The latest Investing Matters Podcast episode featuring Jeremy Skillington, CEO of Poolbeg Pharma has just been released. Listen here.
Thanks Ducati
I was trying to suggest that the decision to drill the new Te4 well is relatively simple and could be viewed as a separate, straight-forward single well Farm-Out, that is not necessarily integral to the highly complex, time consuming and expensive Phase2 project, which will go ahead irrespective of Te4 success or failure, but might and probably will, take many more months to agree.
When the decision to proceed with Te4 is made it confirms Sound's continuing exploration intent and the SP would be lifted even if the well is not highly productive, if it is (and there is already a high chance of success), then the massive investment into Phase2 will be much more secure, as will our share price.
The location and costs of the drill are known and the Te4 decision to proceed could and should be made as soon as possible, as a separate agreement independent of the greater Phase2 contract.
I would be good if the pace was a lot quicker! I would be much more assured, if those pictures were taken in Tendrara rather than in Canada! It would be even better to see the plant being constructed on site. First revenue still so far away but at last, there is now light at the end of the tunnel!
I hope Graham is considering making the new Te4 well a horizontal drill the same as Te6 & 7, as the presence of gas in this horst has already been confirmed by the first Te4 drill. That would surely increase the Chance of Success to greater than 36%. Another duster would not be good.
Surely we don't have to wait for every i to be dotted and T crossed with Calvalley, regarding Phase2, before an agreement can be made to drill the new Te4 ?
Graham was very clear that as soon as Calvalley sign the new Te4 well will be started , possibly spudded before year end? They are all very keen to get further exploration and drilling underway. So positive announcement of signing will be followed by announcement of drilling. All moving in the right direction.
COS 36%… probably more if horizontal drill.
5 km of pipeline doesn’t come cheap. This is not money that Sound has in its empty coffers so there continues to be very real outside interest in Tendrara. Hopefully the Calvalley deal is progressing .
This pipe is not just to fix a few plumbing problems.
Is it significant that 5km is about the same distance from the Te5 site to the proposed Te4 well?
It would be good to see genuine Phase 1 equipment arriving and being erected on site. Revenue still seems a very long way away !
More pictures of the wellhead are hopeful but minimal and still nothing showing any action regarding plant delivery or construction at the LNG site. Is Italfluid still able to get the LNG plant up and running so we can get some revenue?
Thanks for posting the Drone fly-by view of the site. All looks a bit sleepy! Misses where the main action is, with the completed tank and plant foundations, and could be quite old as nothing much has changed.
A good, but very dated view, as tank foundation work still in progress, can be had with the layered view on Google Maps. Map ref: 33.006584 -2.350379 ....eye in the sky!
I don’t have the calculations to hand but when the pipeline was first proposed, a 10 or 12 inch diameter was considered more than enough to handle the maximum Te5 Horst output. The Moroccan authorities have demanded a minimum 20 inch diameter because of anticipated future finds.
Double the diameter, quadruple the cross section area and more than quadruple the flow rate. Simple physics!
Roll on FID
Ktf, thank you for your efforts to raise spirits! ... Ramping?
I would like explanation as to why, if all is so rosy, why is the SP so low and sells out-strip buys?
Deadlines keep passing and the company coffers are dry. We are sitting on a huge resource but still a long way from getting any of it to market. I can only hope that, as the deals with Attijariwafa and Calvalley are absolutely huge and Sound has only a tiny team, things are taking their time and there are no resources to update us with progress.
Any little bit of positive news would be more than welcome.
Tincan this is not News. The article you quote, regarding CryoSpain and the LNG plant and storage tank dates back to April of last year and things have progressed a long way since then. It would be good to get some up to date information on how the plant and tank are progressing now that all the groundwork, foundations, well-head, connecting pipework and fire protection measures are done. There is no sense in bringing completed plant to the site in dibs and drabs. It will all come together on site when the bulk of all the equipment is ready and on schedule for Afriquia Gaz to purchase the LNG for its awaiting customers.
I have asked the team many times and have been reassured that the LNG plant can be relocated at a later date. It would be illogical to have convoys of lorries transporting LNG on a 120km road running parallel to the pipeline once the pipeline is up and running. The plant, that is being built off-site in Spain, Italy and elsewhere, will be skid-mounted and transported to the Tendrara site, where it will be bolted onto the awaiting concrete foundations. It will be possible to unbolt and put back onto skids to transport elsewhere. The deal with Italfluid means that the Sound consortium will own the plant once the lease period is completed. It could be very useful if a peripheral field is found that is big enough to feed the mLNG plant but too small to justify a pipeline connection. This is where the term "micro" begins to make sense for what is otherwise a very major project!
Interesting times!
The major part of the problem with the decaying floating storage vessel FSO Safer off Yemen would appear to be being sorted.
Octavia/Calvalley have made a significant positive contribution to the issue, which no doubt, buys considerable influence in the area. They have deep pockets.
Latest update:
As of 1 August, almost 90,000 cubic meters of cargo have been transferred from the FSO Safer to the Yemen.
SMIT began the transfer of oil on 25 July 2023. The transfer should be completed in less than three weeks.
https://www.imo.org/en/MediaCentre/HotTopics/Pages/FSO-SAFER-oil-spill-risk.aspx
UNDP received funding from private sector individual donations. The HSA Group, the International Association of Oil & Gas Producers, the Trafigura Foundation, and Octavia Energy/Calvalley Petroleum also contributed, illustrating the importance of private sector and civil society engagement on such an operation.
I had misunderstood that additional funding on top of the Attijariwaffa and the Calvalley contributions was still needed to complete Phase 2. The best part of this Q&A session was to learn that Calvalley will cover ALL outstanding costs to bring Phase 2 to completion. Job done!
Considering, that just two years ago, Sound was on the brink of going under, as it was about to default on the $25m bond and has remained on the brink of insolvency, literally penny-pinching to survive, awaiting the revenue that the LNG plant might generate to allow it to start paying off some of its debt, Graham and his very small team has now transformed the company.
It does seem like a massive give away to Calvalley, giving them 53% of our share. We did own 75% of Phase 1 and its potential $35m annual revenue and now will have just 35%, but this Phase 1 concession is tiny, compared to the potential of assured revenues from what will be FULLY funded Phase 1, Phase 2 and the Te4 drill. The future of Sound will now be assured and the revenue potential is huge even if it is just 35%!
We will soon be able to resume exploration activities and any successful find will be relatively close to the infrastructure of the phase 2 pipeline. We still have 75% 0f Sidi and Anoual.
I agree with Southmead and the wait is unnerving, but if anyone needs cheering up, listen again from 4.30 on, where a really positive sounding Graham says "we (already) have our EPC contractor......."
https://vimeo.com/823664714
Thanks jlovie, explanation quite helpful.
"SETSmm is gradually being extended further and further down the liquidity rankings, and now there are many AIM stocks - mostly those with market caps that are, or have been, £100 million or more - traded on the SETSmm system."
This move suggests that it is not only GL who is expecting an upward move in the market cap.
It will open up the restrictions and control our current, just two, market makers have on the SP and the huge spread. In anticipation of much greater market activity in Sound shares?
Thanks PS for your usual, carefully considered contribution, which could even run the risk of being quite up-beat?
The farm-out is certainly more than the icing on the cake. The Attijariwafa proposed funding is only part of, albeit a very large part of Phase 2 funding but not a penny comes back to Sound from Phase 2, until full funding and completion of the pipeline and CPF. The farm-out process is quite different from raising cash by issuing new shares in the whole company with a consequent dilution of the share value (particularly when the SP is so low).
Farm-out is inviting partnership and investment into new projects, which currently may have no actual value to the company, until they are completed, such as the proposed pipeline, the CPF and one, two or three well drills. Farm-out offers a share in these projects, which would otherwise not happen and actually adds value to Sound rather than dilution by issuing further shares in Sound Ltd. I am sure that Graham is taking every step to avoid share dilution. He is working with many different interested parties and I am very hopeful that all the pieces of the jig-saw puzzle are beginning to fall into place!
Funding runs out in July and revenue is not due for another nine months. Surely the Attijariwafa funds will be available to cover the interim?
Rags to riches!
All has gone very quiet regarding Farm-out. It would be good to have any (positive) news in this regard. Is this behind the delay? Where has the "strong interest in the process from a wide range of credible and well-funded parties" gone?
Presumably nothing can be revealed before the financing agreement but hopefully they are still there and committed and able to "fund the expected balance of Phase 2 development costs"
31st October 2022
Farm-Out Update
The Company announced on 9 August 2022 that it had initiated a formal farm-out process for the Tendrara Production Concession and the surrounding Grand Tendrara and Anoual exploration permits. The objective of the area-wide farm-out is to seek a co-investing partner in each licence to both fund the expected balance of Phase 2 development costs to first gas of approximately US$60 million net to the Company's working interest in the Tendrara Production Concession and also to progress an exploration and appraisal drilling programme in the Grand Tendrara and Anoual exploration permit areas.
The Company has received strong interest in the process from a wide range of credible and well-funded parties. Management presentations and data room evaluations are ongoing, and further announcements will be made, as appropriate, in due course.
Tincan.
https://www.soundenergyplc.com/media/f1aez3rk/investor-presentation-spring-edition.pdf
Nothing much new, but you're spot on with page 16. In cautious, Graham Lyon, conservative terms, this shows how much more potential we have beyond what's already agreed in the GSA with ONEE, just in the Te 5 horst. Te 4 is just 5km away and SBK and Anoual M5 are relatively accessible compared to the GME. Hard to understand why pushing at this open door has been such a struggle?
Patience, patience!
Thanks Rubber Soul for posting the Twitter picture.
Shows that this is in no way a Micro but a major project with massive earth-works, concrete foundations and fire-control now all in place. It would be good to have a photo of the whole site, including the LNG storage foundations and the water storage reservoir but even better would be to see the processing plant bolted to those slabs. It would be good to have an update on how the equipment and storage tank construction is progressing off site.
Revenue approaching? Getting quite exciting!