Tendrara: Schlumberger Field Management Agreement
Sound Energy, the European / Mediterranean focused upstream oil and gas company informed that further to the memorandum of understanding and term sheet previously signed with Schlumberger, that it has entered into a Field Management Agreement with an affiliate of Schlumberger Oilfield Holdings Limited (the "FMA") in relation the Tendrara licence, onshore Morocco (the "Tendrara Licence").
Under the FMA:
· Schlumberger will provide integrated technical services, equipment and personnel to Sound Energy, Operator of the Tendrara Licence;
· Schlumberger will fund a significant proportion of the capital expenditure on the first three Tendrara appraisal wells, and of the development of the licence area thereafter; and
· Schlumberger will be granted an upside linked to production performance.
Field Management Agreement
Schlumberger Funding
As announced by the Company on 8 June 2015 as part of its entry into Morocco and Farm-in with the Moroccan Oil and Gas Investment Fund (the "Farm In"), the Company is required, in accordance with the terms of the Farm In, to fund 100% of the costs of the first three appraisal wells on the Tendrara Licence. Under the FMA, Schlumberger has now agreed to fund the following proportions of the first three Tendrara appraisal wells:
· 80% of the capital expenditure of the first Tendrara appraisal well;
· 75% of the capital expenditure of the second Tendrara appraisal well; and
· 75% of the capital expenditure of the third Tendrara appraisal well.
Sound Energy will continue to be required to fund the remaining costs on the first three appraisal wells under the Farm In.
Thereafter or, if earlier, on commerciality of the Tendrara Licence having been declared, Sound Energy and Schlumberger shall fund the Company's costs under the Farm In in equal shares - with each party funding 50% of the Company's participating interest costs under the Farm In.
Schlumberger Net Profit Interest
Under the FMA the Company has granted Schlumberger a net profit interest of half of the Company's interest (which equates to 18.75% initially increasing to 27.5% after the first well).
Schlumberger Services
Subject to such services being made available at fair market rates, Schlumberger will provide integrated technical and drilling services, equipment and personnel to the Company under the FMA (the "Services"). The Services will be funded directly by Schlumberger up to the maximum Schlumberger funding commitment percentages described above. Schlumberger will also have a right of first refusal to provide additional services to the Company, as Operator of the Tendrara Licence, under the FMA.
James Parsons, Sound Energy's Chief Executive Officer commented, "I am delighted to announce signature of our first transaction with Schlumberger, a leading oil and gas services company, which will propel us towards becoming one of the leading Mediterranean and North African gas companies. This transaction significantly reduces our financial exposure to the drilling programme while maximising the potential upside relating to drilling and development success. The involvement of Schlumberger in this project also helps de-risk the asset and further supports the quality of our technical work."
