Member Info for Soundingoff

Fred is the general counsel at Sound (an employee). If we are working a deal, then frankly it appears good practice.

I agree medi. As usual it takes someone else to translate Exploration's post. On the one hand ONHYM are 'on the ball', but on the other, (according to Exploration) they're contracting with a company that has no route to deliver. Quite clearly there's something wrong with that viewpoint.

Of course the MOU is slightly more than Exploration suggests, being almost half the gas supplied under the production concession.

I agree it 'should' be that way and I'm almost certain we'll have news either way prior to the deadline. But a certainty it is not.

Your timeline is now 5-10 years? I don't disagree with what you're saying, only your timelines. Gas is the bridge fuel to renewables. This is my last long term investment (hopefully ending shortly) in fossil fuels.

'No, you are incorrect. All of the companies who I have been involved with, or had knowledge of, in a bidding process, it is clear that bids received after the deadline will not be considered, A major reason for this is to avoid charges of 'corruption', and another reason is to maintain time lines. Please think it through.'

Don't worry I have, it's my job. I'm not talking about offers after deadlines. It's the negotiation after offers that is the hard part. You don't just accept the offer and get the cash paid by BACS. There may be a number of offers with different pros/cons and considerations that don't just involve Sound.

We have already been advised that there is/was a deadline on bids:

https://www.youtube.com/watch?time_continue=1&v=pRjmXIzeNso

Ignoring all the pointless words and insults, the question is do we have a deal or not?

You are incorrect in your statement that 'there should be no reason that slippage can happen' as anyone involved in deal making will know that more often than not, things don't go to plan/timelines.

Whilst we are on the subject. it's interesting to see the change over the years. Coal doesn't really feature now in the UK:

http://www.gridwatch.templar.co.uk

Indeed they are divesting oil. For gas and renewables. You are right about the direction, but in your haste to put Sound down, you are ignoring the reality of the changes required to move from oil/gas to renewables.

Incorrect Gekko. Jobbs is referencing the NPV10 calcs provided by Progressive Research:

https://www.soundenergyplc.com/media/1594/exciting-times-ahead.pdf

Quite why people continue to pluck random numbers out of thin air, I do not know.

'There is hopefully much more than 10 yrs of gas in the Horst, and I think people are deluded if they think POO will be anywhere near $50pb. Once the EV market attains momentum, not in 30 yrs, probably 5, and 60% of all oil supply goes into transport, then POO will be significantly lower'

With the change in company car taxation, it's going to be a huge growth area for company car drivers and other transport users. And so I have spent a lot of time researching. The change is going to take a lot longer than 5 years, and that's from someone who is very bullish on electric. I already have one EV and our other car will be changed soon. The uptake of EVs is limited by a number of factors including infrastructure, which will take time.

The big O&G players appear to disagree with you on energy economics:

https://www.bp.com/en/global/corporate/energy-economics/energy-outlook/demand-by-sector/transport.html

So we now have an MOU where almost half the gas modelled has a price of £8.60 per mcf. 3% lower than that per the Progressive report.

https://www.soundenergyplc.com/media/1594/exciting-times-ahead.pdf

Good news and we'll see where we go from here.

That makes sense. I knew Nigerian CT was high, and that's certainly one way to steer companies in the 'right' direction.

Anything is possible, but I think the key is that there is reliance now and there may not be in the future. That always does wonders for relations. This Russian refinery is an interesting move as well.

Immediate cashflow is what most O&G businesses wants for a number of reasons. But of course we don't want development, we want to cash in and move on.

We also have to look at the bigger picture and consider what Morocco want. If there's more gas there than the Horst, they want it out of the ground. It makes sense for them to be flexible on the development given the main advantage of the Horst is the move from Algerian gas in 2021.

It sounds like you have some internal battle going on in there partridge. It is bigger in size, but when you take into account exorbitant royalty and corporation tax rates, and gas prices less than a 1/3rd of Morocco, the reality is it's a fraction of the TE5 horst value.

Surely you can come up with something better partridge? If you were looking at the scale angle, how about SDX's RNS this morning:

'SDX Energy Plc (AIM: SDX), the MENA-focused oil and gas company, is pleased to announce the commencement of a 12 well drilling campaign, targeting a mean 15bcf of gross unrisked prospective resources, in its operated Gharb Basin (SDX: 75% working interest) acreage in Morocco.'

12 drills to go after the equivalent of 2% or less of the TE5 Horst? As we all know, a very material development and one which provides real support for any sale of the asset or business.

We could partridge, but why?

wh0s- I saw an email from JP earlier in the week that the guidance is still end of year, and if that changes it would need announcing. Obviously it's open to debate when any decision had to be made. The question is, what would an extension suggest to the market? That an offer/deal is being discussed? An interesting one for the nomad I think.

Morocco has a relatively unique position for a number of reasons, politically, geographically etc etc. Russia always has a plan and it's easy to see where this one's going.

'SoundingOff

I read your posts on here and I genuinely admire your unwavering faith in Sound. It’s conmendable and you seem to support your opinions with facts, maybe facts with sound tinted specs but facts to some extent.

My question is this- Based on projected Horst value, seismic data and licence area the size of Belgium/Qatar/Australia/China etc... why no bids? Do you think there have been bids or bids are being considered? What if there are no bids or bids are made that aren’t satisfactory to the board/shareholders? If this company goes south will you be able to admit you called it wrong? Personally, I suspect we’re heading for liquidation in some form. I just can’t see anyone putting money on the table for a distressed seller. Would you pay top dollar for all this? Like I said, respect for sticking to your guns but at some point you’re going to have to take a step back and admit you may have called this one wrong.

Maybe'

Gekko- Talking of faith- The use of the word 'disciple' is used quite often by a few here, when ironically they are the ones who are devoid of rational thought.

Eastern Morocco certainly isn't the asset it was once expected to be, but if you read a bit about what those in O&G circles want, Eastern Morocco should meet their criteria.

The development has a value and it meets the criteria that O&G businesses want- gas, pricing, infrastructure, onshore, in-country taxation etc etc. Then the exploration comes down to nothing more than risk vs reward.

We are also able to ascertain a ballpark figure for our NPV based on broker notes of other fields/exploration. That NPV figure is £1+ from my calculations and there's certainly no tinting of any kind.

How does that translate into a deal and it's value? You, I and everyone else on this board don't know.

With reference to your questions:

We have no idea of where we are with bids. So most of your question is moot. My view is the longer this goes on, the more likely a bid(s) is being negotiated, especially if another few weeks ticks by. However I'm also well aware a deal can fail at any point.

Your view is based on us being a distressed seller. I'm afraid that is simply not where we are right now IMO. We have a significant development and, as a person who works close to the field of finance, talk of liquidation does not make sense. Have you done any research of businesses coming to the end of their lifecycle either through planning or liquidation, and compared that with the results of a sale vs NPV?

The risk for me is the failure to get a deal and then we would have to consider the next move. Without a leveraging of the Horst, we would suffer significant dilution. Saying that, I don't think it will come to that because of the risk/reward available, and resulting from favourable conditions that no O&G company has yet been able to exploit in Morocco.

Sorry, I forgot the quotes on the post below for Ian's comment.