The most significant development is Sound Energy’s full repayment of its financial debt using the proceeds from the transaction. In its half-year report, the group said it had repaid all its term loans and bought back its outstanding eurobonds. By the end of August, its cash position had reached $9.8 million.
According to CEO Majid Shafiq, this represents a major change for the company, which now plans to use its resources to finance new opportunities rather than deal with the constraints of its former debt burden. Sound Energy said it is now looking for acquisitions of companies and assets capable of generating cash flow and expanding the group.
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Exit from Tendrara and Anoual
The transaction with Managem does not involve Tendrara alone. As part of the deal, Sound Energy also withdrew from the Anoual exploration permit, where it held a 27.5% stake, and relinquished all its remaining rights in the Grand Tendrara permit.
The exit significantly reduces Sound Energy’s exposure to eastern Morocco. The group nevertheless noted that the permits cover more than 19,000 square kilometers and, according to its own geological assessments, still have largely unexplored exploration potential. Only 13 wells have been drilled there to date.
The sale primarily allows Sound Energy to avoid future funding requirements related to the development of Tendrara, while monetizing its stake in the project before the final investment decision on its second phase.
The report also provides an update on the project’s status at the time Sound Energy exited.
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The first phase of Tendrara involves developing the TE-5 Horst field and a mini-LNG unit designed to supply industrial customers by road, with Afriquia Gaz responsible for transportation. Connecting the TE-6 and TE-7 wells is expected to bring commercial production to 10 million cubic feet per day.
The second phase calls for the construction of a 120-kilometer gas pipeline, notably to supply ONEE power plants. Sound Energy said the infrastructure should allow the region’s gas potential to be better exploited while reducing development costs for future discoveries.
Following Sound Energy’s exit from Tendrara, Anoual and Grand Tendrara, Sidi Moktar remains the main Moroccan exploration asset highlighted in the report.
Located in the Essaouira Basin, the permit covers 4,712 square kilometers and is 75% owned by Sound Energy. The group believes the deep Triassic and Paleozoic formations could hold significant potential. This assessment is based in part on the permit’s proximity to the Meskala gas field, operated by ONHYM.
Sound Energy nevertheless said additional seismic work is needed before the identified areas of interest can be converted into prospects that could be drilled.
The project also remains subject to discussions with ONHYM. The company said it received correspondence raising a claim concerning non-compliance with the minimum exploration work program set out for the initial permit period. Sound Energy said it has recognized the amounts it considers contractually due and is continuing discussions with ONHYM to regularize the situation.
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At the same time, the group is still seeking to sell part of its Sidi Moktar stake to a technically qualified partner, while negotiating with ONHYM to amend the permit duration or work program.
Solar at the heart of the new strategy
Freed from its debt and its exposure to Tendrara, Sound Energy now intends to move to the next level. The group said it is continuing to develop its solar activities in Morocco and is actively exploring acquisitions outside its current portfolio.
The stated priority is now assets capable of generating cash flow, with the aim of turning Sound Energy into a larger, diversified and revenue-generating energy company.
