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Sound Energy Shares Surge 24.5% Extending the Current Parabolic Rally, Should You Buy?

Simon Mugo trader
Updated 8 Apr 2021

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Shares of Sound Energy PLC (LON: SOU) surged 24.5%, extending the parabolic rally that has been in place since the beginning of the week, boosted by the positive announcements made by the upstream gas company.

The company, whose operations are primarily in Morocco, recently released a proposal for restructuring its senior secured notes with €28.8 million due in 2021, starting with an extension of the maturity date to 2027.

Investors were pleased by the proposal, which triggered the current parabolic rally given the six-year extension of the maturity date. The company also proposed to convert notes worth €3,479,999 into 141 million ordinary shares priced at 2.125p each.

Sound Energy also proposed that the 5% annual interest due on the notes should be split into 2% cash payment and 3% deferred interest to be paid upon redemption.

The company also recently clarified that it was still in exclusive discussions with Italfluid Geoenergy S.r.l to reach a binding project contract concerning the proposed micro liquefied natural gas (“mLNG”) phase 1 development project.

The two firms are yet to agree on contract terms, but Sound Energy issued the press release to dispel media speculation that the two companies had already signed a contract. The company also clarified that it was not aware of Italfluid’s financial arrangements.

Sound Energy recently sent a consent solicitation letter to its noteholders to approve the bond restructuring measures. We will be monitoring the company to see if the noteholders agree to the revised terms.

Investors worried about missing out on the company’s massive gains should hold on to their money because equally massive selloffs typically follow parabolic rallies. I would wait for the selloff before opening a new position in the company.*

*This is not investment advice.

Sound Energy share price.

IG chart of Sound Energy share price 08-04-2021

Sound Energy shares surged 24.49% to trade at 3.05p, having risen from Wednesday’s closing price of 2.45p.

Should you invest in Sound Energy shares?

Sound Energy shares are traded on the London stock exchange's AIM market (the alternative investment market), which is the submarket specifically for smaller companies. AIM stocks are attractive to investors as they have tax advantages and smaller companies have the potential to benefit from rapid growth. But are Sound Energy shares the best buy? Our stock market analysts regularly review the market and share their picks for high growth companies

Simon has over six years of professional trading experience across FX, commodities and equities. He has a strong passion for financial markets and is particularly focused on price action trading