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Sound Energy signs HoT with Moroccan

firm for micro-LNG project

MOROCCO UK-LISTED Sound Energy has taken a step statement added.
towards teaming up with a local partner to dis- The other agreement slated for discussion
Sound Energy has tribute and market production from the small- provides for the Moroccan firm to help finance
signed a heads of terms scale gas liquefaction plant it intends to build at the Phase 1 Development project at Tendrara.
(HoT) with a Moroccan the Tendrara licence area in eastern Morocco. The proposed terms involve a share subscription
firm for its micro-LNG In a statement, Sound Energy said it had under which the partner would pay GBP2mn
plan. 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
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-
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
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-
while also drawing up plans for Phase 2 Develop- ment, construction and operation of the micro-
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 10 award of exclusivity for the purchase of LNG
years. The proposed document would also have from the TE-5 Horst,” he said, according to the
take-or-pay provisions under which the Moroc- company statement. “In spite of challenging
can firm would have to take delivery of at least current market conditions, we have made signif-
90 mcm per year of gas. It would set the price of icant progress, and these heads of terms mark an
the gas “within a range of $7 to $9 per mmBTU important step forward towards the delivery of
with an indexed formula using a combination of the Company’s phase 1 production development
the European Title Transfer Facility and United plan for the TE-5 Horst at the Tendrara Conces-
States Henry Hub benchmark indexes,” the sion.” ™

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