Sound Energy shares up 270% since June

AIM listed O&G explorer Sound Energy has confirmed a significant gas discovery at the Tendrara field in Morocco. The discovery, which is potentially a single gas column, flowed at 17.0 MMscf/d (17.5 million cubic feet per day), a highly commercial rate.

Prospects at the Tendrara field have driven Sound Energy's share price up 270% in 5 weeks, and today's announcements saw a further 13% gain in early trading.

In a 12-page report published this morning, broker finnCap said the results were better than expected:

"The company has successfully achieved a flow rate of 17mmcfd following completion of drilling and mechanical stimulation of the well. This is much higher than was expected and indicates that the field is commercial."

Since June 30th, the company's share price has increased 270% to 65p, a value not seen since March 2006.

finnCap have valued Sound on a DCF (discounted cash flow) basis for its current and forecast production onshore Italy and its extensive appraisal and exploration portfolio:

"We have calculated our RENAV* on a pre-farm-out/funding basis and highlight that this will need to occur for each asset before it can progress."

*RENAV = Risked Exploration Net Asset Value

Analyst Dougie Youngson said there were a number of future share price triggers that could have "significant" impact on the company's valuation:

• Result from the TE-7 slanted well in Morocco (December) and results from the extended well test thereafter
• Farm out and funding of the Badile well in Italy
• Commencement and result of the Sidi Moktar extended well test
• Further details on the development and timing of Tendrara coming onstream

CEO James Parsons, said:

"I am absolutely delighted to confirm a material commercial gas discovery at Tendrara and a resounding success at the first of our three Strategic Plays.

I believe Tendrara, Meridja and the Eastern Morocco TAGI play have the potential to be a material hydrocarbon province on a regional scale and therefore to transform both Sound Energy and the Moroccan gas industry."