Sound Energy PLC Eastern Morocco: FEED Award (6121Q)
07 June 2018 - 4:01PM
UK Regulatory
TIDMSOU
RNS Number : 6121Q
Sound Energy PLC
07 June 2018
7 June 2018
Sound Energy plc
("Sound Energy" or the "Company")
Eastern Morocco: FEED Award and Heads of Terms for 20 inch
Pipeline and Production Facilities
Sound Energy, the Moroccan focused upstream gas company, is
delighted to announce signature of heads of terms with a consortium
comprising Enagas, Elecnor and Fomento (the "Consortium") for the
front end engineering and design ("FEED") and conditional
construction and financing of all the infrastructure required,
including a 20 inch pipeline and facilities, to commercialise the
Company's existing gas discovery in Eastern Morocco.
Following a competitive process and negotiation, the Consortium
has been awarded the FEED and exclusivity to finalise the funding,
construction and operation for both a 20 inch pipeline and the
central processing facility under a 'build-own-operate-transfer'
("BOOT") structure.
Sound Energy's CEO James Parsons commented:
"This is a hugely important milestone for our Company and I am
delighted that Sound Energy is playing such a pivotal role in
unlocking the first significant scale indigenous gas production in
Morocco.
For Sound Energy and its shareholders, this innovative BOOT
structure means that the Company is now firmly on the pathway to
commercialising our existing and future gas resources in Eastern
Morocco, all without additional equity dilution."
The Consortium will shortly begin front end engineering and
design ("FEED") on a gas processing plant and a 20 inch gas
pipeline intended to deliver an estimated 60 mmscf/d of gas to the
Gas Maghreb-Europe pipeline system, some 120km away (the
"Project").
In parallel with the FEED, the Consortium will finalise plans to
secure access to some US$184 million of development capital that
will be required to fund the Project.
Subject to the completion of FEED, and conclusion of a final
BOOT contract with associated debt funding put in place, the
Consortium will be responsible for the construction of the Project
and for its operation for a period of 15 years. In exchange, Sound
Energy and its partners will pay an annual fee to the Consortium
with effect from the commencement of commercial gas production. The
fee payable by the Company will be agreed post FEED but will be
subject to an open book target fee calculated by reference to a
target internal rate of return for the Consortium and to a 'not to
exceed' fee of US$45 million per annum. At the end of a 15 year
operating period, and subject to a possible extension by the
parties, the ownership of the Project facilities will be
transferred to Sound Energy and its partners, or to another entity
appointed by the partnership, at no cost.
FEED is expected to last for some six months, following which
the Company will be in a position to take the Final Investment
Decision ("FID").
Upon signature of the BOOT contract, Sound Energy and its
partners expect to pay a success fee to Advisory & Finance
Group Investment Bank, the Company's advisor in Morocco.
The Consortium has agreed to pay Sound Energy a break fee of
US$1.5 million, and to provide Sound Energy and its partners with
the FEED at cost, in the event that the BOOT contract is not
concluded to the Consortium's satisfaction. Sound Energy and its
partners have agreed to buy out the FEED from the Consortium for
US$2.2 million, should the Company elect not to proceed with the
Consortium.
Today's heads of agreement is subject to approvals of the
Company's partners. The final BOOT contract will be subject to both
parties Board and regulatory approvals.
Further announcements will be made, as appropriate, in due
course.
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information please contact:
Vigo Communications - PR Adviser Tel: +44 (0)20 7390 0230
Patrick d'Ancona
Chris McMahon
Kate Rogucheva
Sound Energy j.parsons@soundenergyplc.com
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser Tel: +44 (0)20 7131 4000
Azhic Basirov
David Jones
Ben Jeynes
RBC - Joint Broker Tel: +44 (0)20 7653 4000
Matthew Coakes
Martin Copeland
Laura White
Tel: +44 (0)20 3031 2000
Macquarie Capital (Europe) Limited
- Joint Broker
Alex Reynolds
Nick Stamp
mmscf/d means million standard cubic feet of gas per day.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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