Member Info for Exploration

Ducati You are right about condensate. The definition is in the Petroleum Law. my mistake. But condensate does have value and CPRs should account for that since TE5 area might yield up to 10 mmbbl. Add the other prospects and we have a reasonable inventory of �oil� too. In the provisions of this Law 1) "hydrocarbons" shall mean natural hydrocarbons whether liquid, gaseous or solid other than bituminous shale, and shall include crude oil and natural gas; 2) "crude oil" shall mean all hydrocarbons that are liquid in their natural state, or obtained by the condensation or separation of natural gas, and asphalt; 3) "natural gas" shall mean all gaseous hydrocarbons obtained from an oil or gas well together with gas that is the residue of the process of separation of liquid hydrocarbons;

250SWB This is a good example of a situation not addressed in the current legislation. Elsewhere in the world agreements usually specify a CGR. In Morocco the wellstreams will produce gas with pressure reduction and condensation at the well head clusters. So one can argue production is gas in fiscal terms. Something for discussion with Onhym I suppose.

Luckyman There are couple of other goodies to include in the revenue stream; 1) The production of the first 300 million cubic meters from an Exploitation Concession is exempt from the payment of royalty. Any production in excess of 300 million cubic meters from an Exploitation Concession shall be subject to royalty at the rate of five percent (5%). 2) Condensate. 60 mmscfd of gas should yield about 2000 bbl per day of condensate worth around 75 dollars per bbl at todays oil prices. Tendrara is not too far from Moroccos railway system and condensate can be shipped by tank car to point of sale.

Macaumike The political turmoil needed to boost SP over 600 is collapse of Brexit talks and dollar pound parity Then we will be quids in

Albus Onhyms recent tender for their cpr and development evaluation of TE5 area specified 60 mmscfd plateau rate giving about 15 years field life 12 producing wells - all horizontal with multi stage fracs So its all very realistic and achievable. Also 60 mmscfd of gas yields about 2000 bbl per day of condensate too. The tender specified either 12 or 14 inch export line but quite rightly it has been oversized to 20 inch cope with additional yet to be found gas in Tendrara. All good stuff and will move those contingent reserves to proven undeveloped reserves in the next CPR.

SouthernCross Yes, to have one of AFGs top men running Sound in Morocco is a huge asset for us.

Jacklevi To do any business in Morocco you need a local subsidiary. The suffix �sarl� is effectively French for �PLC� as it is throughout most West African countries who base their legal system on Nepolionic law. The bureaucracy is mind-numbing but getting it right is essential to prove legal title. In the case of Sidi Moktar the Moroccan system took its normal time to finalise the documentation. So an agreement dating back to February 2018 became effective six months later. The par for the course comment referred to numerous failed projects where foreign investors just do not understand how to cope with the Moroccan Labyrinth. We should be thankful that JP and his team understand how to function in Morocco. A lot of companies do not. Welcome to Rabat

Jacklevi The actual Petroleum Agreements and Association Agreements are held by Moroccan subsidiaries of Sound Energy SARL which, in turn, are held by Sounds UK subsidiaries. This arrangement enables transaction to comply with Moroccan tax rules like CGT an so on. Its a fairly complex legal arrangement, but that what lawyers and accountants do!

Moroccoknows You are right - keeping Onhym informed is cricial. The RNS could have been a bit clearer because it contains two items of good news. The first is Ministerial approval. To make the Petroleum Agreement effective the Minister, Amina Benkhadra, and a representative of the Operator, JP, must sign a raft of forms, with wtnesses, which officially triggers Sound involvement. I assume that was done this week. After that, the Official Gazette publishes the event and it is the date of publication which triggers the Effective Date of Petroleum Agreement. The second piece of good news in the RNS is the start of the farm out process which is excellent news. Neither Onhym nor Minister needs to approve this, but as partners they have the right to be informed. Also, Amina Benkhadra is Director General of Onhym, so she knows what is going on. So yes, onwards and upwards and full marks to start the farm out process.

Jacklevi This type of apparent shambles is fairly typical for foreign joint ventures. It is par for the course. Earlier today Trellis noted a non-exec director might keep Sound on track. But what it really needs is a COO who masterminds the work programme, financial affairs and keeps partners informed. Trellis is also right about corporate communications foot-in-mouth events. For example, there was simply no need to mention lack of partner approvals for TE9 this morning. As a PI I would assume all that is taken care of in normal business.

Ericnat17 Yes, I forgot about that. A virtual pipeline for micro-LNG to Agadir may be the best option. But as daveyboy says, that will be challenge for the new owner some years from now.

All Sorry to report that OCP no longer needs gas at its phosphate mine north of Sidi Moktar. Also, OCP fertilizer products are based on phosphates rather than amonia based fertilizers manufactured with methane. If you revert to O-level chemistry you will find byfar the largest amount of sulfuric acid, supplied from native sulphur from counties like UAE, Russia and so on is used to make phosphoric acid, used, in turn, to make the phosphate fertilizers, In plants nitrogen promotes leaf growth and phosphorous promotes root growth. The basic process requires mixing the phosphate rock with sulphuric acid to make fertilizer. The industry requires moving very large shiploads of phosphate rock and sulphur over large distances to an ocean terminal plant near the point of use. Making the finished product in Morocco just would not make economic sense. In recent years OCP has built a slurry pipeline from the opencast phosphate mines to the coast. Before the existence of the pipeline, the raw rock phosphates were washed, crushed and floated.� All or substantially all of the phosphate was dried to adapt to the transport system requirements and was stockpiled at the mine.� The export phosphate was then shipped to the port of Casablanca by rail, while the phosphate destined to chemical upgrading made its way to Jorf Lasfar.�� As part of the upgrading process, dry phosphates are pulped through addition of water, that is 60% of phosphate and 40% of water. With the slurry pipeline on stream, extracted phosphate is washed and conditioned for hydro-transport, and will be enriched through the washing-crushing-floating of poor grade rock. It is then shipped by slurry pipeline to the Jorf Lasfar where undergoes filtration, drying and granulation. So for Sidi Moktar gas, the OCP gas market originally fed by the Meskala gas field has simply ceased to exist. The best sales option is to connect any Sidi Moktar production to the new Moroccan gas grid.

Peterz123 I am Uber positive on the geology But finding oil and gas is very easy. Finding the money to drill is very difficult. And so it always has been.

Such fun? When we are hit by full force of Al Mada you will not be laughing. Step outside the Sound Bubble and you will see the risks involved.

Jacklevi, If I sit in Schlumberger accountant�s seat and look at the Morocco profit and loss account I see a 27.5 percent net profit interest, but no equity interest. So if and when the LE comes along how much do I get in return for funding seismic and part of drilling costs? Well, the accountant will ask the Morocco Account Manager for a number and the answer is difficult to quantify and could even be zero.The NPI has a value but in my experience tends to get whittled down by a buyer into the Sound equity. Knowing how service companies operate it is all a bit vague in their approach. Under the FMA the Company has granted Schlumberger a net profit interest of half of the Company's interest (which equates to 18.75% initially increasing to 27.5% after the first well) Now we have Schlumberger and Sound employing Saipem, a competitor, to drill TE9 and I wonder if the drilling contract is under review too because Saipem needs to make money as well. After TE9 PIs are paying 50 percent of TE10 and TE11. All this is normal stuff which goes on behind the scenes in just about every oil and gas venture. It is constant negotiation even after wells have been completed. JP has a wonderful deal with Schlumberger in Morocco but I wonder if they see it in the same way on their Profit Loss spreadsheet now the heat is on for earnings.

Thanks Playa Anyone can apply for a UKCS licence OGA, and before them DECC, required pretty strict pre qualification rules for applicants. For example a drill or drop commitment requires demonstration that the applicant actually has money to pay for a well in the bank. Same with 3D seismic acquisition. The beauty of CLNR approach is that they won blocks with very low commitments, but a convincing geological story and track record of serious progress on 29th Round Blocks.

Shaungreen I certainly hope so. It is a small price to pay as a �loss leader� to get exclusive rights to develop the discoveries in Tendrara in manageable bite sized pieces and also benefit from value uplift which is why we are all here. But knowing how Schlumberger operates they count every penny and accountants have their red ink pens ready all the time.

Jack Levi Do not know. What usually happens is the Head Office makes a long list of things they can cut. In OneLNG they found a loophole regarding external financing and baled out. Pay and rations for staff is an easy one. Also on the list will be exploration, but only if it is not part of a commitment to a government and so on. Taking a wider view this is the inevitable part of the service company business cycle connected to oil prices. Operators demand more for less and there is intense pressure on service company profits. Some go bust and others hunker down to survive. Experience shows the service sector down cycle is usually about 18 months after an oil price collapse.

Earlier this week Schlumberger pulled out of the OneLNG project in Equatorial Guinea where they held substantial interest. That caused Ophir share price to tank. Then the Aberdeen newspaper carried stories about bonuses being cut at the Well Testing Division in Dyce and even rumours of redudancies. Looks like a big top down effort to try to improve fiancial returns.

Playa 30th Round commitments. All the details are on OGA website. It shows winning work commitments. Generally there is enough legacy seismic to reprocess to reveal new prospects. See this link https://www.ogauthority.co.uk/media/4881/30th-round-table-of-potential-awards-by-block-may-2018.pdf On 29th Round. Licencees and OGA work together to develop new plays and prospects. In practice the OGA Board decides it likes the work done by an operator AND they stand a chance of securing finance the Operator gets more time to complete the work. So you can infer CLNR has satisfied OGAs requirements. Many companies are thrown out due to lack of progress.