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Sound Energy signs HoT with Moroccan

firm for micro-LNG project

PROJECTS & UK-LISTED Sound Energy has taken a step indexes,” the statement added.
COMPANIES towards teaming up with a local partner to dis- The other agreement slated for discussion
tribute and market production from the small- provides for the Moroccan firm to help finance
scale gas liquefaction plant it intends to build at the Phase 1 Development project at Tendrara.
the Tendrara licence area in eastern Morocco. The proposed terms involve a share subscription
In a statement, Sound Energy said it had under which the partner would pay GBP2mn
entered into a heads of terms (HoT) with a ($2.46mn) for 159,731,651 new shares in
Moroccan conglomerate on June 26. It did not Sound Energy at a price of GBP0.01251 each.
identify the Moroccan firm, but it did say that The Moroccan company would also take out a
the HoT provided for the two sides to conduct secured commercial loan worth $13.5mn, with
exclusive negotiations with each other until a coupon of 11% and a term of 12 years.
December 31. Sound Energy did not comment further on One of the
The goal of these discussions, the statement the talks with its local partner. It did say, though,
said, is for Sound Energy to negotiate “agree- that it intended to take a final investment deci- agreements the
ments for both the purchase of LNG to be pro- sion (FID) on Phase 1 Development in the sec-
duced from the TE-5 Horst development, as well ond half of 2020. Additionally, it stated that it was companies will
as the partial financing of the Phase 1 Develop- making progress in negotiations with potential
ment by the partner.” The company is doing so contractors with respect to the design, procure- discuss is a gas
while also drawing up plans for Phase 2 Develop- ment, construction and operation of the micro- sales deal.
ment that envision the construction of a 120-km LNG plant that will be built during the first stage
pipeline and processing facility at Tendrara. of the project.
One of the agreements the companies will Mohammad Seghiri, the CEO of Sound
discuss is a gas sales deal that calls for Sound Energy, expressed satisfaction with recent
Energy to extract, refine, liquefy and sell to its developments. “We are delighted to announce
Moroccan partner the equivalent of 100mn the signature of these heads of terms and the
cubic metres per year of gas over a period of award of exclusivity for the purchase of LNG
10 years. The proposed document would also from the TE-5 Horst,” he said, according to
have take-or-pay provisions under which the the company statement. “In spite of challeng-
Moroccan firm would have to take delivery of ing current market conditions, we have made
at least 90 mcm per year of gas. It would set the significant progress, and these heads of terms
price of the gas “within a range of $7 to $9 per mark an important step forward towards the
mmBtu with an indexed formula using a com- delivery of the company’s phase 1 production
bination of the European Title Transfer Facil- development plan for the TE-5 Horst at the
ity and United States Henry Hub benchmark Tendrara concession.”™

Week 26 03•July•2020 www. NEWSBASE .com P13