TIDMSOU
RNS Number : 8359G
Sound Energy PLC
29 July 2021
29 July 2021
Sound Energy plc
("Sound Energy" or the "Company")
Phase 1 Development LNG Sale & Purchase Agreement and Equity
Subscription
Sound Energy, the Moroccan focused upstream gas company, is
delighted to provide the following update in relation to the
Company's micro liquified natural gas ("mLNG") phase 1 development
plan for the TE-5 Horst development (the "Phase 1 Development") at
the Tendrara Production Concession (the "Concession").
Highlights
-- Ten (10) year take or pay LNG sale and purchase agreement entered into with Afriquia Gaz
-- GBP2 million equity placing with Afriquia Gaz cementing the
strategic alignment with Sound Energy PLC
-- Improved envisaged Afriquia Gaz loan note financing terms
Graham Lyon, Sound Energy's Executive Chairman, commented:
"We are delighted to announce the signature of a binding ten
year LNG sales agreement for the Phase 1 development covering the
sale of not less than 100 million cubic metres of gas in a
liquified form per year. In addition, the execution of the
previously announced equity subscription agreement and the GBP2
million equity placing cements the strategic alignment between
Sound Energy and Afriquia Gaz. This is a key milestone in moving
forward towards the final investment decision and notice to proceed
for the Tendrara Phase 1 Development.
In recognition of the alignment between Sound Energy and
Afriquia Gaz, I am also pleased that we announce today that the
parties are working towards improved terms in relation to the
Afriquia Gaz loan note upon which the LNG sale and purchase
agreement is, inter alia, conditional. We plan to conclude this
loan note ahead of finalising the contract to construct the
plant.
By establishing clear paths both to market for our gas and to
our financing of Phase 1 Development, today's announcement together
with the recently announced Schlumberger Silk Route Service
acquisition not only mark critical milestones for the Company but
underscore our commitment to Sound Energy Shareholders to deliver
upon our objectives and to create value through innovative
commercial arrangements."
Execution of LNG Sale and Purchase Agreement
The Company is pleased to announce that Sound Energy Morocco
East Limited ("SEMEL"), its wholly owned subsidiary, has entered
into a binding and fully termed conditional LNG sale and purchase
agreement with Afriquia Gaz S.A. ("Afriquia"), pursuant to which
SEMEL will sell not less than 171,000 cubic metres of LNG per year
(approximately 100 million cubic metres a year of gas to be
produced and liquefied from the Phase 1 Development) on behalf of
the Concession joint venture (the "LNG SPA").
Under the LNG SPA, SEMEL will commit, for 360 days of each year
over a period of 10 years from first gas, to provide to Afriquia a
daily quantity of between 475 and 546 cubic metres of LNG, and
Afriquia will commit to an annual minimum "Take or Pay" quantity of
475 cubic metres per day of LNG.
Pricing under the LNG SPA will be within a range, the floor
price being US $6 per mmBTU and the ceiling price commencing at $8
per mmBTU and increasing during the course of the LNG SPA to $8.346
per mmBTU and will be determined using an indexed formula which
applies a combination of the European Title Transfer Facility and
United States Henry Hub benchmark indices. The point of sale to
Afriquia will be at the Tendrara (TE-5) field location following
processing and liquefaction, with Afriquia having responsibility
for transportation and delivery to its downstream customers.
The LNG SPA is conditional upon fulfilment of certain conditions
precedent including:
-- The approval of the LNG SPA by the Concession joint venture;
-- The execution of a loan note agreement between the Company
(as borrower) and Afriquia (as lender) setting out the terms of an
US$ 18 million secured loan with a 6% annual coupon and a 12 year
term;
-- The execution of a project contract with Italfluid Geoenergy
S.r.l ( Italfluid) for the provision of a gas processing and
liquefaction facility relating to the Phase 1 Development;
-- Receipt by Afriquia of regulatory approvals for the
transportation of LNG by tankers and the sale of LNG; and
-- Afriquia having secured in principle agreement from
downstream buyers to purchase not less than 60% of the Annual Take
or Pay Quantity under the LNG SPA
such conditions to be satisfied by 29 October 2021.
Execution of Equity Subscription Agreement
In addition, the Company is pleased to also announce, subsequent
to its announcement on 29 June 2020, that it has entered in an
equity subscription agreement with Afriquia pursuant to which
Afriquia has made a GBP2.0m subscription to the Company in
consideration for which the Company has today issued for
159,731,651 new ordinary shares in Sound Energy at a price of
1.2521 pence per new ordinary share to Afriquia.
Application will be made for the 159,731,651 new ordinary
shares, which will rank pari passu with the Company's existing
ordinary shares, to be admitted to trading on AIM ("Admission').
Dealings in the new ordinary shares
are expected to commence on or around 8:00a.m. on 4 August 2021.
Total Voting Rights
On Admission the Company will have 1,628,282,948 ordinary shares
in issue. No ordinary shares are held in treasury. The figure of
1,628,282,948 may be used by the Company's shareholders as the
denominator in the calculations by which they will determine if
they are required to notify their interest in, or change to their
interest in, the Company under the Financial Conduct Authority's
Disclosure Guidance and Transparency Rules.
For further information please contact:
Vigo Communications - PR Adviser Tel: 44 (0)20 7390 0230
Patrick d'Ancona
Chris McMahon
Sound Energy chairman@soundenergyplc.com
Graham Lyon, Executive Chairman
Tel: 44 (0)20 7397 8900
Cenkos Securities - Nominated Adviser
Ben Jeynes
Russell Cook
SP Angel Corporate Finance LLP - Broker
Richard Hail, Sam Wahab Tel: +44 (0)20 3470 0470
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulation (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
mmBTU means million British thermal units
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END
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