Despite the strategic sale of its Moroccan subsidiary to Managem, Sound Energy ends the year 2024 with a net loss of £122 million. An asset impairment in Morocco, particularly at Sidi Moktar, heavily impacts the accounts of the British gas exploration group.
A saving divestment, but insufficient
The transfer of Sound Energy Morocco East Ltd (SEME) to Managem, covering the Tendrara concession as well as the Anoual and Grand Tendrara permits, allowed the group to recover part of its historical investments. This transaction was accompanied by a cash injection covering expenses since early 2022, along with a free participation right in future drilling.
Despite this financial breathing space, the accounts remain in the red. A significant accounting impairment charge related to the revaluation of non-transferred assets has deepened the losses. These adjustments, required by the divergence between the book value and the recoverable value of the remaining sites, explain the magnitude of the recorded deficit.
Maintained debt and industrial delays
A transitional financing granted by 2i Partners temporarily bolstered cash flow, but this bridge loan was repaid before the end of the year, including interest. The company remains under the weight of significant debt, with accrued interest reaching nearly £569,000.
The other setback comes from the natural gas liquefaction project at Tendrara, a cornerstone of Sound Energy’s repositioning. This project, intended to mark a key milestone, suffers from delays related to logistics and civil engineering. By the end of December, only the storage tank was operational, with other critical elements still in transit or installation.
New dynamics under Moroccan leadership
Since the takeover by Managem, field operations are now fully directed by the Moroccan group. The latter relies on its internal resources and former SEME staff to ensure continuity. Sound Energy retains a technical support role.
As for the development of phase 2, concerning the connection to the national gas network via pipeline, it remains contingent on updating the engineering study to incorporate the new costs for 2025. A financing agreement has been signed with Managem, and a gas sales contract is in place with ONEE. However, the main financing from Attijariwafa bank remains subject to certain conditions.
Exploration on hold and tightened governance
On the exploration side, the Anoual and Grand Tendrara permits are awaiting administrative extension. No drilling can commence without ministerial approval. Two wells are planned at Managem’s expense, with technical involvement from Sound Energy.
At Sidi Moktar, where the SEMS subsidiary remains in charge, a seismic campaign is projected between 2025 and 2026. However, numerous obstacles remain, including bureaucratic burdens and uncertain logistics.
The group has also undergone a restructuring of its governance. Simon Ashby-Rudd left his position following the announcement of the divestment. Mohammed Seghiri, another key figure, joined Managem to ensure continuity. The board of directors, now reduced to three members, including only one executive, reflects this transitional phase.
Local commitment and long-term ambitions
On the social front, Sound Energy claims to maintain a responsible approach. A water pipeline has been installed to serve a rural school, and local labor is prioritized whenever possible.
In terms of safety and the environment, the group is becoming more vigilant. Two incidents were recorded in 2024: a workplace accident and a road accident. CO₂ emissions were limited to 936 tons of carbon equivalent, mainly due to work at Tendrara. A CO₂ capture study is underway.
At the same time, the company continues its diversification efforts. A study project on the potential for natural hydrogen and helium in Morocco, conducted with Getech, is expected to deliver its first results in 2025.
Towards a new strategic phase
To reassure its shareholders, management emphasizes the strength of its model despite the turbulence. The issuance of 117.5 million shares has allowed the settlement of the convertible bonds from 2023. In the future, Sound Energy plans to streamline its expenses, enhance the value of its remaining assets, and position itself for new growth opportunities.
“Our priority remains to create sustainable revenues while maintaining rigorous financial discipline and exemplary governance,” said Graham Lyon, executive chairman of the group.
With Barlamane