Sound Energy has confirmed the completion of the transaction for the partial divestment of its Moroccan assets through the sale of its entire issued share capital in Sound Energy Morocco East to Managem, for a total value of up to $45.2m (£35.65m).
The terms of the sale and purchase agreement were disclosed by the company on 14 June 2024.
Under the terms of the agreement, Sound Energy retains a 20% interest in the Tendrara Production Concession (concession) via Sound Energy Meridja (SEM), and a 27.5% working interest in the Grand Tendrara and Anoual Exploration Permits through Arran Energy Holdings.
Managem has committed to funding phase two development of the Tendrara Production Concession on behalf of SEM and will also finance two exploration wells for Arran Energy Holdings, adhering to the work programmes for the permit areas.
The agreement includes a contingent production payment and reimbursement for past expenditures incurred by Sound Energy Morocco East (SEME).
Sound Energy will provide transitional support to Managem to ensure a smooth handover of operations.
The sale of the entire share capital of SEME, with an effective date of 1 January 2022, will result in Managem acquiring significant interests in the Group's Moroccan assets. These include a 55% stake in the concession, with Sound Energy retaining a 20% interest through its subsidiary SEM.
Additionally, Managem will acquire a 47.5% interest in the Grand Tendrara Permit and a 47.5% interest in the Anoual Exploration Permit. Sound Energy will maintain a 27.5% interest in both permits through its subsidiary Arran Energy Holdings.
The SPA consideration payable to and on behalf of the group includes several components. These are primarily linked to future developments and exploration activities in the Group's Moroccan assets.
Managem will fund up to $24.5m as a net carry for the group's remaining 20% interest in the Concession phase two development.
Additionally, there is contingent consideration of $1.5m, which will be payable to the group no later than one year after the first gas from the concession phase two development.
The agreement also includes a $3.6m net carry to fund the group's remaining 27.5% interest in the Grand Tendrara Permit area for drilling the exploration well SBK-1, as well as a $2.6m net carry to fund the group's remaining 27.5% interest in the Anoual Permit area for drilling exploration well M5.
Additionally, with an effective transaction date of 1 January 2022, Managem has remitted $13.06m to the company as reimbursement for back costs related to the concession and the permits.
Sound Energy executive chairman Graham Lyon said: "We are delighted to have completed the sale of SEME Limited, and we are pleased to welcome Managem as its new owner. I would like to thank all those involved from both companies, our advisors, ONHYM and the Ministry of Energy. This is a transformative transaction for Sound Energy, unlocking significant value and we look forward to the new chapter of Tendrara development and exploration activity in Morocco."
