Sound Energy Closes Divestment of Moroccan Assets

London-based Sound Energy Plc has completed the partial divestment of its Moroccan assets through the sale of its entire issued share capital in Sound Energy Morocco East to Managem SA.

The total value of the transaction is up to $45.2 million (GBP 35.65 million), Sound Energy said in a news release.

Under the terms of the sales and purchase agreement (SPA), Sound Energy retains a 20 percent interest in the Tendrara Production Concession via Sound Energy Meridja (SEM) and a 27.5 percent working interest in the Grand Tendrara and Anoual Exploration Permits through Arran Energy Holdings.

The sale of the entire share capital of SEME, with an effective date of January 1, 2022, will result in Managem acquiring a significant interest in the group's Moroccan assets. These include a 55 percent stake in the concession.

Managem will acquire a 47.5 percent interest in the Grand Tendrara Permit and a 47.5 percent interest in the Anoual Exploration Permit.

The agreement further includes a contingent production payment and reimbursement for past expenditures incurred by Sound Energy Morocco East (SEME).

According to the release, Managem has committed to funding phase two development of the Tendrara Production Concession on behalf of SEM and will also finance two exploration wells for Arran Energy Holdings, continuing the work programs for the permit areas. Sound Energy said it plans to provide transitional support to Managem to ensure a smooth handover of operations.

The SPA consideration payable to and on behalf of the group includes several components, primarily linked to future developments and exploration activities in the group's Moroccan assets, Sound Energy noted.

Managem will fund up to $24.5 million as a net carry for the group's remaining 20 percent interest in the Tendrara Production Concession phase two development. Additionally, there is contingent consideration of $1.5 million, which will be payable to the group no later than one year after the first gas from the concession phase two development, according to the release.

The agreement also includes a $3.6 million net carry to fund the group's remaining 27.5 percent interest in the Grand Tendrara Permit area for drilling exploration well SBK-1, as well as a $2.6 million net carry to fund the group's remaining 27.5 percent interest in the Anoual Permit area for drilling exploration well M5.

Sound Energy Executive Chairman Graham Lyon said, “We are delighted to have completed the sale of SEME Limited, and we are pleased to welcome Managem as its new owner. I would like to thank all those involved from both companies, our advisors, ONHYM [National Office of Hydrocarbons and Mines] and the Ministry of Energy. This is a transformative transaction for Sound Energy, unlocking significant value and we look forward to the new chapter of Tendrara development and exploration activity in Morocco”.

Sound Energy announced the divestment in June 2023. As of December 31, 2023, SEME had total assets of $41.45 million (GBP 56.98 million).

Managem describes itself as an international mining group with resolutely African roots, with a presence in seven countries across the continent. Initially present in metals such as cobalt, copper and zinc, it has since diversified into precious metals, including silver and gold.

Sound Energy is a transition energy-focused business. Its Micro LNG project aims to bring much needed gas supply to Morocco, reducing the reliance on imported liquefied petroleum gas (LPG), and playing an important role in the transition to lower carbon energy sources.

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