Sound Energy plc (SOU) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Sound Energy plc Final Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives in the meeting itself. However the company can review the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you to Graham Lyon, Executive Chairman. Good afternoon to you, sir.

Well, thank you very much, Alessandro, and welcome, everybody, and happy St. George's Day to you all. We're going to give you an update today. I'm joined here with our CFO, Garry Dempster; and our VP Geoscience, John Argent. We'll be -- the 3 of us will be sharing the questions that you've kindly submitted. So to remind everybody where we are and who we are, just in case you've forgotten. We are a transition energy company in Morocco, which is an ideal place to the new business, domestic market [indiscernible] is required. We are getting close to producing them. We have a competitive advantage. We have our large play. We have our large discovery, the biggest in Morocco, and we are very advanced in the development of the first phase. There's a strong need for gas in Morocco and throughout 2 phases, 1 targeting the industrial market, our LNG with Afriquia and the Micro LNG project, the other into the power market with ONEE. So we've got 2 good projects that are moving along nicely. Since we last spoke to you, we have been working closely with ManaEnergy, our operator in the country, but it doesn't take away from the fact that we are now financially in a much more robust position than we were ever before. And therefore, we are luckily, fortunately funded to get through these developments. The projects have significant running room in the sense of we have exploration portfolio with plenty of upside, but we also have more gas to sell at Tendrara. So we haven't sold all of the gas that we have in our tank, in our reservoir. We sold just about half of it. So that gives us an opportunity to develop that for -- further. We are committed to doing not just what we do, but how we do it and how we do it in a compliant good way with environment, social and governance at our core. So for you long serving and long-suffering shareholders, here's the history, and I think it's well known to you. But I wanted to just show you how, over the last 5 years, we've transitioned this company from a pure exploration company that was up for sale to one that is very close to revenue generation, has a fully funded development at Tendrara, has 2 exciting exploration wells carried to drill and more in the portfolio plus it's got some money in the bank. So we're in a much different position. However, not very well reflected in the share price, and that is painfully aware to our Board and to everybody that works in Sound. So we're trading at about 0.65p. And you can see that our broker Zeus Capital, have evaluated where we stand today after the transaction with Managem and have a core net asset value of around 2.4p a share, so 3x, 4x where we are today. And then, of course, we've got the risk NAV, which includes some exploration, but also the development further in the area. Now this is highlighted to show you that the ups and downs of investing in the AIM market. So there are definitely highs, but there are also lows. I would also point out that where we are in this project over the last 5 years, we happen to have a couple of geopolitical events, one, COVID, the second one, Ukraine-Russian war. And now I suppose you could say Trump's coming along to make the third. So it's always been an interesting environment that we're working in, but we're now doing what engineers love to do, which is develop, produce and sell gas. So that's to give you a bit of a history lesson, if you're not familiar with it. What we've got on the left-hand side? This is our resource base 377 Bcf. We're talking gross numbers now. So that's not only found ManaEnergy volume. But I wanted to make a point that the separation of now where ManaEnergy is. In the past, you used to see the Italfluid logo there in the middle. ManaEnergy have converted the vendor financing contract into an EPC contract. That gives them a lot more control over the deliverables. So we have ManaEnergy providing the operations, the activities at the wells, the Micro LNG plant, Afriquia Gaz picking up the LNG. We are underway with 2 projects. Phase 1, as you well know, Micro LNG delivering gas by the end of this year, Q4. And Phase 2, I will talk about that a little bit in the Q&A with the idea of having FID finished by the end of this year. So we can go into an 18-month to 24-month development on Phase 2, our pipeline gas going into the power stations on the GME. Here's a nice picture to show you some of the activity that's going on in the bottom right-hand corner. This is the cold box. That's the heart of the Micro LNG project. This is where the gas is taken and refrigerated now to minus 162. Above it is the [ Amian ] towers, the different site views. You can see the roof being laid on top of the LNG storage tank. There's an inner tank, which has a roof as well. This is the outer tank with the roof. And I would say that's all now, it's welded in place, everything is really. But the encouraging news we hear from site, and we'll be able to confirm this more is both the worlds have now had the disk burst. That was the barrier that separated the wells from the reservoir. That's been burst. Both of us wells have now been flowed gas. So we've got gas at the site. We've got very, very nice flows, clean -- the wells have cleaned up. And so we have gas now sitting at the wellheads behind pipe and ready to -- sorry, behind the BOPs and Christmas trees and ready to flow. So yes, lots of activities over the next few weeks. Whilst we're not operating this now, we will continue to share information as and when it becomes available from the ManaEnergy on updates of where we are with the project. I'd like to pass to John now because please don't underestimate having 2 funded exploration wells in this environment on the AIM market is no [indiscernible]. So John, let me pass over to you.

Great. Thanks a lot, Graham. Really appreciate that. Whilst Graham has summarized the development activity there, let's turn to the opportunity we have to unlock what I believe are really significant resources in this basin. So there's a lot of information on this slide. I'll try and be as concise as I can be. But we have exposure to a huge area of high potential exploration acreage. It's held really under the premise of historically underexplored sub-salt petroleum plays, which is so prolific across North African and obviously extending across it into Morocco. So in Eastern Morocco, we have the Anoual and Grand Tendrara exploration permits. They have combined area of around 24,000 square kilometers, and they completely surround the TE-5 Horst gas development. And as Graham said, Managem is carrying us for the cost of 2 wells, SBK-1 and the M5 structures. Those are the targets for those wells at the moment. But we've technically matured 3 prospects, which you can see in the map there at the top right of the screen. So the SBK structure, first one to talk about there that flowed gas to surface when it was tested some 25 years ago now. So we have that well as a high chance, say 50% chance of a second well coming in and flowing gas from that structure. And we have a mean volume of around about 140 Bcf as gas in place with an upside of 225 Bcf. So a bit smaller than TE-5 Horst, but able to be tied back into the those facilities. Then we have the T4 structure, which is about 5 kilometers to the south of the TE-5 Horst. And whilst that well was drilled in 2006, now a little while ago, it's proved the presence of gas but did not flow on test because the reservoir, as we communicated before, was tight at that location where that well was drilled. So the fundamental risk of a new well on that structure, which we drill up dip from TE-4 is whether or not there's effective reservoir at that location to allow gas to flow at commercial rates. And we have a mean volume there of around about 270 Bcf and upside of 400 Bcf. And then lastly, the well that excites me is the -- or the prospect that certainly excites me is the M5 structure. So that's an exciting wildcat exploration well. It's an opportunity to drill the reservoir in a different part of the basin. It's a very large structure with the potential to have in excess of 400 meters of reservoir across it, and that compares to 100 meters of reservoir over the TE-5 Horst. So you can imagine it could be quite substantial in size. So the mean volume that we've calculated there from our assessment is nearly a TCF of gas in place of an upside of about 1.7 Tcf. So a potential game changer for the basin is successful. But it is an exploration well and so it carries, obviously, higher risk. Now in Western Morocco, there you can see hopefully on the map. We have the Sidi Moktar exploration permits as well. They have a combined are around 5,000 square kilometers, again very large area, completely surrounded -- surrounding the Meskala Gas Field, which proves the gas play that we're targeting there. It's at a much earlier stage in the exploration cycle than our Eastern Morocco assets that we have in Managem. It requires additional seismic to mature several leads into prospects. So we're seeking a partner to carry the cost of that survey obviously. So I would also like to add with regards to our and our partners' work commitments and extensions of these various permits. We're still waiting for a number of approvals and closure of discussions with ONEE and both the Ministry of Energy and Finance. And we need to conclude those discussions to have these approvals in place prior to these -- all these operations commencing. So we certainly look forward to providing updates as [ ManaEnergy ] ourselves go ahead and conclude that. So Graham, I'll pass back to you.

Thanks, John. We're going to keep you busy, I think, over the next year or so. Slide -- Slides -- the next slide is really just to show shareholders as a Board, we're very much focused on our key performance indicators, how we measure our success and how we measure our activities. And this is the 2025 target. So these are the what we're going to do. And there's also how we do it. But how we do it is to make sure we use the -- all the right tools in ESG to make sure we think 2 things environmentally, socially and well-governed business. With the overarching, and I can be absolutely clear to you, we had a fairly robust shareholder -- sorry, a robust Board meeting a couple of weeks ago. The #1 priority is to get the share price up. So that is front and center of where we are with our key performance indicators and metrics. Breaking that down, it comes into sort of 5 buckets. And clearly, Phase 1, getting the gas produced and making revenue is clearly an important target for this year and we do believe we'll achieve that in Q4 this year. Phase 2 engineering and FID, there's a lot of activity that's already concluded. We've got questions about that, so we'll explain that a little bit more. But with ManaEnergy and the -- let's say, the horsepower that ManaEnergy have brought to the table, we're confident we can take FID this year on that. And as I said, it's somewhere between 18 months and 24 months until we get first gas that way. John just explained some of the exploration. I mean, 2 carried wells, that's great by ManaEnergy. We're all happy to work closely with them. So we, as a non-operator, are doing everything we can to encourage them to get those wells going as soon as possible. And as John said, he's working with -- on the Sidi Moktar license. And of course, we have the hydrogen and helium work that we're undertaking and we'll report on that midyear. Clearly, some questions on our balance sheet. And our balance sheet is structured in a way we have some debt and a very clear KPI for 2025 is to optimize that balance sheet, reduce it where possible and look at alternate financing options. So -- and then finally, we want to extend the business, grow the business. We love Morocco. We have good supportive shareholders and good business partners in Morocco, good stakeholders in Morocco. So if we can expand in Morocco, we'd be very keen to do that. It is one of the sunniest and windiest countries in the world. So transition energy would be a good opportunity for us. However, we will look at hydrocarbon activities outside of Morocco that build to our strengths. We're not going to be going and doing some wild things, but we will try and grow the company with our resources that we've got at the moment. And then finally, we'll be opportunistic. As the market changes and opportunities come up, we will try and react to those. So KPIs very much how we measure our business, how we measure our performance. And of course, everybody's success. Ultimately, if we deliver all those 5 items results in a higher share price. I'm going to ask Garry, our CFO, if he would like to cover the financial slide. Garry you are very quiet.

Sorry, but just refreshing the mic. Is that better?

Yes.

Yes, the mic just dropped off for a second. So yes, good afternoon, everyone, nice to be speaking with you today. So this is a slide that I think many people that have participated in this call before will be familiar with. So the -- I guess, there's a couple of key messages here. One is that in terms of the left-hand side of the page, not much has changed in the sense that we still have a shareholder representation largely in line with the pie chart that we see down there. But the other thing that's important to consider are those 2 numbers in the box about that, the net resources and the net unrisked gas initially in place. So if you look at those, they are still very material numbers to have within the Sound portfolio. And that's post the Managem transaction that we did last year. So obviously, with that transaction and with the funding that, that brings, we're very exposed to obviously realizing the potential that lies behind those numbers. So that's something that we're hugely excited about Obviously, as Graham as mentioned, we do have significant debt on the balance sheet, there's no getting away with that. We've done that for historical reasons, the recent debt we've deployed has been related to getting the Phase 1 project on stream. And again, as Graham mentioned, the key priority for us this year is to look at restructuring the balance sheet to lower that debt position. So that's something that we're working on actively at the moment. And hopefully, over the coming months, we've got some exciting announcements to make in that domain. And then in terms of the key financial priorities, those again, they don't really change. We are targeting sustained revenue generation from Phase 1. That's a clear priority for us this year, as Graham as mentioned. We're also managing our cost base. And again [indiscernible] significant strides from what was a very high level back in 2019 to the levels that we're managing the business at today to achieve a 60% reduction in G&A is quite staggering. But we're very focused going forward in living within our means and operating within the financial envelope that we have. So that continues to be a key priority for the business. And then, of course, we continue to look at opportunities to finance the business as well from a growth perspective because we want to not just deliver on the opportunities we have within the existing portfolio, but we want to try and mature opportunities to grow the portfolio as Graham mentioned, potential opportunities in renewables but also in the conventional gas space. Those required to be financed. We're looking at creative financing solutions to enable us to deliver the growth aspirations that we have within the business. So Graham, I mean with that, I can hand back to you to summarize.

Thank you. Thanks, Garry. So we were able to see a few shareholders in January, those that accepted the invitation. We had our broker out at the site with us. You have an updated broker note from Zeus. So this was a little picture from people talking, and I'm sure some of you are on the call now. We have transformed Sound Energy. It was an exploration company that failed to sell itself back in 2019. We transformed it now. We're on the verge of revenue generation. We are fully funded for our Phase 2 development once FID is taken. We have 2 carried exploration wells which have -- 1 of them has a particularly large potential. But as John will tell you, there is some risk on that. The other is an extension of something that is already there. So -- and then we're working closely with ManaEnergy and, of course, ONEE, our state partner. So yes, we're poised to do some good things. We've got very clear targets in 2025 that we need to deliver on. And we're looking forward to executing on all of that. So with that, Alessandro, I think I'll pass back to you if that's okay.

[Operator Instructions] But just while the company take a few moments to review the questions that have been submitted today, I'd like to remind you the recording of this presentation, along with the copy of the slides and the published Q&A can be accessed via our investor dashboard. As you can see, we have received a number of questions, both pre-submitted and throughout today's live event. And Graham, if I could hand back to you to read out the questions and get responses to it's appropriate to do so. I'll just pick up from you at the end.

Okay. we'll go back into some questions then. And we had quite a lot of them. So I'll take some, Garry will take some and John will do. And then I see there some new ones coming through already. So the first question was about drilling, exploration drilling. We had several along the same lines here of, when will the drilling of exploration of Tendrara expansion start? It does feel like the gases -- the gas pedal has been fully released since the sale to Managem. And I mean, it's true to say ManaEnergy are the operator now, so it's not under our full control. We've worked -- we're working very closely with ManaEnergy. And in fact, we are providing some support to them as and when they require it. So John described the activity plan, what needs to be done and how we go about that. So -- but yes, I can say we're tracking on as I was in Morocco last week and having exactly those conversations with everybody. So yes. The next question is a very straightforward one. When do we start selling gas? The answer for that is Q4. That's been scheduled, that's announced. And it's committed under the EPC contract now. So moving from the vendor financing contracts and the EPC, Italfluid had to commit to certain things. And Q4 is where it's at, at the moment. I would also say ManaEnergy have put a lot of extra resources that when you have a vendor financing contracts, you don't. So ManaEnergy got construction managers on site, project directors, a whole lot of specialists, and they're doing everything they can to make sure that r Italfluid delivers the contract delivery date in Q4. I would say all the long-lead items are on site. I just told you that the wells have been opened up and they've cleaned up and they're nicely flowing -- well, gas is available to flow. So yes, things are coming together and commissioning midyear and for gas sales Q4. Another question, well, I'm going to let John answer this on drilling. You previously stated that you were spud by September, which was confirmed in your last investor presentation. Given that it's about 9 months to get that away, I assume you've already got 4 months' worth of work. Can you make these deadlines is spudding likely to happen?

Okay. I'll cover that one. So, yes, we discussed that in the last call, and we communicated that SBK-1 and the M5 structures were the 2 exploration wells, which comes first really depends on rig availability and forward planning. And we also said that Managem wants us to lead the exploration drilling and undertake that 9 months is a feasible lead time for spudding exploration an well. So as we always say, drilling exploration well requires certain lead time. Our estimate would be that, that would be a 9-month lead time is required to take -- undertake detailed engineering, all drill the LLIs, long lead items, secure rigs and all the associated services. And this is entirely normal across our sector. Obviously, now that Managem energy -- ManaEnergy are the operator, they can drive the work and the planning and everything else. So that's all ongoing. So for example, earlier this year, we held a workshop which I ran for them with ManaEnergy and in [indiscernible] and that was obviously well received and very well attended. And we're obviously, I'm advising ManaEnergy along with my colleagues as well, to progress the exploration drilling, but in parallel to all he development activity as well. So we'll continue to provide an offer support and advice, and we look forward to providing an update when we have a firm drilling schedule from ManaEnergy in place. But obviously, I'm not definitely delighted to be working with such a large organization as they are. And they've got great resources at their disposal as well. So I hope that covers it.

Thanks, John. There was another one, which I think you just covered, which was about drilling timing. So the next question was about Phase 2. Can we have something a little bit more granular than just near-term mentioned in the presentation, update EPC, FEED, close bank, close GSA with -- so we're nearly 4 months into that. So what's happening. Well, let's go through this again. We work with ManaEnergy the operator, ONEE is our partner. So Sound Energy, it's actually Sound Energy Meridja Limited, the company that owns 20% of Tendrara works with ManaEnergy and with ONEE. So we have a planned management committee meeting with them in May where -- with all the partners, and we expect ManaEnergy to -- we can formally hear that the feed update work has been commissioned and the early indications are, if they have continued exactly with the way we had lined it up. They will -- the feed takes about 6 months. Now in parallel to that, we need to find the EPC contractor. We need to conclude with ONEE. The contract are all in place, [indiscernible] bank debts in place is the CPs that need ticking off. So FID by the end of the year. And hopefully, 18 months to 24 months for delivery of Phase 2. Again, another question on drilling. But this time, let's give you another, in Sidi Moktar. You said you'd start seismic early next year. I assume you will be commencing activity within the next couple of months before we move into the second half of 2025. Or is this going to be another missed deadline?

Okay. So obviously Sidi Moktar on shore. We operate that license. So that's something that we're in full control of. We hold 75% equity in that license, and we carry ownings 25% equity that they have under the terms of the petroleum agreement. So we pay 100% of the costs. So the seismic, it's a significant exploration expense for Sound, particularly for us to proceed entirely alone. So the cost of which is it's coming less than $6 million, but it's a substantial piece of investment. So as we communicated, we continue to look for a potential partner to share this expense, and we're engaged in several discussions with third parties. But in the meantime, I'm very much kept engaged with various seismic service providers and various contractors, continue to monitor the market and equipment availability very closely. So we're ready to move extremely quickly once we have that partner on board.

Thanks, John. One for you, Garry, coming up about the Zeus half yearly report, but it was actually the year-end report, right? You confirmed in the past that gas sales of Phase 2 could be mid-2027. And in the April report of Zeus, it talked about early 2028. What's changed in the last 4 months, and we're already talking about another slippage. We were keen to say ManaEnergy or fast-tracking stuff, but there's no sign of that yet.

Okay. Thanks, Graham. So the view hasn't changed that we believe the project will take around 18 months. That was the timing that we had when we undertook FEED back in 2019. So it's certainly achievable to deliver the project first gas 18 months from FID. As Graham has mentioned, we are planning to embark upon FEED very shortly. And part of the outcome of that FEED process is actually coming up with a more definitive, more robust schedule for the project. So mid-2027 still remains entirely achievable.

Yes. Yes, exactly, Garry. Next question, also for you, Garry. So regarding the last RNS for the year-end 2024 results. Basically it says we're running out of money and business isn't a going concern. So what's going on? How much of these delays in bringing online the revenues from the LNG affected us? And how much money do we need to borrow to stay solvent?

So the first thing is that the RNS doesn't actually say that we're running out of money. Otherwise, I would be exceptionally concerned. And it doesn't also say that we're not going to continue on an ongoing concern. So I just want to reassure shareholders that, that's not the case. Obviously, we've got a statutory obligation to update the market on the company's ability to continue as a going concern. And this is a process that's examined by the auditor through the annual review and actually at midterm as well in a very meticulous and detailed manner. So they look at a variety of different forecasts, different scenarios in the business. And obviously, look at our capability to fund the plans that we have for the business. So, again, I just want to reassure our shareholders that we do fully expect the company to continue functioning as a going concern and indeed, as we always have them. And I mean, just to give you a sense as to how the auditors look at this. John mentioned Sidi Moktar and that we are seeking to bring in a partner there to share the funding requirements or work obligation. So one of the scenarios we have there considers the cost of the full committed program. At the moment, we don't have a partner on Sidi Moktar. So they consider the full $6 million cost of that cost -- sorry, of that work program. And clearly, we are planning to bring in a partner. So that's a pathway that's a mean through which we'll bring in more capital into the business to enable us to continue fulfilling our financial obligations and remain functioning as a going concern, but please be assured that we fully expect to continue as a going concern throughout the next 12-month period. And obviously, as Graham has pointed out, we've got the exciting journey towards revenue in a few months' time as well.

Yes, exactly. Next question was about me buying a few shares. Thank you, Graham, for demonstrating your confidence. Why have other Board members not bought shares? Don't they share the same confidence. Can we be assured that my purchase is not an attempt to raise the share price as a prelude to raising funds through another share placement. There's also sort of a supplemental question that came through from Jeff P live saying, what changed so you're able to buy GBP 18,000 worth of shares, no close period because that was your excuse before. You're still referring back to COVID. You're now talking about Trump, haven't you been used to this basically over the next 9 years -- or the last 9 years? Well, first of all, I maxed out my [ ISA ] at GBP 20,000. Yes, it was the day after, if you noticed the year-end results were out. So we were, for the first time ever in -- for many, many years in a nonclose period. If you read the RNS closely, everything was disclosed in there, and that's why that thing sits at the top, which says all the information out there. And so yes, it really was the only time I could buy shares, though, I thought I'd take the first opportunity before something else crops up and puts us into a close period again. As the -- my fellow Board members, they both own shares, they both contributed and bought shares the last time we did a raise. So -- and we should not underestimate the guys on the call with you are not on the Board, but they also own shares in the company and buy shares in the company but that doesn't get reported, okay? So the other -- but of course, when we're in a close period, we're in a close period and we'll have to get an amazing amount of clearances so that we can trade. The other issue is did I buy shares just to tempt the share price high before there was another raise and more dilution. If you remember from the AGM last year. We do not have authority to issue shares on a non-preemptive basis. So we can't do that. And if we do want to raise any money for any specific purpose, which we can do. We have to come back to shareholders and you get the opportunity to participate on the same terms and conditions as anybody else. So we would either do an open offer or a rights issue. So no, we have no authority to issue shares at the moment from our shareholders. And yes, we were out of a close period. And unfortunately, because of, let's say, stuff that's going on. We are sometimes privy to information that does preclude us from trading shares. Garry, another one for you now. Our debt is in excess of GBP 30 million and 20% of Phase 1 will make little impact on this. Is there some way a futures contract with revenue now for the anticipated and effectively assure future LNG can be obtained? Basically, how we're going to manage the balance sheet?

Yes. Okay. Thanks, Graham. So I think the first thing to mention is that it's really important to understand that the repayment time lines for the Afriquia debt for the corporate bonds are in the future. We begin paying the principal on the Afriquia debt in December of 2028. So that's well after we expect to be generated revenue from the Phase 2 development in addition to Phase 1. So we'll be generating significant revenue at that junction point forward from there. So that's really not a concern in any shape or form. The corporate bond that matures a bit earlier, December 2027, but as many people that are on this call will be aware we've successfully restructured the bond twice since 2021. So through that process, we've developed a very good relationship with bondholders. They are keen to see revenue generation. They're keen to see the company succeeding. We regularly engage with them. We're engaging with them, and in fact, at the moment because I mentioned earlier that we are looking at some balance sheet restructuring. So we're not -- a significant debt yes, clearly. But we're not concerned with our capacity to meet the financial obligations that we have to Afriquia and to the bondholders. So hopefully, on the corporate bonds, I mentioned a few minutes ago, we should be in a position in a few months to release some very positive news in the coming period.

Thanks, Garry. Next question is more about the Afriquia gas price for Phase 1? What can we expect for Phase 2 for the gas price. And we have informed that TE-5 Horst has 377 Bcf potential. It's actually 2C resource. So a quantified amount. It's not potential, it's gas there under the 2C classification. What is a realistic retrievable volume and what price can be put on it? Can you give us an estimate of the range. Well, Phase 1, we're underway with that Afriquia gas, Phase 2, the gas will be sold to ONEE. That's under GSA. That's -- we have that GSA. What we have disclosed is the revenue that we expect to have from Phase 1 and Phase 2, and we've also disclosed the volumes that we expect to produce and therefore, mathematicians amongst you can divide 1 by the other to get the gas price. The gas price is confidential, okay? We are and ManaEnergy are in conversations with ONEE about optimizing this gas sales agreement, and we had the sort of discussion that Trump doesn't influence things. Well, look, we're in a geopolitical environment and since we signed this GSA with ONEE, that's been a Ukraine war and there's Trump, and it does make a difference to the gas price in Europe. You've probably all seen that in your own homes. So there is an opportunity for us to optimize that GSA. So, yes, we're moving in. On the volume side, the slide we showed on the deck where we -- I made the point about the 377 Bcf, that's raw gas. So that's all the hydrocarbon gas and a few of the impurities, nitrogen and CO2. And then the volumes of gas that we've sold. So the volumes we've sold come to, I think, is 145 Bcf of the 377 Bcf. So still a 230-odd Bcf to sell. The key is Phase 1 and Phase 2, lock in the infrastructure. They lock in the production, they lock in the returns. And then we have additional gas to sell, which we can sell in the marketplace. We can either sell it on spot, we can sell it under a shorter-term contract and take advantage of the peaks and the troughs, more likely the peaks in any gas price. So capacity of the pipeline will allow us to sell a whole lot more gas provided we drilled enough wells, and we've got the processing capacity. Here we go, Garry, on tax optimization. There's a 10-year tax holiday before the corporate tax kicks in. The clock starts ticking as soon as we produce the first cubic foot of gas and sell it at Tendrara. Is there something going on with ManaEnergy to optimize the delay in the Micro LNG production to combine and squash the Phase 1 and Phase 2 together so that we save more money on tax payments?

Yes. No. I think the first thing to clarify there, Graham, is the 10-year tax holiday, which, as you see, commences at the start of regular production from the concession applies to all the licensees and not just the Sound Energy, not just one also to ManaEnergy. So Mana are fully aligned in driving Phase 1 to first gas as early as possible in line with the plans for a commencement later on this year. So there's no divergence there in terms of our alignment on that particular point. They're not doing any tax planning here to try and optimize things. They simply want as we do start producing gas as quickly as possible.

Yes, exactly. John, it's not really the geological question, but I'll ask -- let you answer it if you know the answer. if there's a success or M5 or SBK-1 extension TE-4, do they each have their own tax-free holidays? Or is it restarted?

Okay. Yes, they do each of their own holidays, if you will. So if discovery is made, there's an application is made for a production concession to proceed with the development in that discovery and the tax-free holiday applies to the production concession for that discovery.

Okay. Okay. Another one on scheduling of first gas. We're 2 years behind schedule. I think we said at the end of last year, but anyway, we're 2 years behind. You said it was the cryo tank that was on the critical part. That was true at that time. It's not anymore. When can we expect production? Any charts we get it sooner rather than later or sooner than Q4. No, I think the chances are getting earlier than Q4 is pretty unrealistic. There has been a very heavy negotiation with ManaEnergy and Italfluid converting that vendor financing contract into an EPC contract when it's a more robust target. So, yes, we do expect -- I mean, there's gas to the surface today, but it's not sales gas, right? What we expect is sales gas in Q4, and it does give a lot more credibility to the schedule now. And ManaEnergy have put the resources behind it to deliver. I can assure you, that's very much on their agenda to deliver gas in Q4. And very much in Italfluid's feeds are held to the final because they have a lot of penalties if they miss that date. The next question, can we have a reassurance that the feed and FID are progressing Well with Mana what are the realistic time frames? Well, Garry, has now answered some of that question. And it's -- yes, it's -- much of it's unchanged. The pipeline is the same size. There will be a reduction in the processing capacity rather than doing a massive processing plant, we'll build in stages because that's what you do when you're in the desert. You drill the wells at the right time, you phase your capital investments. But it's there's no reason to suspect that once we take FID that we can't deliver this project within 18 to 24 months. And in fact, if anything, it's more likely now the world is a bit more stable in the sense of steel production that we get in that period. And we expect the FEED study to take 6 months. So it could be 5, it could be 7. Question on Trump. So yes, when I brought it up earlier, it was because one of the questions raised it. Is this going to have an effect Sound? Is he trying to close the door on imports to the U.S., it will be a nice position for us to be exporting LNG. If we do, we're not going to, we're going to produce the gas and put it down that pipeline and take it into Europe. So the good thing is the relationship between the U.S. and America is very positive and that America is in a trade surplus with Morocco. So massive investments going to go in on the air fleet in Morocco of which Boeing is likely to win a large chunk of that. So you can see that the imbalance is very much on the down side from Morocco. And hence, as of when we started this presentation, the tariffs on Moroccon goods getting into the U.S. are the lowest like the U.K.s. Right. We're running through -- I can see we've got 15 minutes left. Is progress, John, being made on work with Sidi and finding a partner? What update have you got? Because whilst we're concluding the license formalities, you haven't stopped talking to people to potentially come and be a partner?

No, that's right. So I think part of the question is well, they're talking about when we're drilling likely to start on that license on Sidi Moktar as well. So I think I've answered a lot of that earlier. But as I said before, the first step is the seismic survey to mature the lead into drillable prospects. In regards to sort of time frames about progressing towards drilling from seismic, what we did in Eastern Morocco when we undertook airborne gravity [ 4,500 line ] kilometer seismic -- sorry, it was [ 2,800 line ] kilometer seismic survey. And we drilled 2 wells as well, all in the space of 18 months. So the right resources behind us, we can certainly accelerate activity.

Good, thanks, John. And one that you need to pack yourself on the bank on because I know you put a lot of effort into making sure it looked good. The website is much improved, but why is there only a video from 2 years ago and not recently?

Maybe because I'm not a website designer and I did a lot of that in my spare time. It's on my day job to do website design. We're a very capable company being able to do that. Thanks for the positive comments on that. But yes, whilst it's looking a lot better, it benefits from reduced ongoing maintenance costs as well, which is obviously important keeping our costs down. And basically, for the drone footage, I certainly didn't want to go through the expense of commissioning additional drone footage. As you've seen, we've released lots of photographs on our other media channels. And there's a lot but more additional equipment has arrived, yes, on site construction is taking place. Yes, it would be wonderful to have more drone footage over there. But I think I mean the drone footage we have, it shows the scale of the site.

I'm sure ManaEnergy will organize something later on. But also bear in mind, you can't just fly a drone over these sites. It's a military control area. So okay, Garry, why haven't you paid the dividend here? When can cash flow start? And will you pay a dividend? And will this help the -- stopping the sell-off in the stock?

Yes, okay. We'd love to be in that place. And look, I think we've discussed this a number of times. It's a reasonable question. But until we've established stable, long-term and substantial revenue generation. We're not really a dividend stock. So we won't be paying a dividend until such time as we achieve that. We obviously want to grow our business. We've spent the last few years transitioning the business and dealing with some legacy issues getting funding in place to bring about that substantial revenue generation in the future. But we also want to grow the portfolio. So the strategy we have within the company is to deploy discretionary funding that we have and potentially additional funding into further growth for the company to provide -- to create a really robust diverse portfolio of assets. And from there, hopefully have much longer revenue generation capacity that we have [indiscernible] examine the dividend policy of the group. But obviously, there's 2 ways of delivering to shareholders There's deploying and dividends. But obviously a key part of delivering shareholder value is appreciation in the share price. And I think it's not that, probably we're more focused on at the moment we've got multiple triggers, as Graham mentioned earlier, to substantially re-rate the stock, many of them hopefully over the next coming period of time. So as we look upon these milestones, then that gives us the opportunity to give some shareholder growth back to our shareholders.

Thanks, Garry. A quick question now. There was an article posted about ourselves and Predator being looking at the Casablanca Exchange. Is there any truth in this? We can't comment on behalf of Predator. You can read their RNS' and see what they say. We don't have any immediate plans to list on the Casablanca Exchange, but we're also -- we're always open to other sources of funding if the markets are sensible to do that. So it's not in our immediate plans. John, TE-5 area was tested for helium. What can you tell us about that?

Okay. So basically, there was gas -- the gas from the 2006 TE-5 well test that was analyzed for helium. Helium presence was detected, but we're talking about very small quantities, okay? So 0.09 mole percent. So not considered commercial levels, but it's there, okay? So new fresh samples, those could be obtained during production and more accurate measurements could be made. So, obviously, it's a component of the raw gas, a very, very minor component, but we've made ManaEnergy aware of that. So, I guess, it also brings us a little bit, I can plug our agreement with Getech for the hydrogen helium exploration across Morocco. And just to let everyone know that that's on track. The results of that regional screening study, we delivered this quarter. We look forward to updating everyone on that piece.

Thanks, John. Another operational one to -- it says for reentry of SBK-1, I think you can clarify that. Wouldn't a new EIA be needed?

Okay. So to be clear, this is -- this will be a new well. It won't be a reentry of SBK-1 because that well was abandoned by the previous operator many years ago. So it's a brand new well drilling. A new EIA is required, but we don't anticipate that being an issue or a critical path item, okay? It hasn't been in the past. It takes a few months to undertake an EIA and we subcontract on ManaEnergy well. But M5 and TE-4, those targets, they do not require EIAs to draw them because we already have those in place.

Okay. Great. Thank you. And then I hope the shareholders and the interesting parties like it. We're trying to mix it up a bit, so it's not just me talking or John talking or Garry talking. So over to you, Garry. How well you've been getting on with the bondholders? Have you started renegotiating the bond?

Yes. So I think we've largely kind of covered this. The engagement with bondholders is continuing to advance on a regular basis. And again, as I mentioned, one of our priorities is the restructuring of the balance sheet. So yes, we have been in contact with bondholders.

Great. Thank you. That was all of the pre-submitted questions. I'm going to go through the ones that are coming online if they don't -- if they are new topics. If they pretty much around the topics we've already had, then if you can bear with me because we've only got 7 minutes left, I'll drop it. How do you plan share price appreciation? Well, the idea of that slide that we showed at the KPIs, if we can deliver first gas, we can take FID. We can spud an exploration well, grow the business and restructure the debt. There's 5 really meaty things which will grow the company, and we believe shows share price appreciation. Is the political situation in Morocco, a major risk to operations? I don't know if you watched Morocco lately. It's a very stable kingdom. It's got good security. It's a safe place to travel. It's the largest influx of tourists into Africa in any country. So it's a good place to work, and it's safe and secure where we are in Tendrara. There's virtually nobody there. So yes, we -- I think there's no political -- sorry, no, there is limited political risk of anything changing dramatically in Morocco. Are there revenue agreements in place to sell gas extracted? Yes, we've got 2 gas sales agreements, 1 open take or pays. So yes, yes, definitely. Otherwise, we wouldn't get bank debt financing. Announcing a drilling program will have a positive effect on share price. Yes, of course, until we drill a dry hole and then it will come down again. But we are confident that at least 1 of the 2 is going to be quite successful. The other one, M5, as John said, is a game changer that comes in, but that will be very material. Phase 1 LNG revenue, that's in the broker note. It's around about $6 million revenue to Sound, our share of 20%. While I suppose how difficult it is to face retail shareholders have found the update to be rather negative. I'm not confident -- sorry, David. That's not really a question? Is that? Sorry, we have a very clear plan. I think what we've tried to show is in 5 years, we've taken the company from not a very successful exploration company trying to sell itself into one that is fully funded for development, going to generate revenue has 2 exploration wells. How many other AIM-listed companies have got 2 fully funded exploration wells on their short-term agenda? On restructuring -- debt restructuring, we've got all of these things in our plan. We're going to do our best to deliver those. So hopefully, David, you can stick with us. Thank you, John B, on the comment, David J, again, Ukraine and Trump. I'm not sure what the question is. We'll drop that one, David, if you could expand it a bit more. That's all of the questions that we've got online. And we've got 3 minutes left. So can I pass you back to Alessandro.?

Yes, of course, and thanks very much for being [indiscernible] to your time and answering all those questions from investors. Of course, the company can view all the questions submitted today, and we will publish a response out in the Investor Meet Company platform. But just before redirecting investors to provide with their feedback, which is particularly important to the company. Graham, can I just ask you for a few closing comments.

Well, I tell you you've got to tell them upfront, tell them in the middle and tell them at the end. I think I've told it enough times. Those KPIs are so important for us to deliver on this year. First gas Q4, we will do it, FID by the end of the year. Getting the exploration well going, whether we actually spud in the next week or 2. But to have a confirmation that we've got this rig, it will be drilling either M5 first, the extension of SBK-1 or maybe even TE-4. But we've got 3 wells that we like. That will be helpful. Bond restructuring, debt restructuring, we're working on that hard and we have a way -- we have a plan that we want to get to. And then a new business opportunity in parallel to all the day job where we're working up some of those opportunities as well. So look, please, gentlemen, we have transformed Sound in 5 years. We believe we're a compelling access to Moroccan gas and transition energy and we believe there's potential growth beyond. So stick with us, if you like. Thank you very much. That's it Alessandro.

Perfect. And I'd like to thank you once again for updating investors today. Can I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations. It only take a few minutes to complete, but I'm sure will be 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, and good evening to you all.