Sound launches farm-out search for Morocco's Tendrara Phase 2
Sound Energy has launched the formal farm-out process for the second phase of the Tendrara gas project in Morocco, the London-listed company announced on August 9.
The junior developer is seeking a co-investor for the Tendrara production concession and the surrounding Greater Tendrara and Anoual exploration permits, and has hired Edinburgh-based financial advisor Gneiss Energy to manage the process.
In late June Sound also mandated Moroccan bank Attijariwafa to arrange a long-term senior debt facility worth up to $250mn, to cover most of the gross $330mn cost of the project. In its latest update, the company said it continued to make progress with a number of external banking advisors and was seeking to negotiate binding terms for the facility within 120 days. It is also looking at alternative financing solutions for the remaining $60mn it needs to cover relating to its 75% interest in the project. Morocco's state-owned ONHYM holds a further 25%.
Funding from the farm-out will be used to pay not only for Phase 2 development costs, but also an exploration and appraisal drilling campaign at the Greater Tendrara and Anoual exploration permits. The company has already shortlisted several drilling targets within the Trias Argilo-Gréseux Inférieur (TAGI) gas reservoir, including M5, SBK-1 and TE-4.
"Our re-evaluation of the potential of the Greater Tendrara and Anoual exploration permits has high-graded three drilling targets, two of which have previously encountered gas shows," Sound chairman Graham Lyon commented. "We believe mechanical stimulation is the key to unlocking the potential of the TAGI gas reservoir, as we have done at the TE-5 Horst discovery."
Potential discoveries could be commercialised using infrastructure already planned as part of the development, he said.
Sound issued a notice to proceed to contractor Italfluid Geoenergy in February to begin work on a micro-scale LNG plant that will be built as part of Tendrara's first phase of development. The second stage of Tendrara's development is significantly larger in scale, and will involve the laying of a 120-km pipeline to link the concession with the Maghreb-Europe gas system.