Sound Energy Regulatory News (SOU)

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29 July 2020

Sound Energy plc

("Sound Energy" or the "Company")

Placing to raise £2.75 million and Broker Option to raise up to £1.75 million

Sound Energy (the "Company"), the Moroccan focused upstream gas company, announces that the Company has successfully placed 129,411,764 new ordinary shares Shares ("Placing Shares") at a price of 2.125 pence per Placing Share (the "Placing Price"), to raise £2.75 million before costs (the "Placing"), conditional inter alia on the Placing Shares being admitted to trading on AIM.

The Company also announces a proposal to raise up to a further £1.75 million by way of a broker option through the issue of up to 82,352,941 additional new Ordinary Shares (the "Broker Option Shares" and, together with the Placing Shares, the "New Ordinary Shares") at the Placing Price in order to enable smaller qualified shareholders in the Company and other qualified investors to participate in the Fundraising (the "Broker Option" and, together with the Placing, the "Fundraising").

The Placing Price of 2.125 pence per New Ordinary Share equates to a 1.5 per cent. discount to the mid-market closing price of the Company's ordinary shares ("Ordinary Shares") on 28 July 2020 of 2.1575p, being the last practicable date prior to the date of this announcement.

The net proceeds of the Placing of £2.57 million and any additional proceeds from the Broker Option will be used to strengthen the Company's cash position in adding to the Company's unaudited cash balances of approximately £4.2 million as at 30 June 2020 (which includes restricted cash balances associated with an Anoual exploration permit bank guarantee which is expected to be released to the Company during 2H 2020 following the recently announced restructuring of the Anoual exploration permit terms) whilst the Company continues to progress its phased development strategy as outlined in its announcement of 17 February 2020.

In the Board's opinion, the net proceeds of the Placing, in addition to total existing cash resources, are sufficient to meet the Company's present working capital requirements through to March 2021 and will enable the Company to continue moving the phase 1 development of the Tendrara Production Concession towards a final investment decision as well as progressing other planned 2020 corporate objectives, which include maturing options to seek to restructure its 2021 Eurobond obligations and secure project financing options for the Company.

The New Ordinary Shares to be issued pursuant to the Fundraising will, when issued, rank pari passu in all respects with the Company's existing Ordinary Shares and application has been made for the Placing Shares to be admitted to trading on AIM ("Admission").

Settlement for the Placing Shares and Admission is expected to take place on or before on 5 August 2020. The Placing is conditional upon Admission becoming effective not later than 5 August 2020, or such later time and/or date as the Company and TPI may agree (being not later than 4.00 p.m. on 7 August 2020). The Placing is also conditional upon, among other things, the placing agreement between the Company and Turner Pope Investments (TPI) Limited ("TPI") (the "Placing Agreement") becoming unconditional in all respects and not being terminated in accordance with its terms.

Broker Option

In order to provide qualified Sound Energy shareholders ("Shareholders") and other qualified investors with an opportunity participate in the Fundraise and to subscribe for Broker Option Shares in the Company at the Placing Price, the Company has granted TPI a Broker Option over up to 82,352,941 New Ordinary Shares in the Company exercisable at the Placing Price. Full take up of the Broker Option would raise a further £1.75 million for the Company, before expenses.

Shareholders will be prioritised for participation in the Broker Option (other than at the discretion of the Broker) and all orders from such existing Shareholders will be accepted and processed by TPI on a strictly "First Come, First Served" basis. The Broker Option has not been underwritten. The Broker Option may be exercised by TPI, following consultation with the Company, but there is no obligation on them to exercise the Broker Option or to seek to procure subscribers for Broker Option Shares pursuant to the Broker Option.

To subscribe for Broker Option Shares, Shareholders should communicate their bid to TPI via their stockbroker, as TPI cannot take direct orders from individual private investors, unless they are clients of TPI. Existing Shareholders who wish to register their interest in participating in the Broker Option Shares should instruct their stockbroker to call TPI on +44 (0)20 3657 0050. Each bid should state the number of Broker Option Shares for which the investor wishes to subscribe at the Placing Price.

Requests to participate in the Broker Option should be made as soon as possible and must be received during the period from the time and date of this Announcement up to 4.30pm on 31 July 2020. The Broker Option is exercisable at any time prior to 4.30pm on 31 July 2020. Any Broker Option Shares issued pursuant to the exercise of the Broker Option will be issued on the same terms and conditions as the Placing Shares.

TPI may choose not to accept bids and/or to accept bids, either in whole or in part, on the basis of allocations determined at its discretion (after consultation with the Company) and may scale down any bids for this purpose on such basis as TPI may determine.

The maximum number of Broker Option Shares that may be issued pursuant to the exercise of the Broker Option is 82,352,941. If the Broker Option is exercised, settlement for the Broker Option Shares and admission of the Broker Option Shares is expected to take place on or before 5 August 2020. The Broker Option is conditional upon admission of the Placing Shares.

The maximum aggregate number of shares (including both the Placing Shares and Broker Option Shares) that may be issued is 211,764,705 (the "New Ordinary Shares").

The Broker Option Shares are not being made available to the public and none of the Broker Option Shares are being offered or sold in any jurisdiction where it would be unlawful to do so. No Prospectus will be issued in connection with the Broker Option.

Proposed Director Participation

Certain of the directors of the Company have indicated an intention to place orders to subscribe for, in aggregate, Broker Option Shares with an aggregate value of up to £65,000 via the Broker Option.

Update to Partial Farm-down of Eastern Morocco

The Company announced on 17 February 2020 an update to the proposed partial divestment transaction in relation to its Eastern Morocco Portfolio in which the Company confirmed that whilst it no longer remained in exclusive discussions with the then proposed purchaser, discussions with that party were continuing.

The Company announces that it is no longer in discussions with the previously proposed purchaser but that, having announced its phased development strategy, which is currently being advanced, the Company continues to engage with multiple other potential farminees who have expressed interest in participating in the Company's strategy by way of a potential farm-in. Normal business development discussions are ongoing in this regard. However, there can be no certainty that any of these discussions will advance and the Company's current key priority is to deliver a final investment decision on its proposed phase 1 development of the Tendrara Production Concession during 2020

Graham Lyon, Sound Energy's Executive Chairman, commented:

" Today's Placing and the announcement of an opportunity for existing shareholders to participate under the same terms and conditions provides Sound with a stronger financial base to progress our planned activities. We have confidence in our strategy to bring Sound into a cash generating position and look forward to updating the market as future milestones are met."

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The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

The Placing does not constitute a public offer of securities in accordance with the provisions of Section 85 of the Financial Services and Markets Act 2000 and accordingly a prospectus will not be issued in the United Kingdom.

This announcement does not constitute an offer of securities in the United Kingdom or in any other jurisdiction, including the United States of America.