Page 5 - AfrOil Week 25

AfrOil InvEstmEnt AfrOil
Sound plans cash raise amid Moroccan sale hopes
moRoCCo
SOUND Energy is cutting costs and raising cash as it seeks to solve the problem of its tE-10 well, in eastern Morocco, owing less than expected.
On June 18, the minnow said it would seek to raise US$3 million through a placing, with net proceeds of around US$2.7 million. is is intended to shore up its cash holdings while it considers the marketing of its eastern Moroccan assets, which should be nished by the end of 2019. Sound said it would issue 23.83 million shares under the placing, with admission to London’s junior AIM expected to take place on June 24.
It has also cut costs through a reduction in the salaries of all executive directors, by around 29%, for six months from August 1.
Sound began setting out its plan to cut run- ning costs on May 21. As of mid-May, it had around US$14 million in cash, with two of its three exploration wells concluded. e cuts were to include reducing staff numbers and costs, with a plan to reduce general and administra- tive spending over the year by 50%. Plans for the third well were also put on hold.
e cost cuts were announced at the same time as the disappointment at the tE-10 well. Gas did ow to surface, the company said, but not in commercial rates during well stimulation.
It had said that the most likely risk for drilling in this area was the tAGI reservoir quality – and these fears appear to have been borne out.
Sound’s CEO, James Parsons, acknowledged this was a disappointment but said the company remained “confident in the potential of our eastern Morocco basin”. A statement the next day took a slightly di erent tack, saying that the board now considered this to be the right time to “explore the monetisation option” on its eastern Moroccan assets. It has taken on Rothschild & Co. to explore sale plans before the planned nal investment decision (FID).
e minnow had been planning to take FID on its tE-5 Horst discovery by the end of the year.™
Sunset slates Tunisia talk
tunIsIa
SUNSEt Paci c Petroleum, a Canadian-listed minnow running short of cash, has been forced to deny allegations of a deal with China National Petroleum Corp. (CNPC) on its Ben Khedechef permit.
Sunset, on June 21, said a “false document” had been circulated to some of its shareholders and to its lawyer’s o ce. “ is false document has obvious spelling errors and non oil and gas terminology, which are similar to recent internet chat room postings and an unsolicited so-called analyst coverage report, which the company has previously uncovered and denied.”
e company issued a management cease trade order – preventing executives from trading in its shares – on May 1. is decision was taken following its inability to prepare its annual ling by the April 30 deadline. Sunset acknowledged that it had insu cient cash to pay for the required audit, which had forced it
to postpone this ling. In mid-June, it said that it had secured a private loan in order to pay the auditor, with work expected to be completed by July.
the debunked rumour said CNPC had signed a letter of intent with Sunset on the tuni- sian area. e Chinese company was said to have o ered US$30 million for the rights to the area, with Sunset required to accept or move into the second phase of work on the licence, with a cost of US$100 million. e report went on to link this alleged deal to China’s Belt and Road Initiative.
According to Sunset, it was awarded the Ben Khedechef permit in May 2016, with the area formerly known as El Hamra.
Entreprise tunisienne d’Activités Pétrolières (EtAP) lists the Beni Khedache permit – another name for the licence – as being open for bidding.™
Week 25 25•June•2019 w w w . N E W S B A S E . c o m P5