Member Info for tradeemup

For 65% Fe grade fines, Citi sees average prices falling to $91/mt in 2020, from $107/mt in 2019, before declining further to $67/mt in 2021 and $65/mt in 2022 -- substantially lower than the $90/mt average of 2018.

Agree with you Karv the current price looks like value. it make may take the next set of results but I can wait. ’ Fastmarkets index for iron ore 65% Fe origin fines, averaged $128 in July and $99.17 per tonne in August, so H2 results should look impressive IMO. Just a waiting game and hopefully iron ore futures outlook for premium stay above $85 into 2020.

Fromhere, I completely agree. The risk sits with sound yet the purchaser can dilute us further and reduce our working interest to 14.3%. This is such a bad deal IMO and I’d have preferred to raise $30m for 3 exploration wells and have accepted 40-50% dilution through the issue of shares. As things stand the exposure to upside is being talked up but I can’t see an aggressive near term commitment to exploration. The costs associated to the production concession and approved plan will leave us with a one hit and hope strike at the big time.

Thank you partridge. Plenty left over for multiple exploration wells..::

Agreed Fez. I’ll report back on the reply received.

Jez getting to first gas involves the following based on the rules associated to the granting of the production concession. How much of the 58.5m will this eat up.....

The field development plan underpinning this award includes:

· the drilling, pre first gas, of up to 5 new horizontal development wells, in addition to recompletion of the existing TE-6 and TE-7 wells.
· the construction of a gas treatment plant and compression station ("CPF") and a 120 km 20 inch Tendrara Gas Export Pipeline ("TGEP") connecting the CPF and the delivery point to the Gazoduc Maghreb Europe pipeline. As already announced, front end engineering and design ("FEED") is underway for both the CPF and TGEP.
· the achievement of first gas in approximately two years at an expected mid case production rate of around 60 million standard cubic feet per day over a minimum period of 10 years during which it is currently estimated, subject to optimisation of drilling plans, that an additional 10 to 13 wells will be drilled to maintain this production rate.

Exactly Jez we are being asked to vote blind and being told we have exposure to upside. But the RNS details diddly squat. Who would trust An email from JP as it’s not explicitly clear in the RNS I don’t believe we are carried for exploration.

Anyone guesstimate the cost of drilling each horizontal development well? Thanks

The production concession was granted as below. 5 horizontal wells at $8m usd each. There goes $40mUSD.

Maybe a carry for one well on a hit and hope basis. Let’s hope Brian isn’t pinning the tail on the donkey. JP is an absolute disgrace.

The field development plan underpinning this award includes:

· the drilling, pre first gas, of up to 5 new horizontal development wells, in addition to recompletion of the existing TE-6 and TE-7 wells.
· the construction of a gas treatment plant and compression station ("CPF") and a 120 km 20 inch Tendrara Gas Export Pipeline ("TGEP") connecting the CPF and the delivery point to the Gazoduc Maghreb Europe pipeline. As already announced, front end engineering and design ("FEED") is underway for both the CPF and TGEP.
· the achievement of first gas in approximately two years at an expected mid case production rate of around 60 million standard cubic feet per day over a minimum period of 10 years during which it is currently estimated, subject to optimisation of drilling plans, that an additional 10 to 13 wells will be drilled to maintain this production rate.

JEZtheFez. Where in the RNS die is state that we are carried for exploration?

The RNS states all costs up until production capped at $58m. With 5 horizontal development wells in the Horst area and re entry of te6 and 7 etc. How may exploration wells exactly will we be carried fo after the required development costs to get us into production? Should we all be left to find out after work he vote. Crap deal making! End of story

We are on a "free carry" for any future exploration up until "First Gas", which some people still won't acknowledge.

Test pack according to jp email response his ‘expectation’ is a free carry on exploration wells. No clarity on this in RNS. Let’s just take his word for it testpack... JP absolutely must go. He should hang his head in shame. Note the suppression and deletion of his past public speaking events on social media which began circa 8 months ago.

Thanks Woodrow.

Very strange to be finalising and reaching agreement on whether a carry on exploration wells is included whilst recommending SHs accept. Based on RNS details provided on award of concession below the area is 133 km2. However does $58m get us to production and leave room for drilling to unlock upside. 5 new horizontal development wells based on details below... I very much doubt it. James still dangling carrots it’s in his DNA to market his own poor deal.

The production concession award covers an area of 133.5 Km2 and follows an application by the Company and its partners in June 2018. The field development plan underpinning this award includes:



· the drilling, pre first gas, of up to 5 new horizontal development wells, in addition to recompletion of the existing TE-6 and TE-7 wells.

· the construction of a gas treatment plant and compression station ("CPF") and a 120 km 20 inch Tendrara Gas Export Pipeline ("TGEP") connecting the CPF and the delivery point to the Gazoduc Maghreb Europe pipeline. As already announced, front end engineering and design ("FEED") is underway for both the CPF and TGEP.

· the achievement of first gas in approximately two years at an expected mid case production rate of around 60 million standard cubic feet per day over a minimum period of 10 years during which it is currently estimated, subject to optimisation of drilling plans, that an additional 10 to 13 wells will be drilled to maintain this production rate.

Thank you Woodrow. I’m astonished that it took your email for this to be clarified. The RNS clearly calls out the production concession as per below. This all just smacks of gross incompetence - they can’t even write a clear RNS at sou HQ.

an estimated US$58.5 million carry with respect to Sound Energy's future capital expenditure requirements relating to its retained interest in the Tendrara Production Concession in order to achieve first gas production from the concession (the "Proposed Transaction").

Woodrow. In simple terms if we drill a well on the licence we will be required to:

Use cash received to pay our proportion of costs. If the deal completes this means 23.4%

Convince our partners (SLB and the purchaser) to fund the remainder based on their working interests.

In the event we hit the sweet spot at TE11 and it’s a 3TCF hole in one our purchaser can dilute our working interest to 14.3%. This despite us paying 23.4% of the drilling costs at our own risk for the future benefit of the purchaser should by some miracle we drill in 2020.

So we will suffer a 70% dilution to our working interest in the case the future exploration is successful. On what planet is this a good deal. I would have rather raised and doubled the number of share in issue to drill and retain exposure to the upside. In any event what’s done is done.

Woodrow. Many thanks.

However his expectation is not supported by the deal structure shared via RNS. There was reference to 54.3m in cash which will be received in tranches based on key milestones. The remainder was clearly ringfenced to bring the concession into production by which we mean the te-5 Horst. A free carry on future drilling which means we have no requirement to use the circa $28m received (55% due on deal completion) would be a HUGE omission from the RNS. His assumption and expectations are not legally binding and unless they are stipulated in any agreement are worth ZERO. I think you will find my translation to be close to the mark.

PNE - there will be zero wells drilled in 2020 IMO.

Let me translate.

Use of the proceeds will be considered by the board once the deals signed.

After debt, costs associated to transaction our senior leadership teams salary, Rothchilds fees etc there won’t be much left on the carcass for any distribution of cash to SHs. What a joke of a CEO.

Carried for future exploration = We will use the cash left after the above to fund the 23.4% proportion of future drilling costs. We might not drill for 2 years which means we our cash burn may mean we need further placings.

Sound have spun this as the best deal to retain upside. There will be no exploration in 2020. The deal should have included purchasers commitment to 2 wells minimum and proportionate costs. It should also have stipulated that in the event of a discovery the option to take up additional 9% interest stake would mean the return of the 9% differential (costs born by sound at their risk). Crap deal

JP cannot confirm that SLB and the purchaser will commit to a 2020 exploration programme and stump up their proportion of exploration costs. What good is 28m upfront if we can’t used it to find exploration because partners are focused on first production out to 2022. Instead he spins this deal as retaining upside on exploration upside. There is no end to the level of deceit from this CEO. OUT and NOW!

Conclusion = Any upside from drilling in years away. We are now wedded to a vehicle going into production and given the purchaser 12 months to find the cash to dilute our interest down to 14.3%. I’m gobsmacked this is being put to shareholders.