Sound Energy PLC (LON:SOU) have seen their shares dive as the firm gave an update on its operations in Morocco.
The firm said that it has not yet seen proof of funds from a private energy firm who agreed to buy its assets in Morocco in November.
Sound Energy told the market that the deal had allowed the private firm to buy exclusivity on these assets and that due diligence had been completed.
The firm added that the buyer has not been able to show proof of funds, which meets the companies expectations.
Following this delay, the completion of the deal is now expected to be put back until the private energy firm can show that it has the capital to make the purchase.
Sound said: “The Purchaser has not yet demonstrated to the Company’s satisfaction the proof of funds required in order to advance the Proposed Transaction and nor has a sale and purchase agreement been finalized.”
Whilst this issue continues to develop, the firm said that they are prioritizing a “micro” liquefied natural gas production plan at the Te-5 Horst field on the Tendrara concession to generate early cash flow.
Sound Energy have remained confident for this field to produce gas results within the first few months of 2021, and as operations commence larger development procedures can happen.
While discussions with the potential purchaser continue, the board has been active in considering and refining in parallel other options to monetise its asset at Tendrara. We continue to believe that we have a valuable position in the Moroccan energy sector encompassing a significant discovery in Tendrara with exciting additional exploration upside potential,” said acting Chief Executive Mohammed Seghiri.
“The micro LNG development plan has been identified as an initial and rapid development strategy to prioritise early monetisation of the existing gas discovery, which can in turn facilitate a larger ultimate development. I look forward to reporting further on our progress in due course.”
Sound Energy announce deal in November
The deal which has been stunted today was initially announced in November by Sound Energy.
A few months back, the firm said that the deal would be valued at $112.8 million.
Sound Energy reported that the announcement was made to sell its Moroccan portfolio, the company has since entered into non-disclosure agreements with 23 companies and which resulted in the company receiving a number of non-binding offers.
This was to finalize a binding sale & purchase agreement for 51% of Sound Energy’s stake in the eastern Morocco portfolio for $112.8 million.
The company said it will also provide the undisclosed purchaser with a one-year option to acquire a further 9% of Sound Energy’s remaining interest in eastern Morocco portfolio, which has now been put on hold following the update today.
Shares in Sound Energy trade at 1p (-23.46%). 17/2/20 12:04BST.