found gas and condensate and is awaiting testing. The other is Oranje Nassau’s exploration well on huge the Ossian/Darach reef in Block 42/4, which is reported to have been sidetracked - probably for more coring. And Simwell farmed out their blocks 41/4 and 41/9 to Shell who extended their 3D survey by 200 sqkm.

The 32nd Round applications are due in November and CNRL has said it intends to re-apply for Block 43/11 which formed part of the P2248 licence. Hague and London are drilling the Andromeda prospect in 43/12 at the moment which might extend the Cygnus/Pegasus productive trend and turn 43/11 into ‘hot property’ - which means that drilling resultswill be highly confidential.

So there will be a lot of news flow in CNRL’s core area.

N4a£

Thanks. Yes, it’s Onhym’s favourite video for which BM was awarded ‘arm waver of the decade’ award! Of course the big prize - ‘straw clutcher of the century’ goes to Parsnips for claiming the Tagi is nothing and the big gas is in the Palaeozoic.

N4apound

Here is the video of JP describing the great success of TE-8 and how it contributes to finding 31 tcf.

https://m.youtube.com/watch?v=rrEVwnKhvZg

So what’s left in the bank?

And what are the liabilities?

Jobbinsci, fair enough

Cash was $14 million as on May 14. But at December 31 2018 cash was £20.5 million, call it $30 million so the cashburn was/is pretty steep. And trade payables from TE-10 would be outstanding.

Based on previous annual PLC overheads, the PLC spend rate for the remainder of 2019 will be, say another $6 million. Then there is the $2.7 raise.

So that means money left is $14 + $2.7 - $6 = $10 million. Not enough to pay for Sidi Moktar seismic.

But the $20 million loan is secured against Sidi Moktar, so they can’t lose that - unless the security is transferred to JP’s house etc.

All I’m trying to say is that Sound has to a) sell fast and b) juggle our money to stay in business without falling foul of Onhym and the Companies Act

Longwait

No conspiracy involved. Just describing how companies run petroleum operations according to the law in Morocco.

See Clause 6 of the Association Agreement. Sure as night follows day, Management Committee meetings for Tendrara occur every six months. Accurate minutes are prepared and distributed for approval by all participants. Same for Sidi Moktar.

You can see the penalties for non-payment of contributions to budgeted operations. But I’m assuming there is little Sound can propose without plenty of cash in the bank or they wound fall foul of the Companies Act.

http://www.onhym.com/pdf/en/Model_Association%20Contract.pdf

Just projecting estimates from JJ Traynor’s Malcy interview. There must be a point when liabilities and commitments imply more money is needed. It could be as soon as November - so Sound must sell before then or risk wrongful trading.

Follow the money.

Maybe the main reason for the ‘pause’ and start of marketing is that there is insufficient cash in the bank to pay all the TE-10 demobilisation bills, re-instate TE-8, 9 and 10 well sites, maintain the corporate fixed costs (acreage rentals, insurance, sevenoaks, etc) AND remain solvent until end-2019. My guess is that there isn’t enough cash to drill TE-11 and acquire the Sidi Moktar seismic according to the agreement with Onhym.

Sound is obliged to submit annual work programs and budgets for the coming year. If insolvency is a consequence, what will they do?

Crude

I agree - can’t beat drilling to see what’s there.

TE-1, TE-2 and TE-3 - all close to TE-5 - recorded gas shows in the same sequence as TE-5 and may be capable of producing gas. Same for SBK-1.

But wells drilled away from basement highs, including TE-8, 9 and 10 proved the reservoir is non-productive although there were gas shows. In TE-10 we didn’t get the whole story but it seems some gas reached the surface when the well was reverse circulated and a bubble of gas came up the Annulus. Not even enough for a BBQ.

Crude

It should come as no surprise that Morocco’s geological history has been studied and reported by many specialists in the past. The petroleum geology of the Tagi reservoir interval is fairly well understood and described by many authors such as Professor Hafid from Kenitra University and Rabbah Bouchta (who was geologist for Onarep, Lone Star, Maghreb and OGIF). More recently Professor Jonathan Redfern from Manchester University has written extensively about the Tagi including detailed outcrop studies in the Argana Valley, south of Tendrara. Also, Onhym has numerous well qualified experts.

Also, a copy of Fastnet’s original CPR covers the risks involved with exploring the Tagi.

The bottom line is that the best Tagi reservoirs are found near basement highs such as SBK and TE-5. The well logs and core analysis back this up.

Elsewhere in Tendrara the Tagi was deposited in ‘playa lakes’ as a siltstone driven by intermittent rivers and distributary channels during rainy periods. The trouble is that groundwater plays a part by introducing halite and dolomite into the pores in this shallow ephemeral lake. This was reported in Sound RNS. In other words the Tagi reservoir in these areas is ‘****e’ even before it becomes a rock. But where the Tagi ‘sticks up’ above the lake surface - like around SBK and TE-5 it’s porosity is preserved - the old well logs show this.

If anyone deserves the Dunce’s cap it’s BM, and a bigger one for JP too!

JTF

Actually, we didn’t find any new gas at all - and I doubt anyone else will.

All we proved is that previous operators’ and local experts assessments of the Tagi reservoir were correct. Tagi is non-reservoir except in two places.

There are a couple of sweet spots near SBK and TE-5 - and that’s it.

Palaeozoic? Penetrated in several wells, but poor reservoir. Almost impossible to map using seismic.

WTD

Good question.

Onshore exploration in Morocco stalled around 2007 because there was a rush to licence and drill offshore. But that campaign saw more than a billion dollars spent in 10 years failed to find anything big enough to develop. Onshore, TE-5 had been tested at sub-commercial rates and everyone knew the Tagi reservoir was tight just about everywhere.

Sound’s breakthrough was to demonstrate that staged fracks in sub horizontal wells TE-6 and TE-7 worked really well, but only where the Tagi reservoir pores weren’t cemented before the gas migrated from the source. Maghreb Petroleum’s early work suggested the two best areas to produce gas were TE-5 and SBK.

In my opinion, Sound then threw away a great chance to commercialize TE-5 and went off on a wild goose chase of high risk exploration. To be fair it was really Onhym and AFG who pushed for a TE-5 development and Sound Energy who slowed it down.

Lydondavies

Mohammed Benslimane Is married to M6’s cousin and represents several companies associated with the royal family.

Lyndondavies

I think we can count on Mohammed Benslimane and his team at AFG to help sort out the mess we’re in. AFG is the predominant advisor for all types of buy-side and sell-side deals in Morocco. AFG will also be keen to preserve OGIF’s interest in Tendrara.

AFG created the pipeline/CPF deal and lined up the money for it. Of course, Sound can’t sign the GSA with ONEE because they would be contractually obliged to start the development of TE-5 ‘without delay’ - according to their agreement with Onhym. But with no money of expertise Sound could not start a development.

There is a continuous line of foreign oil companies visiting Onhym in Rabat looking for opportunities. AFG will know who they are and redirect likely candidates to Rothschilds. I’m not suggesting AFG will determine a sale price for Sound, but OGIF’s sizeable shareholding will come into play to select a buyer who gets exclusive rights to negotiate. AFG May also facilitate a speedy closure of any transaction including government approvals.

Long wait

Next to nothing? How about Fastnet?

n4apound

Edison had a summary on their website, but its been cleaned up.

Here is a link to the original Edison presentation, including Tendrara CPR

https://docecity.com/fastnet-oil-gas30500.html

SLR’s original CPR and numbers are same includes a summary of previous work. A group of Russian geoscientists worked with Onarep (Onhym’s predecessor) 20 years ago and estimated 31 tcf of gas might be trapped in Tendrara, but that is not to say it is prospective resources. I suspect that is where BM’s 31 tcf came from originally - too much of a coincidence.

Daveyboy

A flawed corporate strategy at Schlumberger, I suspect.

Looking back, Schlumberger’s business tactics were linked to a global initiative to deploy equipment and staff to earn interests in producing assets. Under the Field Management Agreement with Sound they had first rights to the development project at TE-5 and idle rigs in Algeria. It all made sense at the time, although their share in Tendrara was ‘synthetic’ and secured by a legal charge over Sound Energy PLC.

Had they known then what they know today I doubt they would have committed so much money for negligible return. Like us, they took a risk and have lost their money.

Schlumberger has taken hundreds of millions in write-downs or impairments on similar joint ventures, according to its financial reports. The write-offs are frowned on by Wall Street pundits who question whether Schlumberger should take more conservative path with its oil production partnerships.