Member Info for ps200306

Speaking of Parsons, I see he finally resigned from ECHO this summer after seven years. The share price went from a high of 20p shortly after he joined to 0.003p today (an impressive 99.99% drop), with 36 billion shares on issue. Seems to have changed from an energy company to a Peruvian gold miner. Our friend Pescado still posts positively over there, says it all.

Parsons seems to still be at CORO (share price there only down 99.3%). Actually, resigned from CORO but now with "Coro Clean Energy Vietnam". I think they do rooftop solar. And yep, Pescado posts there too. I see a pattern. 😂

Looking at ECHO and CORO I suppose you could say it's impressive that SOU survived Parsons, even if on life support ever since.

I'm sure LNG seemed like a good idea at the time. Indeed, it probably was. The company had already spent 18 months looking for a partner for full field development including several months in a fruitless attempt to sell the whole thing off. That brought us up to the microLNG announcement in February 2020, with first LNG targeted for 2021.

LNG was going to solve the immediate cash flow problem ... until it, as it turns out, we're probably going to be FIVE YEARS behind that original schedule. Now it's probably just a distraction and a money-loser.

Since the LNG announcement the number of shares on issue has doubled and SOU has had to give away 60% of its interest in not just the LNG but the entire Tendrara production concession. In other words, it's been diluted by a factor of five (and ten since the Parsons days). And we still have no income and are borrowing at 75%. SOU's disastrous scheduling continues to cost it dearly.

"very soon" = "sooner rather than later" = "in the near term"

... all GL noise words for "I haven't a scoobie". It will happen when (and if) it happens. Assuming we aren't hit by unexpected tax demands, sharqi winds, another dodgy subcontractor, geopolitical events, aliens from outer space, or Freddie Starr coming back from the dead to eat our hamster. Mañana, as the Spanish would say.

No idea what Malcy's talking about. We will be lucky to have the Managem deal closed by the end of the year. Then the FEED has to be redone. Then a contractor has to be selected. Then the Attijariwafa loan has to be signed off. Only then can FID be taken. We'll be doing well to have it done in 2025, let alone the first half of 2025. DEFINITELY not happening in 2024. Phase 1 FID was delayed by a year even after partner negotiations and that was much less complicated. Does nobody ever learn anything from SOU past performance?

Kylie -- I'd never accuse SOU of putting out more information than it absolutely have to. However, in the case of the FEED update it made no secret of the fact that it didn't have the money for it, and that pipeline costs were likely to increase as a result of it. The fact that the Managem deal is not contingent on the FEED update means that SOU will have $13m in its pocket and the FEED issue will be largely a Managem problem. The fact Managem haven't baulked at it (yet) suggests it's manageable. On the other hand, plenty of room for slip-ups still.

SasaP1: "Could the Managem deal actually complete prior to the 25th with M5 drilling programme being announced too? "

Short answer: 🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡🤣🤡

No. Managem completion this side of year end would be a minor miracle. Timing of further drilling won't even be discussed until after that.

Among a couple of very minor positives in the report is that the sale completion to Managem is NOT contingent on the Phase 2 FEED being redone first. Managem clearly have some confidence in the bank funding without every last detail being completed before SEME sale. (Not surprising given their close ties to Attijariwafa via their owners).

Kylie: "Then there's the minor issue of the £146m impairment charge. So the Tendrara concession now has next to zero value/upside!? "

The impairment is not exactly a bolt from the blue. It reflects SOU's reduced share of the asset compared to the Calvalley deal and was incorporated in SP Angel's most recent valuation. SOU's share of Phase 2 is still worth on the order of US$120m. Looking on the bright side, the impairment has been taken because the completion of the sale to Managem is considered "highly probable" :

"The criteria for held for sale classification is regarded as being met only when the sale is highly probable, and the asset or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn. Management must be committed to the plan to sell the asset and the sale expected to be completed within one year from the date of the classification ... The Group considered the disposal of Sound Energy Morocco East Limited (SEME) met the criteria to be classified as held for sale as at 30 June 2024 ..."

As for Phase 1, I've been predicting H2 2025 for first gas, so not surprised. If they start commissioning in H1 as planned, they will make this. However, this is SOU, so any milestone more than a month away is prone to slippage.

Yes, they are a crappy company. But at the current low prices there is potential upside.

Hmm. Sounds like the plan hasn't gone off the rails yet, at least. (Or, to borrow a phrase from Trump, maybe it's "a concept of a plan" 🤔).

At least it shut Pescado up for 24 hours about 0.9p being a good price.

12 million traded and 12% down. It's not a good look. Will Graham even appear to say "we know of no reason" etc. ... or are we all just mushrooms now?

That 7.x valuation was pre-Cavalley when SOU had 75% of Tendrara. It went down to 4.6p when SOU had 35%, and to 3.1p at 20% under Managem. Phase 1 LNG is worth nothing -- not enough to pay SOU's debts. Even if Managem comes through SOU will need to figure out how to refinance the bondholder debt as Phase 2 will not yield revenue in time. If Managem *doesn't* come through SOU is a busted flush. There is no other game in town. This week will be three months since the June 14th announcement. About time GL provided an information update. Right now there is no way to form an opinion on how things are proceeding. With SOU, no news has always been bad news. The flurry of inactivity suggests that closure, if it happens, is months away.

P.S. 1.2p for SOU's remaining share of Tendrara would be derisory. The SP Angel valuation of 3.2p is a fair *risked* value. Or, another way of looking at it, SOU's share of the production concession has an NPV of $120m (6c per share) at a discount rate of over 11% (source: annual report figures adjust for Managem vs. Calvalley).

75% may sound exortionate but the last 2.5m SOU borrowed cost them between 5 and 10% of the company *on top of* interest payments. Funny how people are more vocal about short term cash than creeping dilution which has been the bane of SOU. The company has been running on fumes for a long time. Let's not forget that this time last year Graham said the financial position was better than at any time in his tenure. That should tell you how over a barrel they have been. Will this last chunk finally get them over the line? Graham's not going to tell us so we will know when we know. He's always been economical with information and, in fairness, he's prohibited from making forward looking statements. I can see him right now saying "It's not going as fast as we'd like but everyone is working very hard and we expect the deal to close sooner rather than later". In other words, nobody knows. The next few months will bring either cash or a car crash.

I don't have a good feeling about this thing completing in September. If I was to hazard a guess I would say Q1'25. Even of the conditions we know about, just one has been satisified since June ... and that one had a deadline of July so it had to happen. Other things spring to mind that weren't even mentioned in the June RNS. Phase 2 is still to be funded by way of a loan from Attijariwafa bank. The last we heard, the Phase 2 FEED had to be redone before the loan preconditions would be satisfied. So the conditions of the SOU-Managem deal presumably include ones relating to the Attijariwafa loan that weren't mentioned in the June RNS.

I don't think SOU expect the deal to complete in September either. Their new extortionate loan facility is a sign they are battening down the hatches for a long haul. It seems remiss that they didn't negotiate some up front non-refundable advance on the Phase 1 back money as part of the Managem negotiations. Probably they were too optimistic on the timeframe, like they have been on every endeavour they have ever taken on under Graham.

My guess is we're in for a few months where the only announcements will be about delays in deal completion and Phase 1 completion. I've no evidence for such a hunch, but lots of precedent.

Good decision. Hope you stick to it.

Adam, 95% of the time I just counter wild speculation by citing what the company itself has said. Anyway, as goza points out, there's no reasoning with you so I will leave you to it.

Your estimates, just in the past three months:

Long term I believe 10p plus..short term around 3p

SP 1st quater in 2025 around 2.6p plus

Once we start selling gas.between 2 and 4p

I can see well over 1.3p once the deal is signed

well north of 1.5p before year end

1.5p by September.

..once deal signed. 2p plus..

now its a new dawn a new beginning to the 4p

4p now.as we are.thats how I heard it

I can see 10p this time next year..

Share will be around 5p by December 2024.

Brokers analysis due any day now..target price 5p-10p.

Now is the climb to 3p-4.5p range before end of year

Sp goes up 2p in coming weeks.

5p here we come very soon.

I can see 10p -25p.once everything is signed and dotted...

LOL.

Adama: "Ps200306...stranger things have happened to aim company. Emerald energy comes to mind back in the days..1p ..0.9p ..1p..0.89p..for years then boooom almost within months up to £2.50p."

If M5 was drilled and came in with the same volumes as TE-5, if it cost zero to extract and pipe the gas, and if SOU owned 100% of both of them ... they wouldn't be worth £2.50. You are living a fantasy. Sound Energy has commissioned an analyst to value the company, the valuation is 3.2p including SOU's entire share of the TE-5 horste and assuming Phase 2 goes ahead. When fully derisked it's a few pence more than that. Why on earth would any sane investor pay more? And given SOU's history of years-long delays, why would they pay even that any time soon? If you took your head out of the tea leaves for five seconds you would realise what everyone else does: you are talking utter nonsense and these ridiculous weekly predictions are tragically boring.

"But we all know Ps200306 is kyly75 in disguise...can't fool us.... "

I know you are incapable of distinguishing between any two posters making negative comments. But really! Kylie has been posting here for just over a year. I have been around for YEARS longer than that. Why would I create a second account just to post even more negatively? Oh, and, Kylie is an ex-investor. I am a current holder of millions of SOU shares. I have no vested interest in talking the company down. If you were right about 4p or 6p in the short term I would be walking away with a massive profit. But I'd settle for a spike to 1.3p on Managem completion. Your only beef with me is that I'm a realist.

Spencer: "Revenue,,If we start selling gas in January and the Lorries do their job how long does Sound have to Waite for is money"

Let me stop you at the first clause. SOU won't be selling gas in January. If the plant construction was finished TODAY they wouldn't be selling gas in January -- there is months of commissioning work to do. One of the things on which the Managem deal is conditional is "extension of the Start Date/Deemed Start Date as defined in the LNG GSA". Looks to me like Managem are worried about SOU getting sued for breach of contract because of LNG delays. Just by the by, the binding LNG GSA was announced four years ago today. Time flies when you're talking about any SOU project. My guess is first LNG sales in H2 2025.

Adam: "Once we start selling gas.i see the share price between 2 and 4p..its a no brianer"

Saw it in the tea leaves, did you? So what do you know that SP Angel don't? They value Phase 1 gas sales at zero on the SP.

(Btw ... a no BRIANer? Is that an oblique reference to our former Director of Exploration?)