Sound Pens MoU to Sell Moroccan Gas
Morocco-focused Sound Energy has signed a memorandum of understanding (MoU) to sell 0.5bn m3/yr of gas from its Tendrara concession to a state power company.
The aim is to sign a finalised gas sales contract with Office National de l’Electricite et de l’Eau Potable (ONEE) by year-end, Sound said in a London stock exchange filing on October 30. The MoU states this contract would last for an initial 10 years and then automatically renew for additional five-year periods unless one of the partners decides to terminate it.
Sound and ONEE have agreed that the first 0.3bn m3 of annual gas supply will be sold at a fixed price, generating $84mn in first-year gross revenues. These deliveries would be made under take-or-pay and send-or-pay conditions, providing greater stability so that funding can be sought for hook-up infrastructure. The two sides have not yet agreed on pricing for supplies above the 0.3bn m3 threshold.
Sound holds a 47.5% stake in the Tendrara concession, with US oilfield services giant Schlumberger holding 27.5% and state entities control the remaining interest. Development plans project that the concession could produce up to 60mn ft3/day (0.617bn m3/yr) under a mid-case scenario, but a final investment decision has not yet been taken.
Sound put Tendrara and its other east Moroccan operations up for sale in May, after two wells failed to achieve commercial rates of gas flow. It said the time was right to explore monetisation options and it had hired Rothschild & Co to help it find a buyer before taking FID.