Member Info for Maldini1

To badly paraphrase Newton: “for every outcome predicting certain doom, there’s an opposite view which says that not all is lost”. Below is an extract from the last FSC (Mohammed Seghiri).

“We have not come to the end of our Moroccan story yet. We are at the start of a new chapter for SoundEnergy in Morocco. We need first to close the deal with the selected private company and then help our new partner efficiently deliver first gas, securing a key gas supply to the nation of Morocco and to guarantee future profitability for SoundEnergy.

The strategy in the 12 next months will be morocco centric. We have multiple options for profitable ways forward. My priority will be focused on our morocco assets by:
- Helping our partner to get first gas as rapidly as possible. Our 1st customer, the state owned company, ONEE requires that we achieve first gas by the end of 2021 and the industrials are also eager to gain access to this domestic gas supply.
- Progressing the continued exploration of the Tendrara basin: the 2017/18 seismic acquisition improved our understanding of the subsurface leads and matured them into drillable prospects such as ‘M5’ in Anoual or ‘SBK’ in Greater Tendrara.
- Unlocking the potential of Sidi Mokhtar and bringing in a partner so support exploration of the prospectivity we see.”

Well, if it were only that simple of course. A lot is riding on the next 4 weeks but until we get told differently, the above plan is what we have. All down to one’s personal view.

Having re-read the MOU RNS of 30 Oct, I’m questioning my original interpretation. If I’m now reading it correctly, it says that the gross annual revenue of $84m is based on the minimum take or pay volume of 0.3 Bcm. However the RNS also says that the MOU covers the first 0.5 Bcm / annum but that a price for the volume over the initial 0.3 Bcm has not yet been agreed. Would this not suggest that the additional 0.2 Bcm has not been factored into the $84m? Assuming I’m not barking up the wrong tree (validation appreciated please) this would mean that, at the same price, the revenue for another 0.2 Bcm worth of gas would be $56m, making a total revenue of $140m if production reached 0.5 Bcm. Now that would sound far more interesting.

Levelup, whatever is going on behind the scenes, it’s worth remembering that the MOU signed on 30 Oct for 0.5 bcm /annum is binding. There was obviously enough confidence then to make such a commitment to supply so there must still be an expectation to conclude the process successfully. However, the “reasonable” endeavours obligation to complete the GSA by year-end seemed more in hope than expectation then, given that at the time a proposed deal had yet to be announced, and so it’s transpired. This morning’s RNS might as well have been prepared 2 months ago. It changes nothing.

Jones, let’s end the year with an optimistic and possibly deluded hypothesis.

Here goes. There’s no guarantee that the new placing will actually be completed on 13 Jan. It advises as much in the RNS. Let’s therefore assume for a moment that the latest placing proposal was a gee up for the prospective buyer in case they were thinking of dragging their feet all the way to 14 Feb in the hope of coming back with a lesser offer. No money has actually changed hands yet. Both the “lender” and the ‘agent’ would be getting new shares for some new funding and agent fees respectively. What are the chances then of the prospective buyer making a move in early Jan? Why not? If this were to happen, the agent could still be settled up in shares or maybe in cash from the receipts of the sale. However, I don’t know how these things work in the City. Is it highly unlikely? Possibly. Out of the question? Maybe not. All the very best for the new year.

Perhaps we can all agree that, if and when we get released from our current financial straight jacket, our value will be better aligned to whatever assets we end up owning and whatever secure revenue stream we have. The big question will then be from where will funding for new exploration come?

Regrettably that would indeed be the case if we went with the deal.. on the plus side we would still be alive to fight another day.

In broad terms - 1000 cft = 10therms = 1m btu = around $8.

Here you go - 650 Bcf (GOIP) x 47.5% ownership x 50% recoverable x $8 / 1000cft = $1.235 Billion

Thank you. You’re right.

See RNS dated 6 Nov.
For context - £1Billion + of gas owned in the Horst, , 20 TCF + of stubborn exploration potential in Tendrara and we’re currently scraping the bottom of the barrel with a handful of £m to keep us afloat whilst a deal is hopefully finalised. Things could have been different with a different strategy... but their not... but they could be again if 2020 actually delivers anything that 2019 spectacularly failed to do.

I think that’s right Jones. However, if SOU do insist on drilling commitments, then alongside that they will need to have done the groundwork to secure future funding for their part of the costs. I’ve got a feeling that funding won’t be an issue, conditional on a deal being done of course. .

“basis” should read “basin”.

Audible, detailed terms of the proposed JV are as yet unknown so we can only speculate what the rights, obligations and responsibilities of each party will be (assuming of course that the deal gets signed). However, we can expect any agreement to have protocols and controls in place to regulate the actions and behaviours of each party within the JV and there will be provisions to deal with circumstances where a party fails to carry out their responsibilities and obligations. There will likely also to be a process in place to defer to expert determination if parties are unable to agree a way forward. All parties will be negotiating to ensure that each gets their relative value out of the arrangement. We know that SOU are determined that further drilling is an absolute must in order to unlock the basis so we should expect that the agreement includes some commitment, plan and timetable for further exploration. There will of course be many other provisions included but as a minimum I might anticipate all of the above points to be present.
If either party is unable to secure what it needs from the JV then probably best to walk away and go to the next alternative solution.

One person’s opinion is of course just that... based on their personal view of what might or might not happen. Someone else might read the same situation entirely differently. Neither are necessarily right or wrong, just different.
The thing is this. If you are invested and remain invested until you know the outcome, then you are consciously taking the risk that everything might go belly up and you lose your entire investment. Then again the proposed deal is still in play and if it materialises you might start to see your investment recover.
If you are now convinced that there is no earthly chance of any sort of recovery, then you might quite properly consider taking whatever pennies you have left and try to move on. It’s a very personal and probably agonising choice either way.
However, whatever you decide to do, be wary. Very few of us know anything about any other poster on the BB. Are their motives well intended? Self serving? Intentionally misleading, or are they just speculating? Who can tell with any certainty? Not me. Which is why I’ll continue to do my own diligence, listen to my own conscience and make my own decisions. And when the time comes I’ll either pat myself on the back or lick my wounds in the knowledge that rightly or wrongly it’s was my call.

A month back I emailed Brian and John Argent in relation to future drilling ambitions and where M5 and SKB fitted into the scheme of things following the disappointment of TE10. Brian responded as follows:
“We believe that the prospects M5 and SBK offer relatively lower risk TAGI opportunities than TE10. I outlined these opportunities at the last AGM. In particular, a well at M5 would penetrate the TAGI sequence in a different region of the basin and may have different reservoir parameters than was encountered by our previous drilling.”
We believe that further drilling is required to unlock the potential of our acreage and are very focused on drilling these and other exploration wells. Unfortunately we are unable to comment on specific volumes and risking outside of an RNS release.”
Confirmation of a deal and drilling plan would therefore be a very good start to 2020.

Jones, I‘m afraid that I’ve given up trying to second guess what the market will do as I’ve been singularly and spectacularly unsuccessful at it to date. However, when the traders/shorters have finished with the share I’m hoping that a combination of Morocco’s needs, our gas and someone else’s money will make a compelling case for SOU’s value to ultimately rise again. But I do think that it depends on OGIF and ONHYM wanting us to succeed, in which case they have the clout to stop us from failing. Crikey that’s quite a leap of faith to take...but what the heck, we’ll either be entering a new chapter with SOU or licking our wounds and moving on. All the best for 2020.

SO, what I like is that it confirms that all the various sources of energy are necessary and complementary rather than instead of... which counters many of the assertions we’ve seen on the BB.

Worth a read. SOU gets a specific mention.
Keys points: Gas exploration, imports and renewables all play significant roles towards security of supply on the road to 2030. ONHYM keen to attract foreign investment and exploration - ergo, avoid shafting existing companies as it could backfire on investment strategy. Everything crossed for 2020.

https://webstore.iea.org/download/summary/2736?fileName=IDR_Morocco_ES_UK.pdf

You and me Levelup.

Having been kicked from pillar to post over the past couple of years by a succession of desperate news and events, I can understand why many PIs expect nothing but the worst from SOU and hence why any news is treated with equal measures of suspicion, scepticism and dread.

However I can’t readily buy into notions like “once this private company do their due diligence they will run a mile”. Why? What are they likely to unearth that will see them running for the hills? They’ve already had access to the data room so the key question must be whether they can raise the necessary capital. We can all agree that we have a discovery that can produce at a steady rate for at least 10 years. They would be getting that at a significant discount. If they never find any more gas the Horst would still be worth buying in its own right (even with the necessary investment required to first gas)....and if along the way more gas is discovered in Tendrara then that’s even better for them and for us.

My greater concern remains OGIF. If they have renewed confidence in the BOD, with their man now in control, and if they wanted SOU to succeed then they can choose to use their clout to support SOU in securing a deal, be it with their influence, money or both. It may or may not be the current proposal that we end up with but I would speculate that OGIF have been active in the background and will be either directly or indirectly involved in the final outcome, good or bad.

I’ll be raising a glass to all investors this year in the hope that Santa will for once deliver some belated good news and some welcomed relief. From where we’ve ended up, many of us regrettably have precious little left to lose....but we could still have a lot to regain.

Good point Poc