Company Announcements

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulation ("MAR") (EU) No. 596/2014, as incorporated into UK law by the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

12  December 2022

Sound Energy plc

("Sound Energy" or the "Company")

Project Financing Update

Sound Energy, the transition energy company, is pleased to provide a project financing update in relation to the Company's Tendrara Production Concession, onshore Morocco.

Partner and possible Farm-Out Update

The Company announced on 9 August 2022 that it had initiated a formal farm-out process to identify a partner for the Tendrara Production Concession and the surrounding Grand Tendrara and Anoual exploration permits.  The objective of the area-wide approach is to seek a co-investing partner in each licence to both fund the expected balance of Phase 2 development costs to first gas of approximately US$60 million net to the Company's working interest in the Tendrara Production Concession and also to progress an exploration and appraisal drilling programme in the Grand Tendrara and Anoual exploration permit areas (the "Process").

Following strong levels of interest in the Process from a wide range of credible and well-funded parties, the Company has now received quantified non-binding indications of interest in the Process from several parties and, following review, the Company intends to engage in more detail with the relevant parties. Further announcements will be made, as appropriate, in due course.

Phase 2 Development - EPC Contractor

In parallel with the farm-out process in progress, the Company has been developing relationships with various vendors to conduct Engineering, Procurement, Construction ("EPC") and potentially Operations and Maintenance activities for the Phase 2 development of the Tendrara Production Concession. Advanced negotiations are ongoing, with suitable Consortia to undertake such work identified.

Phase 2 Development - Lead Finance Arranger Mandate Update

The Company announced on 23 June 2022 that it had entered into an Arrangement and Mandate letter ("Mandate") with Attijariwafa bank (the "Arranger"), a Moroccan multinational bank and one of the leading banks in Morocco, under which the Company mandated the Arranger in relation to the arrangement of project debt financing for the development of Sound Energy's Tendrara Production Concession (the "Agreement").

Pursuant to the Agreement, the Arranger was mandated, and provided with exclusivity by the Company for a period of eight months, to arrange a long-term project senior debt facility with a term of no more than 12 years of up to 2.250 billion Moroccan dirhams (approximately US$210 million using current exchange rates) for the partial financing of the currently estimated approximately US$330 million total Phase 2 development cost (including development wells post-first gas) of the Tendrara Production Concession (the "Financing"). Under the terms of the Mandate, as amended, the parties agreed to seek to negotiate binding terms for the Financing by 15 December 2022.

Good progress continues to be made with the Arranger who has recently commenced technical due diligence. To provide sufficient time for this technical diligence process to complete, the parties have entered into a further amendment to the Mandate in order to extend the date by which they will seek to negotiate binding terms for the Financing to 15 March 2023. The exclusivity provided to the Arranger under the Mandate to arrange the Financing has also been extended to 1 June 2023.

Commenting, Graham Lyon (Executive Chairman) said:

"The receipt of credible interest from a number of industry participants in joining the Tendrara Production Concession development and surrounding exploration acreage is encouraging and the Company will now spend time to fully evaluate each and the structure of any potential future transaction.  Identifying the Consortium for the Phase 2 development Engineering work is also key as is the structure by which the Company engages all parties.

"Understandably Attijariwafa bank require more time for their external experts to get familiar with the project as this would be the first Moroccan bank led gas development financing. We look forward to providing further positive updates as the various project milestones are delivered."

For further information please contact: