Sound Energy PLC (LON: SOU), an AIM-listed transition energy company with gas interests in Morocco, reported a loss for the six months to 30 June that narrowed year-on-year to £3,233,000 from £5,526,000, with its Moroccan Tendrara, Anoual and Grand Tendrara interests still on the books at that date. Even so, the balance sheet deteriorated: net liabilities stood at £7.5 million, against net assets of £11.6 million a year earlier, while cash and short-term deposits had fallen to £254,000 from £2.8 million.
Shares were little changed in early trading, last dealt at 1.533p against Wednesday’s close of 1.55p on volume of 716,000 shares, so the debt-free balance sheet has not yet produced a clear market reaction.
Those figures are already history. The real news, disclosed as a post-period event, is completion in August of the $57.0 million sale of Sound Energy’s 20% Tendrara production interest, via the disposal of Sound Energy Meridja Limited, to Moroccan mining group Managem SA. Sound Energy also exited its 27.5% interests in the Anoual and Grand Tendrara exploration permits.
Sale proceeds were used to repay $20.3 million owed to lender Afriquia Gaz, a €1.6 million term loan and €17.3 million of secured Eurobonds, clearing all outstanding financial debt. At the end of August, the group held roughly $9.8 million, or £7.3 million, in cash and no financial debt.
Chief executive Majid Shafiq framed the disposal as a reset for the company’s strategy.
Sound is in a very different position today from where it was at the beginning of the year. We completed the sale of Tendrara and eliminated debt from the balance sheet. We now have the financial capacity to pursue growth opportunities rather than having to navigate the constraints of the Company’s historic balance sheet.
Majid Shafiq, Sound Energy PLC
With debt cleared and cash in hand, Sound Energy is now positioning itself as an acquisition vehicle looking beyond its existing Moroccan portfolio for growth opportunities, rather than an operator reporting on assets it no longer owns.