Sound Nears Deal on Moroccan Stake Sale
Morocco-focused Sound Energy has reached a heads of terms (HoT) agreement with a private UK-registered company on the partial sale of its gas assets in the east of the country, it said in a London stock exchange filing on November 6.
Sound put its Moroccan operations, including the main Tendara concession up for sale in May. It then entered into non-disclosure agreements with 23 potential buyers, resulting in a number of non-binding offers.
Under the HoT deal, the unidentified UK investor has secured an exclusivity period until February 14 2020 to complete its due diligence and finalise a sales and purchase agreement to acquire a 24.2% stake in Sound’s eastern Moroccan assets for $112.8mn. This sum comprises a $54.3mn payment in cash and $58.5mn to cover Sound’s share of capital costs to bring the Tendara concession into production.
If the deal is closed, Sound will be left with a 23.3% share. But the purchaser will have a one-year option to acquire a further 9% on the same terms.
"The proposed transaction being progressed on an exclusive basis funds development of the Tendara project, provides early monetisation of a substantial part of our established gas resources and retains upside for our shareholders through both future gas production and further exploration drilling,” Sound chairman Simon Davies said.
Sound has not yet taken a final investment decision at Tendara, but it estimates that the concession could yield 60mn ft3/day of gas under a mid-case scenario. It recently struck a preliminary deal to sell some of this gas to a local state power company.