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(Sharecast News) - Sound Energy updated the market on financing for the phase two development of its Tendrara production doncession on Tuesday, having mandated Morocco's Attijariwafa Bank to arrange a long-term project senior debt facility of up to $250m in June.
The AIM-traded firm said that mandate was for the partial financing of the currently-estimated $330m gross development costs.
It said on Tuesday that progress was being made with a number of external banking advisers and data review and, as it previously said, the parties were seeking to negotiate binding terms for the senior debt within 120 days under the eight-month exclusivity.
In addition, the firm said it was continuing to mature industry and alternative financing solutions for the remaining development costs of $60m net to its 75% working interest in Tendrara.
A number of industry counterparties capable of providing the required financing had expressed interest in pursuing discussions, the board reported.
As a result, Sound Energy said it had launched a formal farm-out process for Tendrara and the surrounding Greater Tendrara and Anoual exploration permits, and had appointed Gneiss Energy - a corporate finance advisory firm - to manage the process.
The company said the objective of the area-wide farm-out was to seek a co-investing partner in each licence to both fund the expected balance of phase two development costs, and also to progress an exploration and appraisal drilling programme in the Greater Tendrara and Anoual exploration permit areas.
"We are making good progress on the senior debt facility for the Tendrara project, which is planned to fund the majority of the phase two development costs," said executive chairman Graham Lyon.
"In parallel, we have now commenced a farm-out process to secure partner participation in both the development of the Tendrara production concession and exploration and appraisal in the surrounding exploration permits.
"Our re-evaluation of the potential of the Greater Tendrara and Anoual exploration permits has high-graded three drilling targets, two of which have previously encountered gas shows."
Lyon said the company believed mechanical stimulation was "the key to unlocking" the potential of the TAGI gas reservoir, as Sound had done at the TE-5 Horst discovery.
"Importantly, future discoveries in this area have the potential to be commercialised through the planned infrastructure that will be built at the TE-5 Horst development.
"We look forward to updating shareholders on progress as we move forward."
At 1418 BST, shares in Sound Energy were up 11.36% at 1.56p.
Reporting by Josh White at Sharecast.com.
