Sound Energy (LSE:SOU) — Investor Presentation

0:01 Good afternoon, and welcome to the SOUND ENERGY PLC Investor Presentation. Question and press send. The company may not be in a position to answer every question received during the meeting itself. But the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we'd like to submit the following poll.

0:26 I'd now like to hand you over to Graham Lyon, executive chairman. Good afternoon, sir. Thank you very much, Paul. I'm, as you can see, ably helped by my chief financial officer, Gary Dempster, and our VP of Geoscience, John Arjun. So I'm gonna go through a presentation very briefly, what's been a quite a a tremendous week for for SOUND. And we're gonna go through the presentation, then we'll take the questions that have been pre submitted. There were quite a few duplicate questions, so we'll we'll collate those and and and take them in total. Some may be answered during the presentation anyway. I will ask John to go through some of the technical questions, exploration questions, and then discuss with Gary the finance questions. And then Gary is gonna turn host to me, and I'll I'll summarize any general general questions at the end. So welcome to our presentation.

1:27 So we've done the deal. The transaction was completed on Tuesday evening last week, I think around about 06:45, 07:00 in the evening. And for those that are not familiar with this, we have sold a British subsidiary called SOUND ENERGY Morocco East Limited, a UK subsidiary of our PLC company, to manage MSA, a Moroccan entity. SOUND ENERGY Morocco East is the operating company in the Tendrara concession and in the Anuwal and Grand Tendrara exploration licenses. In exchange for selling the shares in SOUND ENERGY Morocco East, there's a financing package put in place.

2:13 And that financing package the effective date is back to 2022, January 2022. So SOUND ENERGY PLC has been a partner with us for almost two years. The the guts of the deal is the equity financing that we require for our phase two gas pipeline development, and that's just over $24,000,000. There is a contingent payment of $1,500,000, once we have first gas through the pipeline, subsequent to about a year of production of that. We also have two exploration wells. And I think you'll know for a small cap company like ourselves, getting the exploration drilling again is quite exciting, and we're confident that with management now supporting us, we'll get some exploration wells drilled in the in the not too distant future.

3:04 So we have the SBK one well on the Grand Tendrara license carried by management. They will fund our share of that transaction or that that activity. And we have the M five well on the Anoal exploration license funded by by management. The back costs that SOUND ENERGY PLC has put into SOUND ENERGY Morocco East since January 22 have been returned to us. And the funding that we put into the expiration over the last two years has been returned to us. So we're sitting on a much healthier bank balance, and I'm sure Gary will answer some questions on on that. For those of you who haven't been following the program, Managem are a substantial Moroccan heritage mining company throughout Africa. They're active in in the mining world, and they have started a third leg to their their business.

4:07 It it it'll be on the energy energy front. So substantial company, couple of billion, maybe $3,000,000,000 market cap, and a very experienced operator in the mining world. So this is a step out for them into the hydrocarbon area. Financially very strong. They are in turn 82% owned by the Almada Group, which is essentially a private equity fund across Africa, and and they have a free float of around about 10%. So they're listed on the Casablanca Stock Exchange. But for those of you who can you can dig deeper, they have good corporate in in information on their local website.

4:55 Now we've sold SOUND ENERGY Morocco East, which includes our staff down in in Morocco. It includes the office in Morocco. It includes our operating people out at Tundra. And but, however, not all of the services that are locally provided in Morocco to SOUND ENERGY Morocco East were were those staff. So our corporate office, our London based office, provided services as well. And in helping manage them to effect a very smooth transition so there's no hiccups in in this transaction, We've put in place a transition services agreement, which was signed at the same time as the closing. And within that, there are four areas that we'll be supporting them under three already issued work orders. One is the financial and the accounting. Here we are on the December 18.

5:52 The year end for SOUND ENERGY Morocco East is the December 31, and so it makes a lot of sense for our finance team to complete the activities in the year end, resulting. We'll also provide some accounting services until that formally transitions because of the banks and the way it takes to get, all that transition across. Mohamed Sagiri, our chief operating officer, is a a London based, a PLC based employee, but he spends quite a bit of time, on the ground in in Morocco. So under that term, there's a service request for for Mohammed to continue the day to day management of SOUND ENERGY Morocco East. He's one of the directors of SOUND ENERGY Morocco East alongside Gary. Health, safety, security, and environment's very important to us, and we don't want to make we don't want to see any slip ups during this transition. Now Managem is a a big international operating company, and it has its own policies and procedures.

6:50 So, generally, what we're looking at is a transition from one, set of policies and procedures to another. Broadly, they're very, very, very similar for safe, well run operations. However, policies and procedures, bridging documents, everything has to be put in place, and also the support of the local supervisors the site supervisors from our manager here in in The UK. And then finally, and John will talk about this, we're keen to to move the exploration forward. Although manager is the operator and and it will take the lead, we are able to support them on the exploration front, and we will do as much as they request us to support them in preparing for drilling the two carried exploration wells, which, you know, we'd like to progress sooner rather than later. John will go into that in a bit more detail. There's some good questions about that.

7:46 Here's our phase one micro LNG project. Some of you have seen these pictures. And equipment's arriving at site. It's already more equipment's arrived even in the last two days. And so that project is moving ahead. It's admittedly not as fast as we'd wanted to, but now management have come in with, let's say, a stronger backup with project management teams. We will be looking at having this equipment on-site later this year, early next year. We'll be looking at commissioning the gas pipelines, the flow lines, sorry, the wells are ready. The flow lines will be in place. We'll be commissioning entering into gas into the processing facility early h '2 next year, and we expect to be getting LNG revenues at fully commissioned plants during second half of next year.

8:39 Why did management come into this project? Because they see the importance of developing gas in the region, the need for Morocco to fuel its power stations, its two gas fired power stations on the GME pipeline, and they're very committed to delivering the pipeline project. So it's great that management have come in. They provide the equity part. We've talked about this in the past. They provide the equity part to the overall project funding that's required, and Atiduafa Bank are providing the debt financing that goes with that. What do we need to take financial close or financial final investment decision? We need to have the gas sales agreement con concluded. And we also need to do the update of the FEED study, front end engineering and design study.

9:30 We need to get that done. And I have to say management are already undertaking that activity now. We have to establish an EPC contractor, engineer procure construct contractor. And, obviously, we're we're working to lead to a final investment decision, again, second half of of next year. So the key for our transition is to make sure there's no loss of momentum on this. And in fact, by bringing management in, we can actually accelerate what SOUND was doing on this phase two development approval process. On the financial overview, I mean, this is an ever changing story, and even this slide should probably be updated. We we know where we are. We have a a balance sheet issue of 25,300,000 on the Eurobond.

10:21 I'm sure Gary will discuss that a little bit more. That still exists. $18,000,000 of debt with Africa Gas, which we are servicing the interest on that right now. There was a 250,000 of institutional investor in the convertible loan note. We've paid that off in the last twenty four hours. And so we're we're moving on, and we're we're optimizing our our balance sheet as we can. The market cap, even though this this slide was dated last week, we're we're about 50% higher than that. I think we're around about a $30,000,000 market cap now as opposed to a 17,000,000 market cap. So, yeah, the financial world is something we have been very focused on. Why we're excited about this deal, not only bringing manager in as our as our partner, we are looking forward to drilling the SBK 1 well up on the Grand Tendrara license.

11:16 SBK 1 and it's not SBK 1. It's the it's a little bit offset from that well, but that well was a a well that discovered gas and and and and actually tested gas. And well, on M 5, a large prospect, a riskier prospect for sure, small wildcat exploration. But, again, it's a big project and a good good prospect. But even though we've lost the managing opera sorry. We lost the operation of SOUND ENERGY Morocco East to manage them. We're a nonoperated partner. We're gonna do our best to influence them and and make sure they keep the schedule going, and I'm sure they will because that's why they bought in. But we are operator of City Moctar. And City Moctar is in the South, and and we're planning operations on that. We're 75% owner of that, and we're planning operations on that and starting the seismic program early next year, which could mature a prospect for for drilling within a period of time. So we still retain operatorship in Morocco in the city Moktar license at 75%.

12:22 So that's a brief overview. I think most of you know the story now, but we've we've updated this. And what I'd like to do is pass back to Paul before we take the questions. Fantastic. Thank you very much indeed for running through your presentation there. As you can see, we have had a number of questions throughout today's presentation and both pre submitted as well. So thanks to all the investors for those and do please continue to submit your questions just by clicking on that Q and A tab, type in your question and pressing send. Graham, perhaps if I could just hand back to you and I haven't given you a huge amount of time to look at those questions that come through, but we did have some presubmitted questions. If I may just ask you to read those out where appropriate to do so, direct them to the team, and I'll pick up from you at the end. Yeah. So I I think there were 28 originally came through, and about six or seven were very similar. So we'll we'll group those together.

13:11 So I'm gonna start with some more technical exploration questions to John.

13:16 John, good evening. Could we have an update, read the progress of the storage tank? Is this on time, or is it gonna delay the gas sales? Thank you. Okay. So, yeah, thanks, Graham. Good evening. Yeah. Look. The tank is progressing really well now. Thanks to, you know, to the additional efforts of the of the team working on and I'm pleased to say it's no longer on the critical path. They're currently, weld in the lower most shell course at the moment. The tank is at is at full height, and it's a pretty impressive structure. We've been sharing photos of the the erection of that tank in the last, you know, over the last few months. Good. Thank you, John.

13:56 This is one which I think we're all keen on. You previously said that you could start drilling nine months after the management deal was signed off. Can you confirm that you'll be able to spud that in a while late September twenty twenty five? So, that's that's the M 5 well, but there there are two exploration wells, SBK 1 and M 5, which comes first really, you know, that depends on the choice of rig and the, you know, the forward planning. Okay? ManageM, as you know, now they're they're the operator. And clearly, they've given us every indication of how absolutely as keen as us, you know, to open up the, you know, the full gas potential of this basin with more drilling. Okay? So, you know, those of us who, you know, work in this exciting industry will appreciate that there is a lead time to secure long long lead items for a drilling program, multi well drilling program like this. It's not just just the rig. There are tubeless, wellheads, Christmas trees, other hardware as well. And in addition to the rig, there are drilling services as well, mud engineering, directional drilling, wellhead services, tubing running services completion, waste management, transport, civil works, know, to name but a few. You know? But having said that, if, you know, management want us to fully lead, you know, this exploration drilling, nine months is is feasible.

15:07 Great. Thank you. Here's a very topical one. Will the company be using the help of AI to find the sweet spots? Okay. AI. Yeah. So, yeah, so automated approaches, you know, including, you know, the many machine learning, neural networking, now, you know, AI. There's lots of buzzwords around this. You know, they've been long you know, been part of the oil and gas industry, you know, geophysical interpreters toolkit. Okay? And we previously used, you know, some of these techniques in the past. But, you know, all said and done, we'll always need the drill bit to find the gas. Prospects, they've been identified for drilling. That's m five from SPK one, and we also have t four as well and and, you know, other features on on the books in the portfolio.

15:55 Thanks, John. This one's maybe different different way of reviewing it. Does mining license I mean, I mean, do the mining license depend on any external factors or experience? Maybe an award of a license or something. Okay. I'm gonna assume mining license mean petroleum license or or permit. So, yes, there there are requirements to meet, you know, some financial and technical capabilities. But it's important to appreciate that we sold our subsidiary, SOUND ENERGY PLC Limited, a going as concern as it as it is entirety to the whole subsidiary. So that subsidiary meets those those requirements. So I hope that that answers those questions. There there are no hurdles for SOUND ENERGY PLC Limited as holding a subsidiary manager.

16:40 Thanks. Well, whoever asked that question can clarify on the online questions, or we can if we didn't answer it properly, you can get back to us. John, what will SOUND be working on after the two wells have been drilled? I I assume that means the two exploration well wells. Will it be looking for other locations to drill? Yeah. Absolutely. So, yeah, you've got the two carried wells there that that we're working on, but, obviously, we'd like to drill a third well at at t four. That's certainly an aspiration of us. And also there's the development drilling, you know, as well to get to first gas. There'd be five horizontal development wells to drill, you know, prior prior to first gas on the full field development. But also, we hope to be appraising a, you know, a new gas discovery in the basin as well. Yeah. And, also, it's important to know that we're still operator of Sydney Muktar. We're aiming to want to take seismic on that next year to mature early to drillable status.

17:30 And, you know, we're also engaging in further new business development, as you know. So watch this, please. That's a good segue into the next question, John, because it's will manager be helping you with the Citi drill? If so, will SOUND be able to maintain such a high percentage ownership of Citi rather than where we are at Tendrara at the moment? No. I'd say no. That's currently all SOUND's work. First, obviously, we must carry out the two d seismic survey. The seismic survey, we have to firm up a prospect for drilling. We're seeking a farming partner for for Sydney Muktur as well. We are engaging with a number of potential parties. So, again, you know, continue to to watch this space, and there'll be more news to come on that. Great. There's already the people like the Sydney question. So there's already a pipeline close to Sydney, which connects the adjacent field with a fertilizer plant.

18:19 If we're successful in drilling city, is there a market for our gas? Would that pipeline be used? Or is there a a need for a considerable investment to to market the gas in another way? Yeah. So there's I mean, there are multiple ways to monetize any discovery, you know, as as as, you know, you're fully aware, Graham. But let's have a look at that pipe. So the that that that pipeline connects the Muscala field to the OCP phosphate plant. It's an eight inch line. So and it's about, I think, about a 125 kilometers in length. But an eight inch line there and the gas that it supplies from Mascala to to the plant itself, you know, there really is additional capacity in that plant already today. And just a further 50 kilometers away from that phosphate plant on the coast at Safar is the it's a 1.4 gigawatt coal fired power station, which could, of course, be converted to gas. So that would provide, you know, another market, which would be a relatively, you know, what we think of a straightforward hookup in into that existing pipeline network.

19:19 Thanks, John. Well, this next question, you've sort of half answered some of it, but I think we can go into a bit more detail. What can or when can we expect drilling to commence at either SBK or M5? How long will the drills take to determine commerciality? And which one's first? Okay. Well, I've discussed some of that before. So, you know, ManageM, you know, is is now the operator. With m five, that would could likely be drilled with the Star Valley rig one zero one, which we currently have on-site. And SBK, that would need a rig with much, you know, higher capacity. So that would either be the Doitag rig, which we have stacked at the T 10 at the moment or a rig sourced from outside of the country. So, you know, we've managed them. We'll obviously be seeking to fully optimize the drilling

20:08 campaign, and therefore, you know, no decisions in has been made on on drill order at at this at this point in time, I would say. Great. Thanks, John. And this harks back to an r and s we put out a month or so ago. First glance, exploration for helium and natural hydrogen, white hydrogen, would seem to be going off on a very wild tangent. Is there any evidence to suggest this could be commercially viable in Morocco? What have we committed so far? Is what's it gonna be financially? Is this all just simply sharing data we own? Okay. So look. Yes, you know, this is a very new area for us, but it's the one that has big potential, but of a very low, you know, very low initial cost. And we we've partnered with you know, you know, it is a world leading company with some specific expertise in hydrogen and helium. That company, as everyone knows, is is GTEC.

21:03 Our costs are minimal in sharing our geological knowledge as as a Moroccan operator alongside, you know, our local relationships as well and help out in leveraging that with with our partner, GTEC, there. So for me, this agreement, you know, it's exciting initial early step towards diversifying our portfolio, introducing a new business stream, but particularly, you know, alongside our primary focus, which is our ongoing, you know, natural gas hydrocarbon opportunities. So the results of that study, I'm expecting them to be available midyear, mid next year, 2025. And also, I'd note if people, you know, can have a look. We're not the only ones that see Morocco as having potential for hydrogen and helium. There are others working in the region if you do some of your own research.

21:49 Great. Thanks, John. Gary, we'll we'll bring you into the equation now. We're gonna move more to the financial aspects of the questions that people are asking. In the r and s, it said the company will be supporting manager for a period of time to ensure uninterrupted transition program. What will SOUND's role be, if any, as we have a free carry? Alright? Will SOUND be paid for any services they rendered in in the activities? Okay. Well, good evening. It was nice to be speaking to you all again. So Graham's kind of covered some of this already. We we entered into a transition services agreement with with Managem, and the idea really is to provide continuity so that Managem can keep running with the program with the objectives that were in place previously.

22:41 So it covers finance, management, HSSE, and exploration activities. And these are paid services, SOUND ENERGY PLC gets paid for providing that support to manage them as well as obviously benefiting from the the continuing operations and the continuing support. In terms of our role in the in the drilling program, obviously, will be the the operator through their acquisition of SOUND ENERGY PLC, but we will provide certain levels of support under that transition services agreement. And obviously, we'll have a role in the governance of the drilling program as a non operator, which we'll we'll fully take on. Thanks, Gary. How do you see the outstanding debt being paid off without further dilution?

23:31 I assume that means the share dilution. Right? Yeah. Okay. So I guess the first thing is that we don't have any shareholder authority at the current time to issue any new shares other than those present commitments that we have. But I think the second thing that's quite important to to to say is that we've always met our debt obligations as a company. So the base case is obviously that we we pay debt out of cash flows that we generate in the in the business. Having said that, the company does have significant debt on the balance sheet. And I think I've mentioned on the previous investor call that one of our key strategic priorities is debt restructuring, stroke debt refinancing, as well as continuing to mature other revenue enhancing opportunities that we have within the within the hopper.

24:26 So there's a number of different things that that we have in our armory and that we'll be maturing over the the coming period to ensure that we continue to meet our debt obligations. Thanks, Gary. Yeah. That's gonna be a 2025 focus for sure. Are shares to be rerated by the broker? Well, the the brokers just updated their research following completion of the the manager m transaction last week, so that can be accessed on the SOUND ENERGY PLC website. Having said that, it had actually already factored in terms of the transaction with with Managem, including the cash inflow that we received from them and also the the carries on the development side and on the exploration side. So that was already factored into their valuation.

25:15 They carry a risk valuation of 4p per share, which obviously is somewhat ahead of where we're sitting at the the moment. I mean, it's actually very pleasing that we've seen some upper momentum over the the last week in the in the share price following completion of the the deal. Hopefully, that trajectory will continue as we look to deliver the next steps in the the strategy over the coming period. Good. Thanks. It would have been great if the agreement had left SOUND with more than 20% of TETRARA, but 20% of what is now something real and assured is far better than the 75%, which was fantasy. Presumably, the figure of 20% was a reflection of Managem taking over the near 10% portion of Schlumberger's.

26:03 Has this agreement with Schlumberger now been fully resolved? Yeah. I think the first thing we'd say is that we're delighted with the terms of the the transaction with with Managem. We think it represents excellent commercial value for money for SOUND ENERGY PLC shareholders. And as part of that, management did take on that liability for the NPI agreement with Slumberger. So that's now firmly in their control following completion of the transaction. Yep. Good. Thanks for clarifying that. Could we have a figure for the revenue that would be generated by sales 20% of phase one, not forgetting the substantial fees payable to Itau Fluid? I assume that means the OpEx. Yep. Good question. So again, I would guide people towards the the brokers research, which gives a really good representation of the future revenue generation potential of the the company from phase one, and then obviously from from phase two thereafter.

27:05 They value the phase one annualized revenues net to SOUND retained 20% interest at $6,000,000 per annum,

27:14 and also with an EBITDA around $2,000,000 to $2,250,000 per annum. Good. Thank you. Again, a bit more on the debt side. Sales 20% of Phase one will and the cash received from manager will not be sufficient to pay the 25 point more €3,000,000 bond by 2027. How are you gonna pay it? Good question. And I think I've covered some of this already. Obviously, we do continue to service the interest on the the bond as I had mentioned. We've never failed to to meet an interest payment on the on the bond, and we don't intend to do that going forward. Obviously, there's a substantial principle that's due for maturity in 2027.

28:00 I've mentioned that we are actively looking to strengthen the the balance sheet. So watch this space over the the coming period. That's a key strategic priority for us. We've got an excellent relationship with the with the bondholders. We've already restructured the bond twice over the last three and a half years. So we've got a number of different options to to manage those debt obligations that are being matured. Yeah. Thanks, Carrie. This one, I think, goes to the crux of what the deal is and making sure people clearly understand the value of this equity carry that we're getting from manager. The the actual this equity carry. Right? The actual is not a debt. The actual cost of phase two is still to be determined.

28:47 There is little doubt that these costs have risen since the original estimate. What happens if SOUND's 20% share of the revised cost exceeds the £24,500,000 that management's got to carry us through? Will SOUND's share be reduced even further if we're not able to meet our funding? Yeah. It's it's a good question. So the the first priority of the the project team on phase two is to commence the recycle of feed. So that's going to start at the beginning of twenty twenty five, and that obviously will enable us to firm up the cost estimates for the phase two project ahead of taking FID. As things stand, the development carry is is ample, and it covers our share of the equity financing that we we require to meet the the pre first gas CapEx.

29:41 So we're comfortable that the the carry is sufficient. And actually, the way we structured the the SPA, if there's any carry remaining at First Gas, then that rolls forward, and we can utilize that carry for forward expenditure post First Gas. That's good. Here's a nice one. Hi, SOUND team. Congratulations on the completion of the sale. Moving forward, could you outline the LNG plant progress? Well, you've said a bit about that. And the expected completion date. But this is the financial bit, really. If legally possible, can you confirm the cash balances after you've settled any historical supply and prices you've had plus any short term bridge loans that the company had?

30:25 Okay. So all of our debt and supplier balances are up to date. So it's it's obviously a good place to to be in. We don't have any short term debt on the the balance sheets anymore. As as Greg mentioned, we we we made a payment within the last twenty four hours to as to settle the remaining 250 balance that was applicable to the convertible loan note that we entered into last last year.

30:55 So obviously, as as investors are aware, we had a significant inflow just over $13,000,000 of funds from Managem last week. So the company's cash balance is much healthy healthier than it's been for quite some time. Yeah. Thanks, Carrie. Will you consider a share buyback to improve the share valuation position?

31:21 Yeah. We get asked this question a lot, and it's it's an important question. It's a good question. We form the view that the best use of funds will be to enhance the the business. We've got a variety of different opportunities in front of us. Share buybacks tend to be undertaken by companies that have run out of ideas or they don't have any opportunities to invest or they can't find any accretive acquisition targets. So we believe that we've got many more opportunities in front of us to spend more effectively and deliver greater shareholder value by deploying the funds that we have rather than using them for share buybacks. Well, that's good, Gary. Thank you. Can I turn the tables and then you ask me a few questions?

32:10 Sure. Okay. Bear with me. Okay, Graham. So you said on the podcast on the December 11 and take advantage of perhaps people that are not in such a strong position as sound. What what does this allude to? Yeah. And I I I know that that that

32:35 podcast came within hours of us closing, so I was on a little bit of a high, I think. But for the first time in many years, we I've we as SOUND can consider our future and drive our own destiny as opposed to being reactive to the events that are thrown upon us or scratching around to find the cash to do things. We're in a good position now compared to where we were, you know, even six six weeks ago. But there are a lot of other companies on the AIM market with opportunities that are don't have such a fortunate position. And therefore, maybe we can be opportunistic and grow our company by using the strength that we have now, either some of our cash or the the foundation that we have knowing that our development is is fully funded.

33:32 Okay. Thank you, Graham. So there were a few questions relating to the timing of phase one first gas FID on phase two FEED, etcetera. I think we've covered those already through the presentation. So I'll I'll skip to to the next one. And I mean, there's been some some great questions today. So thank you for for posting those. I think this one looks like, Graham, it may have come from from your wife. But I don't know. Regardless. It says, before I ask my questions, I I would like to thank Graham and the SOUND ENERGY for the huge achievement of the managing deal.

34:11 Seeing the videos of the latest interviews with Graham looking relaxed and confident is greatly reassuring. He has put not only a massive amount of hard work and time, but real heart and soul into reaching this deal that he definitely believes is best for SOUND and Us shareholders, even though it is taking longer than hope and real progress is being made. Thank you very much, Graham. Well, thanks for reading that out, Gary, and I can assure you that wasn't my wife. But I think the main thing for me to say, it's good to have some positive feedback. You know, we we thrive on positive feedback as well. We we accept the negative feedback, and we try and do better, but positive is good. But it's not a single person's work. It was a team teamwork. You know, we this process has taken quite some time. Everyone really put in a shift and a half.

35:02 And but I would say a special thank you to Gary who saw it from almost day one, if not day one, to literally this very stressful day of closing last Tuesday. So so thanks for that. Thank you, Graham. Okay. The next one is is a long question yet again. T e five and t e four are in the East, close to the border with Algeria. Both SBK and m five are to the West of t e five and closer to customers. If either of these fields are productive, and then 5 could be many times better than T 5 in the eyes of the manager. It might make more sense if the proposed 120 kilometer gas export pipeline was to be located further to the West with M 5 rather than T 5 becoming the central production unit.

35:53 It could make more sense to wait for the outcomes of the two exploratory drills before committing to the phase two pipeline. This could put a very significant delay in us seeing any real revenue. Does manage EN share our sense of urgency in completing phase two, and are they happy with the proposed pipeline? Yeah. Thank you. Well, long question, and I do get the gist of it. And, yeah, we're all very impatient. So any delay, nobody's gonna be very happy with that. But let's let's look at it. Management bought into this project for the pipeline project. They are fully aware of what the pipeline project is, all the work that's been done to get the pipeline corridor, the feed study that was done before, the design capacities, etcetera. So I would say the m five prospect is a large prospect, and it could even sustain its own development.

36:47 But the main pipeline, the 120 kilometre pipeline is slack bang in the middle between Anoal and Grand Tendrara from the Horst. And it has sufficient ullage in it to take any volumes that we can find at M5 or SPK1 or TE4 or any further prospectivity that we like. So, no, management's fully behind developing this project. They're ready to kick off the FEED study. They're already working with Attitude Alpha Bank to close out that bank debt with ONEE to get the gas sales agreement ticked off. So, yeah, we're we're we're full steam ahead. Okay. Thank you, Graham.

37:33 This is the final pre submitted question. So the share price dropped its lowest level ever just before the recent confirmation of the manage m agreement. Graham makes it clear that the current share price undervalues the company. Is there any consideration of the encouraging share price with direct of of of director share purchases? A share buyback at the current price would make sense as now cheap shares could be used to pay for services at a later at a later date when the price is recovered. Is a dividend payment on the agenda? If so, when and what rates might we expect? Well, there's a lot of things wrapped up in in that question, and some of them have been answered by Gary already. Like, we have no share authority to issue shares.

38:20 We've talked about the share buyback concept. And these are all good points. And, you know, we, as Gary alluded to, I mean, we're we're a 100% up almost on where we were on Tuesday last week. So, you know, obviously, the market has started to recognize that the uncertainty of whether we all close with manager or not has happened and is is clear now. There's no no further uncertainty. We have the funding, and we're we're ready to go forward. The issue with directors buying shares is always a perennial question. It is very much the open and close period story, and you know that there are statutory periods where we are closed.

39:06 And if directors are in an open period, then they're able to buy shares. If they're in a closed period, they're not able to buy shares. And we monitor that very closely with our NOMAD. And in our board reports that we internally prepare each week, we advise our board what the situation is. So without going into any great detail, you know, if if we're privy to any price sensitive information, we can't go out in the market and buy shares. So it'll be remiss of me to purchase shares tomorrow and then on Monday announce something additional to what we've been doing with management. What do we do with the funds? Well, yeah, Gary, you've explained that we're looking for accretive acquisitions or accretive projects.

39:57 A dividend policy is difficult when you're not revenue generating. And our current policy with the company is once we have cash flow, once we have positive cash flow, we can predict that, then we can consider dividends. But at the moment, this is typical for the type of company we are. We're going to reinvest the money in our business and grow it grow the share price that way. Okay. Thank you, Graham. So there's a few questions that came in whilst we were on the the presentation this afternoon. So I'll put the first one to John, if that's okay. John, what happened to t e four? Nothing at all has happened to t e four. It's a it's a target, a prospect that remains in our portfolio. And as I said before, that's you know, we we have certainly have an aspiration to get that well drilled.

40:49 Good. Do you want me to take take over, Neri, or do you wanna carry on doing them? I'm happy to let you know. Yeah. Yeah. I'll I'll just continue, Graham. Thank you. One, well done in the last year. Just one question. Are Slumberjes still involved in the assets in any way? And if yes, can you explain how simple answer no than than not? When do think they're able to provide services as a service provider to to us, and they they have services in country which we can continue to use. When do you forecast SOUND ENERGY having a positive cash flow being reached under current expectations? Was it's obviously quite a dynamic evolving picture because we do have aspirations for growth. And I mentioned earlier that, we are looking for revenue enhancing opportunities at the current time. We've been doing that for for quite a period of time, and that activity is going to intensify over the the coming period.

41:50 Having said that, based upon the the current portfolio, obviously, we've got expectation of revenue coming from phase one next year. And then from phase two, hopefully, we start to build on revenues from phase one around the the middle of twenty twenty seven. Now it's it's it's quite an interconnecting picture because, obviously, we will generate positive cash flow from phase one, but we're also in an investment phase on phase two. So it's not until we get into phase two and stabilize production that the the company starts to regularly generate positive free cash flows from the business. Think, Gary, you've asked the next one, which is about consolidation of shares.

42:38 This can usually be the death nail for share value for small caps. So I think we we can say that one was taken. Okay. With regards to SPK, what techniques and other differences are going to be undertaken to make this well more successful than the previous operator's effort? What are you going to do differently from the previous operator's activities, location, stimulation, anything else? Do you want to ask that, Graham, or shall I? Well, I'd love I'd love to, but you're better at me. No. That's okay. So let me think. So SBK, I mean, that that well was drilled, you know, in 2000. You know? So it's over you know, coming up to twenty five years ago. It's drilled before, you know, even t four and t five.

43:28 So, can you you know, it's an early well in the basin. You could take the we will be taking the lessons from drilling SPK. We have access to all of the well reports on the data associated to that. It's about ensuring that you obviously have the correct well architecture and design. We understand the poor pressure regime, etcetera, from SPK one and the data from from that drilling campaign, and you'll need the, you know, the correct route to drill that well as well. But for me, it's, you know, all these wells, it's keeping it simple. It's a vertical well. No multiple sidetracks with the previous well well had. You know, no directional drilling. In terms of a location, we would be drilling it. I think we we we have a locate plan location, somewhere at four hundred, odd meters away, so not too far away from the original well. The original well wasn't stimulated, so, it did flow without stimulation.

44:18 But, obviously, we we could be looking at a at a stimulation program post post drill to, you know, depending on how we complete it. So there's a little bit of work to be done on the on the well design on that, but I'm, you know, more than confident that we will be able to execute that well successfully in the future. Okay. Thank you, John. The next one for you again is the second last question that we have, actually. So, John, you've been talking about a farm in partner for Citi for about ten years to my knowledge. I don't think you've been with the company for that long. But, anyway, you've been talking to partners for a long time. Is there any interest? Are you planning to go it alone? No. I think that's, you know, that's a good question, a valid point.

45:06 You know, just just to be clear, we we entered the Sydney Moksha onshore license in, 2018. So it hasn't quite quite been you know, it hasn't been ten years. We are obviously impatient as as well, but these things do take time. Okay? You we need explorers. We need to have persistence, tenacity to keep things moving. But just to remind people, you know, I showed Graham some data. I think we have a consultant in me, Graham, that the average farm out, you know, it's four to five years, the average farm out in, you know, in in the industry. Okay? That that is a, you know, that is a long time. We'd like to do things quicker, but, you know, it's not unusual for these things to take to to take time, you know, unfortunately. Okay? So that's I think your your John, your seismic survey, you know, getting the results of that and firming up a prospect surely must help. That's right. So, you know, we could rightsize that survey to something that we could manage ourselves.

45:58 We can mature up, you know, a prospect, you know, with with that survey, and that would certainly enhance, you know, our ability to to farm out and potentially make it more attractive. We have received interest, you know, for a number of years now. It's just getting it, you know, across the line. You only need to get across the line with one one individual successfully. So we're working as hard as we can to achieve that. Thank you, John. Okay. Final question, maybe one for for you, Graham. I know we've touched on this to a degree earlier on, but this question says, are SOUND looking at any acquisitions to assist in providing revenue? And if so, is it in Morocco or elsewhere? Yeah. Well, I mean, essentially, the question can be addressed to me, but it's the three of us that are doing this. So we are looking at diversifying the portfolio.

46:47 We are looking at organic growth within Morocco, and we'll see whether that brings anything accretive. We are looking at potentially something in outside of the, let's just call it, the pure hydrocarbon business, maybe in something in other transition energies in Morocco. I think doing that outside of Morocco is the first step. We we play to our strengths. We know Morocco reasonably well. We have good supporters in Morocco. So if we're gonna do something outside of the the energy hydrocarbon business, then we'll do it in in Morocco. But that doesn't mean that there's not good opportunities either in the in the fishing pole of the AIM market or in the North Africa, Middle East scenario for looking at the hydrocarbon opportunities.

47:37 But it's got to be accretive. We've got to treat this cash that we have in our bank with key gloves and very, very precious ly look after it. It's amazing how quickly it will disappear if we don't if we're not careful. Saying that will be opportunistic. So it goes back to almost the very first question about what did I say to Zach Nia as, you know, we're in a stronger position now. We're in the driving seat. We can we can perhaps be a little bit more in tune with where the market is and drive our own fortune from a a a relatively stronger position than we would have been just six weeks ago. So the answer is, yeah, we will be looking at potential growth opportunities inside Morocco and outside of Morocco where appropriate. Okay. Thank you, Graham. That's it on the questions.

48:26 Fair enough. Gary, thanks so much indeed for running through those questions and to the team for taking them all and covering those all off. You've answered every single question we've had through. So thank you very much indeed for that. Any further questions that do come through, the team will be able to review those and submit response where appropriate to do so. But before redirecting investors to provide them with your feedback on evens there, which is important to you and the company. Graham, could I just ask you for a few closing comments, please? Well, it's just a summary of what we've been saying. Let me just start by saying I I really do have to thank the team. You know, it's it is a team approach. The the team in London and The UK, this has been a combination of a process. It's almost eighteen months, but we I think we've shown that we've now got a great partner in Morocco with Managem.

49:18 And it's not just the UK team, though, to think about. You've got to think about our team in Morocco, in SOUND ENERGY Morocco. They've done a great job getting us to where we've got to. And they it doesn't stop for them. They are still operating. They are still out there on the site today. They're still welding today. So and they've managed the personal transition from the ownership of SOUND ENERGY PLC to the ownership of MAGEN very robustly, very well, with good spirits. So I'd like to thank the SOUND ENERGY Morocco East team particularly. For shareholders, I think we're as I say, the future's in our hands now. We're in a much stronger position. We're positioning ourselves to grow organically or inorganically.

50:07 So we do want to not sit on our laurels. We want to grow this company and give value to all shareholders and see the share price appreciation. But the key thing is now for 2025, we'll be on production with the LNG sales. We have the good opportunity with a fully funded Phase two pipeline development with a great partner. And I, you know, I would love to have two exploration wells drilled. So lots of triggers for share price growth and and activity. All I can say is it's it's been a a happier end to the year than it's been in the past. I hope you now believe in this team that we can deliver.

50:52 I would like to thank all our stakeholders, our shareholders for their patience in 2025. Of course, the ministry in Morocco. Of course, ONIM, our state partner in Morocco. And we look forward to updating you in the early New Year and maybe even meeting in person. I'd like that. So thank you, Paul, and thank you, everybody, for the time to listen to us today. Fantastic, Graham. Thank you, John, Gary as well. Thank you very much indeed for updating investors today. Can I please ask investors not to close the session? It should now be automatically redirected to provide your feedback in order the team can better understand your views and expectations. This will only take a few moments to complete, and it's greatly valued by the company. On behalf of the management team of SOUND ENERGY PLC, we'd like to thank you for attending today's presentation. That concludes today's session, and good evening to you all.