Interactive Investor

The Oil Man: Sound Energy

14th January 2016 09:44

Malcolm Graham-Wood from interactive investor

Sound Energy

A flash blog this morning on Sound Energy, which has announced the acquisition of the Sidi Moktar licences from Maghreb Petroleum. This deal had been announced on 22 October 2015 as an option which has since been deemed unnecessary.

Sound has acquired a 25% WI in three onshore gas permits, which contain a material existing gas discovery in Kechoula and exploration prospects. Sound are also carried until first gas on the licences, so will save significant expenditure, but, should the operator find the going hard, it is easy to imagine a change of management.

This is Sound's second asset in Morocco, they also have - uncorrelated - Tendrara, in which they are in partnership with Schlumberger; indeed, it is easy to imagine a situation whereby the partnership might work at Sidi Moktar as well.

Sound are paying for this with 21.7 million shares plus a 1.6% NPI on future cash flows from Kechoula, which, given the robust nature of the stock, is good management and a prudent use of cash reserves. Sound's management are continuing to broaden the portfolio across the region and, despite a difficult market, finding opportunities which arise from distressed sellers of assets.

Whilst on the subject of management, the company has strengthened the executive with two new non-board appointments. Leonardo Salvadori joins as Business Development Director and Mary Hood as CFO.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.