Sound Oil has announced a proposed farm-in to earn a 55% working interest in the onshore Moroccan licence, Tendrara, in exchange for funding three wells, only the first of which is a firm commitment.
We see Tendrara licence as offering multi-Tcf potential, as the licence contains two existing gas discoveries with potential upside from further appraisal and a number of additional exploration prospects. In our view this deal represents an excellent opportunity for Sound to both appraise and develop an onshore gas play in Morocco, broadening the group's strategy in Mediterranean gas whilst diluting its 100% exposure to Italy.
Sound oil has entered into a 30-day exclusivity agreement with oil and gas investment fund (OGIF) with a view to farming in to their 75% held Tendrara licence in Morocco. The Tendrara licence includes eight blocks over 14,500km2 located to the East of Morocco abutting the Algerian border. In exchange for a 55% working interest in Tendrara Sound has agreed to fund 100% of the cost of three wells, only the first of which is to be a firm commitment, which Sound estimates will cost £6m.