Member Info for i-man

I was amazed that Graham’s renegotiation of the Bond has had so little impact on the SP. If this had not been achieved the Bond holders would have legally taken over ownership of Sound on 21st June. The value of the share would have been Zero and we shareholders would have nothing. The End.
This grim specter has now gone and Sound has a future; possibly in exploration?
Share dilution, bond repayment and interest are acceptable (less of something is far better than all of nothing!) and, provided the gas price remains good, are very achievable, leaving something to support phase 2 and possibly recommence drilling (Te 11?)

Against huge challenges and considerable personal covid risks, Graham has just returned from Morocco looking very positive. He, obviously, did not go there to negotiate the Bond but has for sure, furthered LNG purchase and Phase 2 negotiatons.

Does any one know what, if anything, this means to shareholders or the value of the company?

Move to SETSqx Trading Platform
Sound Energy, the Moroccan focused upstream gas company, announces that with effect from Tuesday 16 February 2021 trading of the Company's ordinary shares of 1p each ("Ordinary Shares") will be migrated to the London Stock Exchange's SETSqx trading platform. The Company's Ordinary Shares have, since September 2016, been traded via the London Stock Exchange's SETS trading platform.

I was reassured by Graham Lyon’s conviction that renegotiating the Bond should not be a problem and that, at their last meeting, he was close to reaching the required 75% of the vote. The existence of Sound depends on settling the Bond. If it is not settled, the Bondholders, not the shareholders, will own the Company. I wish I had Graham’s conviction that the Bondholders do not have any interest in owning the Company.

I just hope he is not forced to give away too much more of our company to the Bondholders. However, less of something is much better than all of nothing! I would like him to grant more than the offered 2% interest and less in the way of Share warrant, as the Bond repayment is a short-term issue, whereas the warrants are a permanent share dilution.

Once the mLNG plant is up and running, Sound will be a cash generating business and until the exploration side of the business is resumed, will have virtually no costs other than the well defined payments to the vendor and Italfluid. The expected absolute minimum income will be in excess of $25m per year, which easily covers these costs, leaving enough to repay the Bond in a reasonable time.

Even though we own a massive resource at Te5 and possibly a lesser at Sidi, it is worth nothing until it can be taken to market. This is reflected in the current SP. Graham has done an amazing job in finding a purchaser who will buy at the well-head and assume all the costs of transport and distribution. Who that is, can’t be revealed until the Bond is settled and, only once this is done, will the SP start to reflect the real asset value.

Mohammed confirmed that mLNG will indeed be a micro plant where much of the equipment will be containerised, meaning that the installation time should be fairly short. If things go according to plan, revenue should start to take off quite swiftly.

There may be some light at the end of this very dark tunnel we have been in for so long! Come on Graham, get the Bond sorted!

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/011321-factbox-asian-spot-lng-prices-hit-record-highs-on-supply-glitches-demand-spike

If the Asian prices for LNG had any influence on Morocco and the price we could get from Te5 gas was any where near $20/mmBTU, the potential revenue would be over $70m per year. The Bond and all debts could be paid off with less than a year's production. Its nice to dream!

I am really saddened to have read all this negative discussion over the past few days, seeking revenge against the previous members of Sound's BOD. Revenge will not bring back the losses Sound share holders have incurred.
My pension pot has also experienced the negative effects of the protracted SFO inquiry into Petrofac, which has taken away 75% of the value of a top quality company. In the pursuit of so called justice, it is the share holder who is punished by far the most, the only winners are the lawyers and the shorters.
Sound's current BOD needs all the support it can get and does not need the distraction of all this vitriol, certainly at this pivotal stage when contracts and assurances have to be signed to ensure the company's future. If any charges are brought against the previous BOD not one of us long term holders will be a penny better off; the company could fail as a result. If Mr Lyon can conclude even his phase 1 agreements, we will all be in a far better place and Sound has a future.

Just a thought:
If AKWA is the group that the mLNG HOT is with, their CEO Akhannouch is the 15th richest man in Africa, Forbes listed as the 28th richest Arab in the world, worth $1.7 billion. He could fund the 120km pipeline out of his small change.

Exploration pointed out that the roads from the well sites are not up to much and require a lot of expensive up-grading to carry the load of tankers filled with LNG, the number of tankers, which are allowed to travel by road are quite restricted.

The Tendrara railway station is short distance to the east of the town. The track runs from the south to the north, where it crosses the Maghreb-Europe pipeline, close to the point where the gas sales agreement has agreed to accept delivery of our gas by our 20 inch pipeline.
Rather than spending money on upgrading roads, the money could be spent on a smaller diameter pipeline to an LNG plant beside the railway, from where trains can carry large volumes of LNG cheaply and directly to the point of sale, where the LNG could be regassified if necessary or onward to other commercial customers. We won't need any trucks or roads or possibly even the 20 inch 120km pipeline?

I think the LNG proposal makes much sense, at least as an interim measure. Equipment can be leased and should be affordable until revenues start coming in.

Someone made the point that if we go down the LNG route we will have difficulty finding purchasers of sufficient amounts to make it worth while. We have already entered into a binding MOU with ONEE to purchase almost half the Horst's potential, at very reasonable terms.

The problem is that "The gas is priced and sold to ONEE at the M04 tie in point of the Gazoduc Maghreb Europe pipeline" and we have to get it there. Although our 120km pipeline would be the most efficient way of delivery, we could meet at least some of the required volume by road and/or rail delivery.

The little used railway line passes through the town of Tendrara and runs north crossing the Gazoduc Maghreb Europe pipeline. The cost of running a smaller bore pipeline from the field to a LNG plant beside the railway and a re-gassification plant on the GME pipeline would be small compared with 120km of 20 inch pipe.

We may be stranded but rescue is at hand!

The Company announces that it continues to negotiate the detailed terms of a Gas Sales Agreement (the "GSA") and confirms that, as part of those ongoing negotiations, Sound Energy, on behalf of its partners, including Morocco's L'office National des Hydrocarbures et des Mines, has entered into a binding memorandum of understanding (the "MOU") with Morocco's Office National de l'Electricité et de l'Eau Potable ("ONEE"), the state power company of Morocco.

The MOU covers the first 0.5 bcm per annum (approximately 48.4 MMscf/d) of production of natural gas with the arrangements for further production above this level (including up to and beyond the mid case production rate of 60MMscf/d used in the concession Field Development Plan) intended to be negotiated in the final GSA. The gas is priced and sold to ONEE at the M04 tie in point of the Gazoduc Maghreb Europe pipeline.

The MOU includes a fixed unitary price for a minimum annual volume of 0.3 bcm per annum (approximately 29.0 MMscf/d or 10.13 MMbtu per annum), which will, once implemented, result in first year gross revenues attributable to the Tendrara concession (100%) of US$84 million. The MOU stipulates that this first 0.3 bcm of production will be both a take or pay commitment from ONEE and a send or pay commitment by the Company. Pricing for the gas above the 0.3 bcm per annum has not yet been agreed and will be negotiated as part of final GSA.

This is old but Morocco's needs haven't changed. We could set up a LNG plant for gas piped from Te5 to close to the Tendrara railway line with leased equipment .

https://www.whitecase.com/sites/whitecase/files/files/download/publications/morocco-gas-to-power-project-eng.pdf

Many of us were very unhappy with the deal that has now fallen through as it would have left us with less than 14% of our major asset. We now still have a 47.5% share of a gas field which has the potential to supply 30% of Morocco's gas demand. Morocco is keen to be more self sufficient in meeting its own energy demands. The gas is there and the demand is waiting. All that is missing is the way of getting it to market. The simplest and most efficient way to do this is by pipeline. The pipeline will be expensive but its cost is just a small fraction of the total potential asset and it would pay for itself in a relatively short time.
The cost and time needed to set up one or more micro LNG plants is going to be relatively small but will give us time to find funding for the pipeline. An investor in the pipeline would be reassured to see that gas is actually being produced even if on a small scale.
If the pipeline doesn't come into being, we must'n forget that there is a railway line not a million miles from the Te5 Horst.

EIA of the gas treatment plant and compression station:
The Company advises that the EIA process related to CPF is progressing well. The initial meeting of the National Committee from the Moroccan Ministry of Energy, Mines and Environment to review the CPF EIA was held on 10 October 2019. The second meeting of National Committee to further consider and, if agreed, to approve CPF EIA is scheduled on 28th January 2020.

Jan 28th has passed. EIA approval might shine a little light in the darkness but has there been any news? Next RNS?

Ordered mine on Monday with HL. Still waiting......which seems appropriate for Sound!

Thanks MikeGP for sharing that. Somewhat reassuring explanation of the time taken to establish 'the commercial potential of this exciting discovery". It is now over three months since the discovery and what remaining funds we have must be being eaten up. Is Te11 still a possibility? Everything hinges on proving Te10 is at least commercial if not a potential production hub.
Is "re-entering the well and cleaning it up" another way of saying: using the still awaited coiled tubing to extend the well horizontally into the Tagi stratigraphic up-dip. The whole point of CT is that it can turn through a small radius from vertical to horizontal. IMO a good use of funds and hopefully worth the extended wait for results. We have to be patient.

I suspect that the reason that there is a delay in starting TE-11 even though its location has been confirmed and the drill rig is still at TE-10 where it is not needed as part of the ongoing well testing, is not simply because of the low cost storage there. It would make little sense to move the rig to TE-11 if there is a chance that the decision may be made to prove significant and commercial flow-rates from the TAGI near TE-10 with horizontal drilling as was done with TE-7. We have confirmed that there is gas down there; we have to prove it is commercial.

https://checalc.com/solved/gasPipeSizing.html

Thank you Prudent for you summary and all your hard work in putting it together. Although no one can know the true value until the sale is agreed it is reassuring to have your estimates. All figures can only be estimates with a wide range but I am sure we all agree that the company does have value considerably in excess of the current share price . I am going to hold until LE.

From what little I understand, RSDD-H might have given reassurance about the presence of hydrocarbons but from all we already know about the surrounding geology, we were fairly certain that hydrocarbons were to be found, as indeed they were. Would we have been any better off to have invested in RSDD-H?
The problem is low porosity and non commercial flow rate. Surely seismic should be able to give some indication of structural porosity? Sound velocity through rock is dependent on rock density?

I found this helpful. https://dinoenergycorporation.com/index.php/oil-and-gas-2/

We are all deeply disappointed by the outcome of TE9 and it is only human to want to point fingers and find someone to blame. It is probably not fair to blame BM and the geology team for the failure. They had the benefit of high quality seismic, which all pointed to high potential source kitchen, reservoir zone and a 1000m salt trap. BM, I'm sure, honestly believed this was "the best you can get". The drill confirmed the geology and hydrocarbons have been encountered but the seismology was not able to reveal the low porosity of the reservoir formation, which is what has let us down. This is what makes O&G exploration such high risk; there is no certainty ahead of the drill bit. This is the risk which we all took on in the hope, not expectation of high reward.

This is a set back but not the end of the company, which has a worth in already proven resources, grossly undervalued by the current share price. We still have two more already funded drills, backed by the highest calibre geology and drill teams and equipment. I'm sure the hydrocarbons are there somewhere but we can only hope the reservoir strata prove to be productive.

None of us should have been expecting a smooth ride for the rewards hoped for.

Hold tight!

I think many of us were expecting or hoping for a positive RNS this morning, as we were only 800m from TD one week ago. No news has pushed the SP further down. If the TAGI was a "dry hole", it would be a relatively simple matter to drill across it into the paleo and on to TD. The more productive the TAGI is, the greater the difficulties in sealing it without damaging it while crossing through it, so drill progress should be quite slow and challenging. This is a case of No News being very positive news, even though the wait is so painful!
Good luck all

National and Bank holidays in Morocco Aug 20 - 23 so don't expect any work done!

I'm sure this week will see progress.

We all have high hopes for TE9 but the reality is that there are no certainties in exploration and the chance of failure on any single new location drill is higher than the COS, however good the seismic. The potential gains of success and the information to be gained from drilling TE9, even if it is a dry hole, more than justify the risk.

In the event of a dry hole at TE9, the value of the company and the SP would drop at least in the short term. A dry hole at TE9, or even, in the unlikely, but not impossible, event for the next three drills, is not going to make the company worthless. We have proven assets at Sidi and at TE6 & 7 as well as other tangible resources that make the company valuable. It would not surprise me if this existing value actually exceeds the current value represented by today's SP.

As JP has said, the company is only worth what it can be sold for. However, there must be some way of valuing the existing assets which would give an idea of the company value and hence the SP in the event of all drills failing. Has any one any ideas on the worst case scenario value and SP?