Sound Energy (LSE:SOU) has reported further progress at its Tendrara Phase I gas development in eastern Morocco, where operator Mana Energy has successfully flowed both the TE-6 and TE-7 wells. The wells have now fully tested their respective sections of the gas gathering system, completing a key element of the project’s surface infrastructure.
Operational and financial highlights
The company is preparing to commission nine on-site power generation engines, including seven gas-fired units that are expected to transition to using Tendrara gas in the near term. This switch is intended to reduce diesel consumption, lower operating costs and cut Scope 1 emissions, as Sound Energy continues to evaluate bridging finance options ahead of first gas production.
On the exploration front, Moroccan authorities have approved an extension to the complementary period of the Anoual Exploration Permits through to September 2028. As part of the extension, Sound Energy has committed to drilling the M5 exploration well targeting Triassic reservoirs, with the option to undertake further 3D seismic work and additional drilling. The agreement reinforces the company’s longer-term exploration position in a highly prospective area, while capping its cost exposure to the M5 well at US$2.57 million.
From an investment perspective, the company’s outlook remains constrained by weak financial fundamentals, including sizeable recent losses, rising leverage and sustained negative cash flow. Share price technicals are moderately supportive, with the stock trading above key moving averages and a positive MACD signal. Management guidance points to potential upside from near-term production and contracted gas sales, although balance sheet pressure and project timing risks remain significant. Valuation support is limited by negative earnings and the absence of dividend yield.
More about Sound Energy
Sound Energy PLC is a UK AIM-listed transition energy company focused on onshore gas exploration, development and production in Morocco, alongside renewable power generation initiatives. Its core assets are centred on the Tendrara gas field, where the company holds a 25-year development concession. Development plans include a micro-LNG project currently under construction and a larger Phase II piped gas scheme awaiting final investment decision, targeting industrial and power customers across a 28,000 square kilometre onshore permit portfolio in Morocco.
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