Member Info for ps200306

It's not going to be 2024. I would say optimistically first half of 2025. You can see the history of slippages going back through the annual and half yearly reports. For example:

Annual Report 2021 (released April 22): "Scalable Phase 1 mLNG FID sanctioned 2022 with First Gas expected within 24 months, unlocking the route to cash flow... Phase 2 pipeline gas sales, preparation for FID in 2022 and first revenue in around 24 months, generating significant value thereafter".

Phase 1 notice to proceed occurred in February 2022, so at that stage first gas was being promised in Q4 2023. Phase 2 FID was being promised for 2022, obviously this still hasn't happened and no chance of it this side of 2024.

Half year report 2022 (published early Sep 2022): no dates given in the Phase 1 progress report, but in the chairman's statement Graham refers to : "... Phase 1 which is targeting first LNG delivery by year end 2023 and advancing debt financing for Phase 2, which is planned to fund the majority of the Phase 2 development costs."

Annual report for 2022 (released around May 2023), things are now looking very different: "Project schedule is reviewed constantly and remains challenging. Delivery of a commissioned plant by Italfluid is contracted for Q1 2024."

What? No more first gas in 2023, in fact "full solution commissioning" can't *begin* until at least Q1 2024:

"Consequently, provided that no new disruptive events slow down progress, and the final industrial users are ready to make their process switch from their current fuel to natural gas, LNG plant commissioning and the full solution commissioning including the well and gas gathering system and Afriquia Gaz logistic solution, are both expected to be started in 2024."

Note: no actual mention of a date for first gas/first revenue.

Half year report for 2023 (September 2023): The language is opaque but it now talks about Italfluid "designing and constructing plant equipment for delivery to site in early 2024". Doesn't commit to commissioning in Q1.

"Whilst the mLNG storage tank fabric has been manufactured, there has been some supply chain disruption leading to later than planned delivery to site which remains on the critical path. Despite this, the Company remains committed to commencing production in 2024."

That last statement sounds like hoping against all odds. And if they are relying on hopium for a date that is over a year away, I am willing to bet cash money that they haven't a snowball's chance in hell of meeting it. SOU has never met a deadline under past or present management. We've seen deadlines that, by the due date, are twice as far out as when they started! If Graham says they are committed to 2024, you can only hope that 2025 is still a possibility. Meanwhile there's a lot of money to be found, not to mention a Tendrara exploration well commitment by Sep 2024. Plus they won't have the bondholders' money by 2027. All slippages now have serious consequences.

Fernan, was about to write something similar but yours is more comprehensive. SOU still needs to raise money for 2024. But there are more potential problems beyond that. If first Phase 1 revenue is delayed to end of 2024 then I don't think SOU are in a position to repay the bond even at the end of 2027. With rolled-up interest it will be the equivalent of about €11m to be set aside for each of 2025,2026,2027. With the Calvalley giveaway that's more than SOU will earn, not to mention the €5m due to Italfluid on project completion and presumably the start of repayments to Afriquia.

Meanwhile, SOU will be unable to afford their well commitment on Anoual, seismic at Sidi, or Greater Tendrara exploration. How much of their licenses will have to be relinquished before they have any cashflow from Phase 1? Graham set out the position in December last year but, as with anything SOU-related, last year's news is always out of date due to slippages.

It might be about time for Graham to come clean with a frank statement of the company's entire situation going forward. If Calvalley doesn't come through then there's no point as SOU will be on the trash heap again. But once that milestone has passed it would behoove Graham to do a comprehensive information session, and not the blood-from-a-stone dribs and drabs of information that he usually dishes up. SOU has so many yet-to-be-delivered commitments that it's getting hard to keep track of them all.

Back in October 2020 we had an abortive attempt to restructure the bond debt. Graham wanted to reduce the interest rate from 5% to 2%. The bondholders said no. It took six months -- until April 2021 -- to get a revised plan where the interest rate stayed the same but 3% of the 5% was deferred until maturity and amortisation payments started in December 2023. The bondholders also took 10.6% of the company in lieu of EUR 3.5m of the debt, at 2.125p/share. They got an additional 100m warrants exercisable at 2.75p.

The latest proposal is to cancel the amortisation payments and pay the full bond redemption in 2027. There are reasons why the bondholders (who are also shareholders) might be accommodating. They need the company to thrive so they get their money back. That depends on the Calvalley deal. Calvelley will need to know that there isn't a bondholder sword of Damocles hanging over the company. However, the company is running out of road. They need to resolve the bond issue and they need the Calvalley back payment money for Phase 1 poste haste. With the share of Tendrara that Calvalley is taking, if Phase 1 revenue gets delayed to 2025 (or even late 2024) I don't believe SOU will have enough money to pay the bondholders even in 2027.

P.S. Interesting to see STD123 pop up again at this juncture. Another poster who has talked up the SP for years, ignored TWO chances to get out at breakeven, and is now down 75%.

Agus ar an taobh eile den uisce, éinne?

Thanks Bill.

Thanks Cephalo. However, there *is* no trade. BEY shares haven't been tradeable for months. The shares are sitting in my broker account marked as Delisted. I don't know what the broker will eventually do but right now they are happy to keep charging me custody fees for worthless shares that I can't trade. Someone over on UKADVFN suggested you have to apply to Revenue to have them written off as negligible value, but I was hoping for more details.

Crude, the naysayers are always the most vocal. I strongly doubt the majority here believe the conspiratorial nonsense about your well-timed exit. I made about the same amount around the same time (but then screwed it all up by buying back in). That phase of SOU was a pure lottery. Bellyaching is to be expected from those who can't bear that the good times passed them by, and also those who can't bear to hear that they're not coming back.

Barryroe would have to make about $2.5 billion within ten years under Larry for me to break even. And I don't think he'll make anything from the field, let alone that amount. So I don't care if I never hear from him. My main concern is how to get the delisted shares written off as a loss by Revenue. Anyone have any ideas on how that happens?

"The present management need to be just as financially innovative as James Parsons & reassure investors that they still have a chance to redeem at least some of their capital."

Seriously? Take a trip down memory lane and read the RNS of 7-Jun-2018. Even before TE-9 was drilled, Parsons had the pipeline construction all sorted:

"Following a competitive process and negotiation, the Consortium [comprising Enagas, Elecnor and Fomento] has been awarded the FEED and exclusivity to finalise the funding, construction and operation for both a 20 inch pipeline and the central processing facility under a 'build-own-operate-transfer' ("BOOT") structure. "

"Sound Energy's CEO James Parsons commented: For Sound Energy and its shareholders, this innovative BOOT structure means that the Company is now firmly on the pathway to commercialising our existing and future gas resources in Eastern Morocco, all without additional equity dilution.

...

In parallel with the FEED, the Consortium will finalise plans to secure access to some US$184 million of development capital that will be required to fund the Project."

More than five years later the pipeline is still years away and "no more equity dilution" turned out to mean an extra billion shares in circulation (so far). With that sort of innovation maybe a stodgy boring old CEO was just what was needed. Unfortunately it turns out it's possible to be *too* boring as the latest one seems to be emulating the parrot in the Monty Python sketch.

Our very own 9/11. How apt.

Can't imagine the bondholders being too happy, and would expect some pushback. The interest rate is only 1% above the current risk free rate, and now they have to wait until 2027 for most of it. Plus they bought ten percent of the company at the last restructuring for nearly three times the current share price. It's kind of funny/ironic that SOU had a clause in that deal that allowed them to redeem the bonds three years early at a discount -- seems a tad optimistic now. They've issued an *additional* half billion shares since then. Also typical of SOU to only signal a month in advance that they can't pay on the agreed schedule.

Thanks Fernan10. Brain fade there -- I had the amortisation payments too high by a million apiece. Unaudited cash at end of August was £4.0m but £1.4m being held as collateral against license commitments. Hard to keep track of the incidentals, for instance US$2.5m in phased payments for tax settlement over an unknown (to me) period. Also not sure what time of year the 2% bond interest of €0.5m comes out. Depending on those things, at a G&A burn rate of £1.25m per half year you would hope there might be something in the kitty beyond the end of the year. Notwithstanding that, SOU need to have a plan to get some cash in soon after year end.

Calvalley are clearly not going to get on board until the revised GSA is sorted out with ONEE and ONHYM to the satisfaction of Attijariwafa. That's a lot of ducks to line up, and some of those parties haven't exactly operated at light speed in the past. First bondholder amortisation payment of €2.25m is due December 21st. There are two more of those next year, plus interest of €0.5m. That's €5m just to keep the bondholders happy next year (not including this December's payment). This was all supposed to be funded out of Phase 1 revenue which looks to be a year behind schedule.

Not clear if the Calvalley back money for Phase 1 was planned to be used for these payments, or if that was for G&A etc. in addition to Phase 1 revenue. Whatever way you look at it, SOU are walking a tightrope. Hard to imagine ItalFluid are working an extra year without passing on some costs for delays to SOU. They are also due a €5m payment as soon as Phase 1 goes live. Phase 1 was also supposed to be building up a fund for SOU to be able to pay ~€4m in deferred interest to the bondholders in 2027 on top of the €5m annually, which now looks like it could be before any Phase 2 revenue. SOU will be ekeing out an existence for the next three years even if everything goes spiffingly.

Of course, everything could fall into place and Calvalley's €8m could be a nice present to SOU for Christmas this year. It's just that nothing has ever gone that smoothly for SOU in the history of the company. The other question is exactly when SOU runs out of cash. Is it literally New Year's eve or could they totter along for another month or more before having to face some very unpleasant form of dilutive cash raise.

If Calvalley doesn't come through by December there obviously isn't going to be an instant replacement even if SOU have other leads. At that point the company has a serious funding problem.

"Graham and Gary ... could at least try and be a bit upbeat. Perhaps a smile."

Because they were delivering grim news? Not flashing their pearly whites was the least thing wrong with that presentation.

I must have been watching a different presentation. I found it quite disturbing. The Phase 2 timeline was not a surprise as I've been saying for a long time that best case was FID at end of 2024 and first revenue in 2027. I was surprised, if I'm reading it right, that they have to raise additional funding even beyond Calvalley. Be that as it may, the need to redo (or in their words, "refresh") the engineering design was a surprise. There was an implication that they need to revisit cost estimates. I would not be surprised to hear of some serious bumps in the road in that process. It's a very different world from 2018, and capital intensive projects the world over are having difficulty meeting previously contracted prices due to supply chain, inflation and interest rate issues.

But the bigger shock was Phase 1. They couldn't have been more vague if they had spoken with a hand over their face and muffled coughing throughout. But the project is quite obviously *MILES* behind schedule. Throwaway phrases like "commissioning through 2024" said it all. Also, half way down their list on the very last slide of the presentation: "Potential for significant revenue within next 18 months and beyond". Uh, what happened to early Q1 '24?

Apart from general running costs there are three bondholder payments due in the next 15 months. And when do the first Afriquia repayments come due? By the original schedule it was 2024 and would include deferred interest payments. SOU faces a significant funding gap next year if these delays are real. At current market cap an equity raise isn't a good option.

The most bewildering thing here is communication. Why does SOU always seem to leave it to the last minute to announce schedule delays and even then they are never straightforward about it? It makes it look like they don't know what they are doing. LNG trucks should have been rolling a few short months from now. All of a sudden it sounds like that's well over a year away.

Ktf: "kylie/trellis/pssomething/and the latest incarnation who joined Sunday."

Don't know why I bother since ktf (allegedly) has me blocked, but I have never been anyone other than "pssomething". Also never made any secret of the fact that I've sold most of my SOU holding at a massive loss, but still retain some. And I've been consistent in pointing out that SOU have never set a deadline that they didn't manage to miss by a mile, and have managed to destroy almost all shareholder value in the assets through creeping dilution. Even now, they are dependent on closing the deal with Calvalley before funds run out at year end (i.e. 50 working days away). Apart from that, everything is roses :)

It doesn't matter a jot if Larry has the money *now*. All that matters is whether Ryan's decision was legal at the time, in which case no license exists for Barryroe and none can be created.

"The broker report is for next 12 months & gives zero value to assets like Sidi. No one can predict where SP will be in 2-3 years. Just those of us that hope it's higher & you pair that hope the company goes under."

I am a SOU shareholder. Why would I want it to go under? You say nobody can predict where the SP will go and I agree. But then a poster predicts a 20x SP increase and you take umbridge at me for calling them out. What sort of logic is that?

Yes, the broker reports are for 12 months but I notice they disappear off the SOU website once they are stale. Fortunately the internet never forgets:

9 August 2021, target price 8.2p "Afriquia deal confirms financing to first commercial gas"

https://web.archive.org/web/20210810121340/https://www.soundenergyplc.com/media/1689/1-soundenergyagfinalsw.pdf

3 May 2022, target price 8.2p "Gas development starts in Morocco"

https://web.archive.org/web/20230608111937/https://www.soundenergyplc.com/media/hw0mk0kh/01jp_sou-2022-05-03-flash-note.pdf

9 June 2022, target price 7.3p "£4m raise provides running room"

https://web.archive.org/web/20230608120926/https://www.soundenergyplc.com/media/lhwnbz0n/energy-flash-note.pdf

17 August 2022, target price 7.2p "Moroccan operations update"

https://web.archive.org/web/20220817143528/https://www.soundenergyplc.com/media/bphbexwi/sou-2022-08-17-morocco-update.pdf

25 May 2023, target price 7.3p "Tax dispute settled, project moving forward"

https://www.soundenergyplc.com/media/z5zb2q55/sp-angel-sou-2023-05-25-nav-update.pdf

15 Jun 2023, target price 4.6p "Funding secured and likely partner revealed"

https://www.soundenergyplc.com/media/q1bbt4co/01jp_sou-2023-06-15-nav-update-1.pdf

28 Jun 2023, target price 4.6p "Debt project funding offer received"

https://www.soundenergyplc.com/media/k2bphqwc/01jp_sou-2023-06-28-flash-note.pdf

4 October 2023, target price 4.6p "Completing partner talks will unwind discount"

https://www.soundenergyplc.com/media/1dlkdtn5/sou-2023-10-04-nav-update.pdf

I haven't noticed any of those 12 month predictions materialising. Instead over the past two years the share price is down 50%, the target price is down 44%, the number of shares on issue has increased by 50%, a three-well drilling program has turned into 1 well, SOU has been forced to give away 53% of its assets (which the broker was oblivious to just three weeks before it happened), and they are *still* in big trouble if the Calvalley deal isn't closed by year end.

It's hardly any surprise the share price is being hammered, for reasons that SP Angel themselves document. I sincerely hope the deal gets done. I will be selling the last of my holdings into the rise and getting the flock out of here. Best of luck to whoever picks up my shares.

There's no way Larry's deal would be worth anything. He'd have to get the license back in court. Then he'd have to go and drill the appraisal well originally planned. Then go for some sort of field development. At the glacial pace that DECC was dishing out permits that could easily take more than 10 years. Even if it didn't, the field life would be c. 15 years with production gradually ramping up. The operating revenue up to ten years from today would be piddling.

If instead the field got sold, there's no way a buyer would be paying up front for unproven reserves. More likely would be a promised share of future profits, akin to San Leon's net profit interest in Barryroe. So that wouldn't count toward the "sale or operation within ten years" disbursement to current holders.

The Larry 5% is worth diddly squat. But I don't think he even intends to develop Barryroe so it's even more academic.