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I-man, thanks for the comprehensive summary. It all looks quite positive. Graham said "late autumn" for first Phase 1 revenue in his latest interview posted downthread by Chesh. That could be any time up to the winter solstice I guess, but anything that is not a slippage to next year would be welcome. Interesting that he and Argent are still claiming the two drills will happen this year also. Personally I wasn't expecting anything other than Phase 2 FID if we were lucky. Also, good to hear they are already thinking about the bond repayment / refinancing. And that they are not wasting money on white hydrogen.

In a way it's a relief to have Sound freed up from much involvement in Tendrara and Anoual. Firstly because they can finally do something about Sidi and have the money to run the seismic themselves. (I like the sound of those new receiver gizmos. The Paleozoic at Sidi is still a very long shot I think, and the adjacent Meskala field has not been that productive historically. But it's one additional lottery ticket to add to the other drills). But secondly, it's really quite difficult to see how SOU can screw things up from here. From the current share price, this is a very probable multibagger (or at least a "several-bagger") even if they sit back and do nothing. Tendara Phase 2 could generate $100m annually, of which SOU's share could be £12m of free cash flow (£17m EBITDA). Just stick 15 years of that in a spreadsheet and discount 10% per annum back to today and you pretty much get Zeus's valuation. Roll it forward to 2028 when the money actually starts coming in and you get their unrisked valuation which, after debt, is 3.5x the current SP even if nothing else happens. At that point you cannot keep the SP down because somebody (possibly even Managem) will step up to the plate with a cash offer to buy out SOU's interest. And there is additional potential upside if any of the drills or Sidi comes in.

Years of overhyping, delays, dilution, false dawns, and being on the verge of insolvency have left this share extremely unloved. I think that's the answer to kif's and the directors' complaints about the lack of price movement. Also, having to wait even more years for those with existing high averages will be cold comfort. (I took quite a hammering myself when I sold out several years ago). But now is the time to buy when nobody else will touch it with a barge pole despite the very clear upside. That's what *I've* done. And indeed -- I never thought I would say this -- but I have had one cheeky top-up already and am sorely tempted to have one more. Obviously nothing is ever risk free, but this does look like a no-brainer. Personally, I'd be more than happy to see the SP stuck in the bargain basement for another six months or more. I'm in no hurry whatsoever.

6.0p in 3 years ✅

Actually, I may have misread the broker report. Knock a penny off those estimates to account for debt.

"Can any (sensible) posters make a sort of educated guess on potential timelines for the announcement of the forthcoming drilling programme?"

My guess is that drilling won't be announced until financing for Phase 2 is confirmed, or maybe even when FID is taken. My rationale is that SBK-1 is not commercial without a tie-in to the pipeline. M5 could be big enough to justify its own pipeline, but I guess you have to show you can finance ONE before you worry about TWO. It's possible, of course, that Managem feel confident enough about the financing outcome to progress drilling alongside it. And then it just depends on how much bandwidth they have to work on projects -- we've no idea if they have 5 or 50 back office people working on Tendrara.

My other thought (which others probably won't share) is that I don't care all that much about drilling. SBK-1, if successfully drilled AND developed, adds less than a penny to the unrisked value per share. M5 is the drill with the potential to really move the needle and double the potential share price, but it's a VERY long shot. I don't really relish the thought of speculators piling into the share pre-drill and then exiting on bad news, leaving the share unloved and languishing once again. I have completely gotten out of the mindset of SOU as an exploration company. Let's just have Phase 2 FID and SOU is locked on to large future revenues with an unrisked value of 3-4p after debt. The future value is discounted at 10%/year, so you effectively make 10% by sitting on your holding and doing nothing. By 2028, with Phase 2 revenue actually flowing, the value is 4-5p/share. Personally, I will be ecstatic if it hits that without further drilling success.

Not only was KTF's holding miniscule, he was one of the chief rampers and never failed to personally insult anyone who suggested the SP wasn't about to take off. Ironic that he finally exited at a loss.

"Inorgeration"??? Did he just have a brain transplant or something? 🤣

Correction to my earlier ... SOU don't have a free carry on TE-4, of course, though it could be a logical one to collaborate with Managem on after SBK-1 and M5.

By far the most important thing is Phase 2 FID and commencement of pipeline construction. (Prior to those are the reworked Enagás FEED, reconfirmation of Attijariwafa financing once the costs have been updated, final signature on the ONEE GSA, and awarding of engineering contracts). Once Phase 2 commencement is announced, we are (allegedly) two years from first gas, with news flow punctuated by the drilling of six horizontal wells. SOU is then locked on to cash flows of $120m over the subsequent decade. Hard to see how the SP could remain at rock bottom at that point. While total production volumes will never be known until the wells are depleted, Phase 2 success mostly depends on above ground financial factors and not on some drilling lottery.

But then we have the drilling lottery too, with a nice mix of risk versus reward (though no risk of loss to SOU which has three free tickets). SBK-1, highest chance of success (50%) but modest resources (~20% of existing horste recoverable volume), TE-4 (36% COS) with about 36% of existing horste volume and ease of tie-in to pipeline, M5 (21% COS) with 125% of existing volume. SBK-1 has flowed gas before, TE-4 expected to be productive with stimulation, M5 is a wildcat.

Based on the advertised chances of success (which is not necessarily a reliable guide) the chances of all three wells coming in is a measly 3%. But the chances of at least one of them coming in is 75%. Not bad odds, on top of the much more certain Phase 2 revenue. The incremental value on the share price for each element is covered in the broker notes.

As chief resident neghead, I would cautiously say SOU's prospects are bright, but with much patience required as nobody knows when the market will sit up and take notice. (Also, I would say there is a half decent chance of a general stock market rout in 2025 which will lower all boats temporarily, but not affect SOU in the long run).

£6m wouldn't buy 700m shares as obviously the price would quickly go up. While I realise that's the whole point, it would be entirely counterproductive if it meant the company running out of cash again at any point. We borrowed a measly £2.5m in 2023 and ended up having just the interest on it converted into over 200 million new shares, for a 10% dilution.

SOU has a long way to go before it is bringing in significant revenue. The money from Phase 1 won't even keep the lights on and there are debts that must be serviced in addition to G&A. Honestly, the best way to protect the value of your holding is to save the company's cash rather than write cheques in anticipation of future income.

On the other hand, my worst fear is that the money will be squandered on some boondoggle. I'm worried that management are determined to spend it one way or another. After all, they have to show their worth to justify the big bucks 🤑.

StMary: "Statistics cited by the outlet noted that the traditional EV maximizes 94% of its fuel efficiency, while FCEVs maximize just 68%."

Bit misleading there, though. The "fuel" for a traditional EV is not the electricity you charge the battery with, but whatever was used to generate the electricity. If that's a traditional thermal plant then that's the low efficiency part -- from maybe 35% for coal or open cycle gas turbine to 60% for closed cycle. If it's from renewables, they have their own well known limitations.

On a more SOU-specific point, if this is related to the Getech announcement, I continue to maintain it is a complete nothing burger. Have any of the supposed "DYOR" fans here actually looked into this company? They are as distressed as SOU ever was. Share price is down 90%+ from their high, 80% in just one bad period last summer.

They seem to be following whatever is the latest hype train in energy. In 2023 that was green hydrogen, a venture that turned out disastrously for them and resulting in them shutting down that part of the business. Last year they were depending on selling an office property to raise cash, but ended up having to do a raise at a low market cap when the SP tanked.

In the mean time they've been pushing AI hype, claiming that their GIS database is now some sort of spatio-temporal wonder that understands 400 million years of subsurface evolution. I don't claim to understand all the details, but from a lifetime in tech I think I recognise extremes of buzzword hype when I see it. I'd view natural hydrogen and helium as just more hype chasing.

For example, part of their magic formula for discovering natural hydrogen is just checking their database for ophiolites, a known source of hydrogen via serpentinisation of ultramafic rocks. As with oil and gas, the mere presence of source rocks is no indication of present day accumulations. You need a reservoir, a top seal, all the usual stuff and a lot more besides to make a commercial discovery (and remember -- commercial natural hydrogen is practically non-existent on the planet today). Hilariously, if you check their end-of-year presentation from last year (which predated SOU's dealing with them), you will hear their CEO saying of hydrogen discoveries that "it wouldn't want to be in a desert". I presume that's because of the difficulties associated with transporting hydrogen.

Morocco has its own problems when it comes to carbonate cementation in natural gas prospects. Natural hydrogen prospecting is just a whole other level of bonkers.

"How reliable are they?"

You do know these sites are generated by bots? Nobody is sitting down doing a detailed "by hand" analysis of a penny AIM stock. Those sorts of auto-generated sites were a thing even before the latest AI buzz. There isn't a single mention of actual fundamentals or recent news. It's just a worthless automated dump of price movements.

60p would value SOU at around US$1.5 billion. That's a dozen times the value of its Tendrara assets. So yes, your money is gone. With extreme good fortune at further drilling you could conceivably get back 20% of your investment. If it's any consolation, if your average is still 60p it suggests you never tried to average down. In retrospect, that was sensible. Those of us who did lost a ton more money catching a falling knife.

Clearly the tank is no longer on the critical path because other stuff has slipped. Nine months ago the question was whether some temporary solution would be needed in order to have everything up and running by year end 2024. Now commissioning doesn't start until H2 and we are looking at year end 2025 for first revenue. We have slipped a year in less than a year. That's absolutely par for the course for SOU. Believe it or not, we have slipped FIVE years from when the micro LNG was first mooted (and I don't mean it has TAKEN five years, I mean it has SLIPPED an additional five years).

Managem must be able to do better than SOU because, let's face it, it's hard to imagine anyone could possibly do worse. In one way I am relieved that SOU are more or less out of the picture on the Tendrara and Anoual assets and permits, because in order to realise a gain all they have to do is sit back and let someone else bring the projects to fruition. Hopefully they can do it without squandering the money currently in the bank.

Good grief. Accidentally unfiltered the two resident loons. Bunnyman posting about shale drilling in Utah (would need a 6,000 mile sidetrack to get to Morocco), Adam wittering about GeTech (a company which is close to bust flogging data that is close to useless about a hydrogen technology that is close to non-existent). As for GL maximising shareholder value, he is essentially a bystander as Managem hopefully improve the value of our mostly passive interest, and we gotta hope he doesn't spend our cash on stupid boondoggles (like GeTech) while waiting for that to happen. Also Adam, about "selling gas 2nd quarter", your beloved Graham told you weeks ago that commissioning wouldn't even start until Q3. Remember all that "detailed research" you love doing? ... if I was you I'd start by getting yer ears syringed.

Pair of absolutely useless clowns. 🤡🤡

Thanks StMary. Don't care about the neghead accusations. I have Adam and Bunnyman blissfully blocked anyway. Their contribution is as useful and as considered as a child cheering on their favourite football team. From anyone else, I welcome arguments for why the share price might rise sooner rather than later (to use Graham's annoying term). That is one aspect that the broker reports do not address and where I'm quite uncertain.

I'm NOT negative. I am positive to the tune of seven million shares currently. I think there is a very decent chance of getting a return on them. Just not as fast or as large as I, and I presume most people here, would like.

Like you say, the drill bit will be a factor. However, value and chance of success are inversely correlated. SBK-1, with probably the highest chance of success, is worth less than 1p/share unrisked. Whereas the big prize, M5, has a mere 20% COS. Of course, there's also still Sidi and the fabled Paleozoic but I see no point in factoring it into any analysis right now.

(N.B. Just in case I get accused of playing Nostradamus myself, let me make it clear that I AM NOT AN EXPERT. That's why a giant whack of MY money is in the pockets of people who saw the Parson's era fiasco for what it was. I would dearly love if there was someone who knew what they were talking about critique my analysis of the latest Zeus numbers. I like to think I can learn from my mistakes. I now hold a LOT of shares at well under 1p average. I'd hazard guess I have a 50-50 chance of getting half my original money back in another 4 years. Maybe a 5% chance of coming out quits. But also a chance of losing even more).

I appreciate Zann's reverse trolling. Fortunately we don't need Nostradamus. We have a semi-detailed valuation from Zeus (the broker, not the deity). It's there for anyone who can read. It tells you all you need to know about each element of SOU's potential value separately. It's got risked and unrisked values for each.

If you can add as well as read, you can form your own judgement based on the likelihood of SBK-1, TE-4 and M5 coming in. If they are all duds, the core unrisked NAV is 2.9p. By disapplying the 10% annual discount you can estimate a value of a little under 4p per share in three to four years time. If, for instance, you think SBK-1 is highly likely, you can up that to 4.5p.

In that timeframe SOU will be in a position to pay a dividend so the share price must inevitably rise. It cannot remain depressed forever with actual cash in the bank.

So are we guaranteed 4p? Hell, no. We're not guaranteed the current assets even exist. They are still contingent. That's why there's a risked value. Right now the risked value is 4p based on ALL three wells coming in. There is a large potential upside to that (but with quite low probability).

So, who here wants to spend 4p TODAY for something that might still be worth less than 4p in four years time? Don't bother answering -- the market has already told you the answer: NOBODY.

This is really simple, elementary arithmetic. As time goes on and elements are derisked you can clock up the value and disapply the discount. There is upside here if either a) you can wait potentially several years and there are no unexpected events or screw-ups, or b) Managem gets lucky with the drill.

If you are hoping there are stupid people out there about to splash tens or hundreds of millions on shares at a price that you wouldn't pay yourself ... well, that's why the money's in THEIR pockets and not yours. Enough of the wishful thinking BS! Hopefully we are (mostly) grown ups that can read and add. The trolls like Adam and Bunnyman are buzzing flies that add nothing to the conversation.

Spencer, given your estimate of first gas is too optimistic by probably six months, I wouldn't sweat the small stuff.

I also think 4p is possible in 2027 even without M5 as long as:

Phase 2 revenue is imminent.

Eurobond refinancing is in place on decent terms.

There is a credible replacement for Graham (who will be long gone by then).

No other fkups in the interim.

All depends on news flow. Here's my guess:

1.5p on Phase 2 FID, rising to 2p at start of construction.

2.5p on SBK-1 success.

Temporary further rise on M5 spud, but will fall by more than it rises on likely M5 failure.

I think that will take us beyond Xmas 2025, but still in the 1.5 to 2.5 range in 2026. 4p in the unlikely event of M5 success.