Oil & Gas

Sound Energy awarded production concession for Tendrara gas discovery

Sound Energy, the Morocco focussed upstream gas company has announced the award of the production concession relating to the Tendrara gas discovery in Eastern Morocco by the Moroccan Ministry of Energy.

The production concession award covers an area of 133.5 Km2 and follows an application by the Company and its partners in June 2018. The field development plan underpinning this award includes:

  • The drilling, pre-first gas, of up to 5 new horizontal development wells, in addition to recompletion of the existing TE-6 and TE-7 wells;
  • The construction of a gas treatment plant and compression station (CPF) and a 120 km 20-inch Tendrara Gas Export Pipeline (TGEP) connecting the CPF and the delivery point to the Maghreb-Europe Gas Pipeline. As already announced, front end engineering and design (FEED) is underway for both the CPF and TGEP;
  • The achievement of first gas in approximately two years at an expected mid case production rate of around 60 million standard cubic feet per day over a minimum period of 10 years during which it is currently estimated, subject to optimisation of drilling plans, that an additional 10 to 13 wells will be drilled to maintain this production rate.

The Company expects to be in a position to take final investment decision on the Tendrara development once key development milestones have been secured, including a gas sales agreement, FEED development capital funding and local regulatory administrative formalities.

On 7 June, 2018, Sound announced that it had signed heads of terms with a consortium comprising Enagas, Elecnor and Fomento for the FEED and conditional construction and financing of all the infrastructure required, including the TGEP and CPF under a ‘build-own-operate-transfer’ structure.

“I am delighted with the award of the first development concession in Eastern Morocco, which is a critical step in commercialising our gas discovery. The Company continues to make excellent progress on all fronts, including FEED, the gas sales agreement and ground works at TE-9,” James Parsons, Sound Energy’s CEO, commented.

Further to the Company’s announcement on 23 July 2018, Sound Energy and its partners, including Schlumberger, have signed a petroleum agreement covering the Tendrara and Matarka areas (the ‘Greater Tendrara Petroleum Agreement’). The Greater Tendrara Petroleum Agreement has been signed by L’Office National des Hydrocarbures et des Mines (ONHYM), the Moroccan State regulator for petroleum operations and it will come into force on approval of the Moroccan Energy and Finance Ministries.

The new Greater Tendrara Petroleum Agreement covers an area of approximately 14,500 km2 extending across eastern Morocco and surrounding the development concession application area relating to the Tendrara gas discovery. The new Greater Tendrara Petroleum Agreement will unite the areas covered by the Tendrara petroleum agreement granted in April 2013 and the Matarka reconnaissance licence granted in July 2017.

Upon the Greater Tendrara Petroleum Agreement becoming effective, the Company will hold an operated 47.5% position. The remaining 52.5% will be respectively held by Schlumberger (27.5%) and ONHYM (25%).

The Greater Tendrara Petroleum Agreement will have a duration of 8 years from award and will be divided into 3 phases, with each phase having pre-agreed work commitments. The work commitments under the Greater Tendrara Petroleum Agreement will be:

  • Initial period of 4 years: 2 exploration wells with the minimum Triassic objective. It is expected that the approaching TE-9 and TE-10 wells will fulfil this commitment;
  • Optional first complementary period of 2 years: 1 exploration well with the minimum Triassic objective;
  • Optional second complementary period of 2 years: 1 exploration well with the minimum Triassic objective.

Sound Energy is a well-funded Mediterranean upstream company, listed on AIM, with cost covering production, a cornerstone investor, a strategic partnership with Schlumberger and an active and potentially transformational drill programme.

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