Sound Energy has entered a non-binding heads of agreement to acquire Oil & Gas Investment Fund's (OGIF's) assets in Eastern Morocco after the successful completion of an extended well test.
OGIF is owned by a consortium of seven Moroccan financial institutions.
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The consortium’s Eastern Morocco assets include 20% interest in Tendrara, a 75% interest in Meridja and an application for a 75% position in the abandoned area in proximity to Tendrara.
Under the agreement, Sound Energy will pay 272 million new ordinary shares as consideration for this acquisition.
Following the issuance, the consideration shares will represent 29% of Sound Energy’s enlarged issued share capital.
According to the transaction, OGIF will agree to a 12 month lock-in for the consideration shares and a 36 month restriction on exceeding 29.9% ownership of the Sound Energy.
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By GlobalDataOGIF will also receive the right to appoint one non-executive director to the board of Sound Energy as long as it holds more than 10% of the latter’s ordinary share capital.
Sound Energy CEO James Parsons said: “We are pleased to have entered into heads of agreement with OGIF following the successful extended well test and I look forward to welcoming them to our shareholder register.
"I have worked closely with the OGIF team for more than 18 months now and their access to Moroccan debt capital and their relationship and influence in country are second to none.”
Both parties have also agreed to identify and secure a cost-effective and quality solution for the Tendrara infrastructure together. OGIF shareholders may need to fund the construction of a new pipeline linking Tendrara to the Gazoduc Maghreb Europe.
OGIF CEO Mohammed Benslimane said: “Morocco is a fast growing and low-risk emerging country with significant hydrocarbon potential. Sound Energy has already played a critical role in unlocking the Eastern Moroccan gas promise over the last eighteen months and we remain hugely impressed by James and his team.”
After the transaction, Sound Energy will own 75% of Tendrara and 75% of Meridja on a gross and net basis. The remaining 25% stake of Tendrara and Meridja will be with Morocco's Office National des Hydrocarbures et des Mines.
The acquisition is subject to the binding contract and approval of Sound Energy shareholders.
