Member Info for ps200306

The less for them, the more for us, right Kylie? 😄

What news are you looking for? We have the spring investor presentation on the SOU website. We've been told that Phase 1 completion, Phase 2 FID and two drills are all coming this year. That's four anticipated events that have been well signposted. Would be nice to have a more specific timeline for when those things are expected, but it's never been SOU's M.O. to put out specific dates. I guess it might be classed as dodgy forward looking statements. So we wait. No point getting too antsy about it. It'll happen when it happens. Meanwhile, now's your opportunity to hoover up a few cheap shares.

It's intriguing looking at the level of despair and capitulation on here. SOU is actually worth something tangible for the first time in its miserable existence. I'm sorely tempted to buy another ten million shares.

Thank for the link Ducati. No additional information on drilling timelines or Phase 2 FID.

While we wait, I've been thinking about people's impatience with the share price. You can't make the market want to buy shares. It doesn't mean shares aren't worth more than what is being offered -- they clearly are based on the financials. SOU could make $20m/yr gross for 15 years. Nett, it could be £180m.

In a low liquidity situation you just have to wait for a so-called valuation event. That could be something like an offer of £100m for SOU's remaining rights at a handsome discount, valuing it at 5p/share. You just can't know when it will happen. This board is polluted by crackpots tossing out arbitrary numbers and timeframes. Conversely there is a pessimistic wing claiming the company is worth nothing. Both are misguided.

Kylie, you got pipped into second place by JFC431 although even they weren't pessimistic enough. 🤣

Kylie: "Oh by the way, who has the post Managem RNS share price prediction list? Care to share it?"

smudger63 published it on June 17th. Sorry to tell you, you didn't win. You weren't nearly pessimistic enough.

Managem are taking over operatorship. Mohammed was the COO. He has a background working in Morocco, having formerly been with OGIF. Makes complete sense.

So Mohammed is gone to Managem. Probably makes sense. I'm guessing he didn't take up any of his SOU share options with an exercise price of 70p before he left, or even LTIP options at 2.5p.

Tanfinch, excellent point. Your comment makes much more sense than mine.

My guess is that Phase 2 needs to move forward somewhat before any drilling is announced. No point drilling wells unless the gas can be moved to market. One would like to think this is a formality, but FEED needs to be completed before the costs are known so that Attijariwafa can confirm financing. Thus, drilling announcements will come after one of: FEED, Attijariwafa sign-off, or FID. Hopefully it is closer to the first, rather than the third, of those. That's the sort of information you'd like to think SOU could provide to shareholders. We could do with a Spring Investor Presentation.

I'm more than happy to have gotten *in* at 0.8p. Nothing GL is doing (or CAN do) is affecting the SP. It's a waiting game, for Phase 2 and drilling news. And even then this share may languish for some years more. Nobody loves it. It's going to have to show its bona fides in cold hard cash income and that's quite some time away. It remains to be seen whether the certainty of income after Phase 2 FID spikes any interest. Other thing that could shift it would be the (unlikely) event of big success at TE5, which would put SOU in line for stupid amounts of money.

And not me. I've got all I want 🤣. Thankfully still in the black even at these prices.

(How BAD is LSE's expletive filter. After stupidly deleting the C@ck from C@ckney it then lowercased my entire post 🤡)

stmary, i had to look up the ****ney rhyming slang dictionary for chicken oriental 😂. you and kif may well be right. that said, i'm not betting anything i can't afford to lose much as i'd prefer not to. nothing ventured, nothing gained, and i'm prepared to throw a certain amount of good money after bad. if the share price eventually achieves zeus's net core nav figure for phase 2 alone, i'll recover about half my prior losses. any addition from drilling will be gravy. if it goes to zilch, well, i'll lick my chops (sans gravy). 🤣

I know Kylie meant it ironically, but SOU actually *is* a no-brainer now. Not that things couldn't still go wrong, of course. We need Managem to follow through and complete the Phase 2 funding. But it is strongly in their interest, and they have corporate ties to Attijariwafa. We need SOU to not squander its current cash pile or do anything else stupid. But given the uncertainty that beset SOU in the past much has been resolved. They wouldn't call them "risk assets" if there were nailed-on guarantees. My own view is that enough has happened to make SOU an intelligent trade instead of an out-and-out lottery bet (which is why I've bought 0.5% of the company since the June announcement).

SOU's interest in Anoual and Greater Tendrara is 27.5%. It's 20% on the existing production concession for Phase 1 & 2. So we get 27.5% of any revenues from future exploration, and pay 27.5% of the costs for drilling ... except for the two upcoming drills on which we are carried for costs. Of course, drilling doesn't lead directly to revenues, there is field development too (like with Phases 1 & 2). So it's quite likely that SOU would have to further farm down its interest to cover development costs.

Agree with goza. It's a waiting game. And while some seem to be waiting for the market to fall back in love with this share, I think it could be a longer wait than that. *Could* happen if TE5 came in, but not a given. Then you are waiting for an event like the sale of SOU's interest in the Tendrara concession. If production volumes from Phase 2 hold up as expected for a couple of years after go-live and SOU was generating £12m/yr FCF on a concession that runs to 2043 you are looking at £200m of value, or £100m after applying a 10% annual discount. If someone were to make an offer for SOU's interest at anything like the discounted value that's 5p per share (less 1.2p per share of debt). But you could be waiting until 2030 to see it.

I was more interested/concerned by this snippet:

"Morocco’s energy strategy extends beyond LNG and oil. The country is exploring “geological hydrogen” or “white hydrogen” potential, with Sound Energy pledging $25 million for exploration studies."

Is it possible Graham actually made this nonsense statement to the press?

I *think* (going from vague memory of something GL said) SOU's revenue from Phase 1 will be no more than about £1m per annum. The problem is we don't have a good breakdown of where the revenue goes -- obviously it's split between the stakeholders: Managem, SOU and ONHYM, but there are other costs specific to Phase 1. There's the Afriquia debt. There's approx. £10m per annum to Italfluid to operate the LNG plant. There's a once-off $5m payment to Italfluid shortly after going live. All of this makes the Phase 1 gas worth very much less than Phase 2.

There's also no easy comparison to Phase 2 volumes. Phase 1 is 3.5 bcf per year to Afriquia. Phase 2 is 10.5 bcf to ONEE under the GSA. But that's just the currently contracted amount. Phase 2 will be able to produce more than that, presumably for export via the Maghreb-Europe pipeline. We don't know either the annual volumes or the price factored into Zeus's projections.

And so, I would say the easiest back of an envelope calculation is to just take the value per share forecast by Zeus for the two Phases. That's 0.3p for Phase 1 and 3.8p for Phase 2 (unrisked). So if Phase 2 represent a potential £12m free cash flow to SOU, it follows that Phase 1 is about £1m. Don't take this as gospel, I could be way off track. But it's why I don't want SOU to squander the money currently in the bank as Phase 1 won't even keep the lights on.

"Great to see you being positive for once :)"

Who, me? Yes and no. Like many here I am never getting back the money I lost. But from the current levels it seems a bit of a gift horse.