Sound Energy Tags Moroccan Bank To Arrange Tendrara Financing

Sound Energy has entered into an Arrangement and Mandate letter with Attijariwafa bank of Morocco concerning the arrangement of debt financing for the development of Sound Energy's Tendrara Production Concession.

Under the agreement, the Attijariwafa bank of Morocco has been mandated, and provided with exclusivity by the company for eight months, to arrange a long-term senior debt facility with a term of no more than 12 years of up to 2.250 billion Moroccan dirhams (approximately $250 million) for the partial financing of the currently estimated 3.000 billion Moroccan dirhams (approximately $330 million) phase 2 development cost of the Tendrara Production Concession.

During the term of exclusivity, the parties will seek to negotiate binding terms for the financing within 120 days of entry of the agreement. The agreement envisages that any financing arranged under the agreement may be provided directly and/or partially underwritten directly by the arranger or by third parties.

"Today's announcement confirms the support Sound Energy has with local financiers to undertake the Tendrara pipeline project development. Attijariwafa bank is a leading bank in Morocco and has provided Sound Energy with a compelling case to seek to provide most of the Project Finance for the development,” said Graham Lyon, Sound Energy's Executive Chairman.

“The company is also progressing potential vendor financing, secondary subordinated debt, and partial asset disposal options to fulfill the remaining element of Project financing required to achieve year-end FID. This mandate is a significant step towards reaching the Final Investment Decision unlocking further the value of Tendrara Concession to Sound Energy shareholders, which can aid the provision of economical and secure gas supply for the local Moroccan power production and domestic markets. Domestic gas supply remains a highly credible energy source for Morocco amongst the difficult geopolitical situation of international energy supply,” he added.

Sound Energy is looking to develop the Tendrara Production Concession in two phases, with the first being a micro-LNG plant that utilizes the existing well stock of TE-6 and TE-7, with additionally the drilling of one new well as required to maintain the ten years of production plateau.

The micro-LNG plant is to be designed, constructed, commissioned, operated, and maintained by Italfluid with guarantees for plant operability and delivery.

The second phase would include a 20” – 74.5-mile Tendrara Gas Export Pipeline (TGEP) that would tie into the existing GME pipeline.

The project would have 70 mmscf/d raw gas CPF processing capacity and Sound Energy has already signed a Gas Sale Agreement with ONEE (Office National de l'Electricite et de l'Eau potable) in November last year, with a minimum volume of 0.3 bcm/year. Sound Energy plans to drill six horizontal wells for Phase 2 first gas.

To contact the author, email andreson.n.paul@gmail.com