Sound Energy having a gas in the Maghreb

Greenbury could have snaffled those same shares for around 18p this time last year, prior to a succession of positive updates on the Tendrara licence in Morocco, in which Sound holds a 55 per cent working interest. TE-8 is the third well it has drilled on the licence after the successful TE-6 and TE-7 wells, whose production tests showed commercial gas volumes and flow rates. Although the TE-8 drilling, conducted some 12km from the main Tendrara operations, came up short of recent wells in terms of reservoir characteristics - described as "tight" and probably requiring mechanical stimulation for production - it did confirm a significant extension of the Tendrara field. Analysts at WH Ireland deemed drilling at TE-8 a "mitigated success", chiefly because the geological structures encountered made it more difficult to assess commercial prospects and deliver a meaningful update on volumes of gas in place, although that could follow shortly.

The financials are largely irrelevant at this point beyond the fact that £10.9m was spent on drilling and analysis through the period and the company had £29.4m in cash at the end of December, bolstered by a €28.8m (£24.8m) bond issue to Greenbury midway through last year.

Post-period, Sound Energy entered into a non-binding agreement to acquire all of Oil & Gas Investment Fund's (OGIF) assets in Eastern Morocco - which includes 20 per cent in Tendrara, 75 per cent of the Meridja project and a 75 per cent stake in acreage close to Tendrara. In exchange, OGIF - a fund controlled by seven Moroccan financial institutions - took a stake of around 29 per cent of Sound Energy’s enlarged share capital. OGIF has previously expressed an interest in funding a new pipeline connecting Tendrara to the Gazoduc Maghreb Europe pipeline.

Prior to the TE-8 drilling report, FinnCap gave a valuation of 94p a share based on preliminary volumetric estimates.