Sound Energy Regulatory News (SOU)

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28 June 2023

Sound Energy plc

("Sound Energy" or the "Company")

Project Finance Update

Attijariwafa bank conditioned project financing offer of up to US$237 million, the first of its size for a gas field development in Morocco

Sound Energy (AIM: SOU), the transition energy company, is pleased to provide an update in relation to the project debt funding for the phase 2 development of the Tendrara Production Concession and announces the receipt of a conditioned offer made by Attijariwafa bank.

Project Debt Funding

The Company announced on 23 June 2022 that it had entered into an Arrangement and Mandate letter (the "Mandate") with Attijariwafa bank (the "Arranger"), a Moroccan multinational bank and one of the leading banks in Morocco, under which the Company mandated the Arranger in relation to the arrangement of project debt financing for the Phase 2 development of Sound Energy's Tendrara Production Concession (the "Agreement").

Under the Agreement, as amended and extended, the Arranger was mandated to arrange a long-term project senior debt facility with a term of no more than 12 years of up to 2.250 billion Moroccan dirhams.

The Company is pleased to announce that the Company, on behalf of the Tendrara Production Concession partners, have now received a conditioned offer from the Arranger for a maximum financing of MAD 2.365 billion (c.US$237 million), proposed to be 100% underwritten by the Arranger, subject to the conditions precedent to the conditioned offer being satisfied prior to 30 September 2023 (the "Conditional Offer").

Material terms of the Conditioned Offer

· Borrower: A to be newly incorporated Tendrara Production Concession partner special purpose vehicle incorporated under Moroccan law (the "Borrower").

· Loan amount: MAD 2.365 billion (approx. US$237 million) subject to a maximum gearing level of 65%.

· Term: 12-year term including 2 year grace period from first drawdown.

· Security: Customary security package over Borrower and Tendrara Production Concession.

· Interest rate: Optionality provided to the Borrower to select from fixed rate, variable and fully floating alternatives with at customary margins for hydrocarbon infrastructure development project financing facilities.

· Use of loan proceeds: Design, drilling, construction and operation of wells, a treatment facility (CPF) and a gas pipeline (from CPF to GME) to transport and sell the natural gas produced under the Tendrara Production Concession to the ONEE, as well as all related activities.

· Conditions Precedent to the Conditional Offer:

o Governmental and Ministerial approvals.

o Tax authority clearance of loan structure.

o Amendment of certain Governance documents to lenders satisfaction.

o Amendment of Gas Sales Agreement to lenders satisfaction.

o Conclusion of Pipeline interconnection agreements to the lenders' satisfaction.

o FEED update to lenders satisfaction & agreement(s) in place with different contractors such as EPC, Rig provider, O&M etc.

o Various ancillary plans and budgets.

o Completion of further DD (including insurance, E&S, Tax, etc.) to be satisfactory for the lenders.

o Finalisation and entry of binding Loan Financing documentation in satisfactory form for the lenders.

o First drawdown from debt facility conditioned to simultaneous capital contribution in ensuring maximum gearing of 65%.

·  Long stop date to the Conditional Offer: 30 September 2023.

Commenting, Graham Lyon (Executive Chairman) said:

"We are delighted to have received the conditioned offer from our debt Arranger and lead bank Attijariwafa bank for an increased amount of MAD 2.365 billion. The majority of the conditions precedent to their offer are to be expected and as a result the Company has been advancing a number of these for these for some time. We look forward to working with the Arranger to conclude on what will be the first financing of its size for a gas field development in Morocco and further announcements will be made, as appropriate, in due course."

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