Sound Energy notes recent Moroccan media speculation in relation to the Company's proposed micro liquefied natural gas ("mLNG") phase 1 development project for the TE-5 Horst (the "Phase 1 Development") at the Tendrara Production Concession (the "Concession").
As previously announced the Company is, pursuant to a letter of exclusivity announced by the Company on 23 December 2020, in exclusive discussions with Italfluid Geoenergy S.r.l ("Italfluid") pursuant to which the parties have agreed to use their reasonable endeavours to negotiate and enter into a binding project contract (the "Project Contract") which will on entry commit Italfluid to design, construct, commission, operate, maintain and let to the Group a mLNG Plant (the "mLNG Plant") which can produce LNG. The Company is not party to Italfluid's own financing arrangements. The mLNG Plant, which would also treat and process raw gas from the Phase 1 Development prior to liquefaction, is a substantial part of the surface facilities required to be built and operated as part of the Phase 1 Development. As previously announced on 23 December 2020 Sound contract negotiations with Italfluid include part capital and part leasing arrangements to cover provision of plant and Operation and Maintenance contracts.
Italfluid is an integrated service company which provides certain upstream petroleum services, including the design, construction, commissioning and maintenance of process plants and hydrocarbon processing, including gas liquefaction to produce liquified natural gas.
The Company confirms that exclusive discussions with both Italfluids and with the prospective Phase 1 Development LNG offtaker (the "Offtaker") continue positively and are well advanced, with a view to seeking to reach agreement contemporaneous agreement in due course. However, the Company cautions that no agreements have yet been reached and that exclusivity between Sound Energy, Italfluid and the Offtaker is expected to expire, as previously announced, on 31 March 2021. Additionally, the negotiation of and entry into binding agreements remains subject to the approval of the Concession joint venture partners and to a Final Investment Decision on the Phase 1 Development being taken.
Negotiations between the parties will continue following the expiry of exclusivity and further announcements will be made, as appropriate, in due course.