Sound Energy Advances Moroccan LNG Project and Expands into Hydrogen in Half-Year Report

Energy transition moves: HyMaroc and a renewable power JV

Sound has formed HyMaroc Ltd to explore for natural hydrogen and helium in Morocco. It has also signed a binding agreement to create a JV to produce and sell renewable energy via access to the medium-voltage grid. Financial terms and timelines were not disclosed, but the direction of travel is clear – diversify while leveraging in-country relationships.

Exploration: two carried wells lined up, licences in renewal

Exploration licences (Grand Tendrara and Anoual) are in the process of extension and renewal. Under the Managem transaction, Sound is carried for one well on each permit – a useful way to keep exploration alive without stretching the balance sheet.

• Grand Tendrara: SBK‑1 structure – unrisked 140 Bcf Pmean GIIP. SBK‑1 previously flowed 4.41 mmscf/d after acidisation, and Sound believes modern stimulation could unlock commerciality.
• Anoual: M5 prospect – unrisked 943 Bcf Pmean GIIP. Both wells could tie into Phase 2 if successful.

“Carry” means the partner pays Sound’s share of defined costs – in this case up to $3.6 million for SBK‑1 and $2.6 million for M5 – plus Sound has a Phase 2 development carry up to $24.5 million and a $1.5 million payment on Phase 2 first gas.

Financial snapshot: smaller loss, tight cash, material borrowings

There’s a marked improvement in the income statement versus last year’s impairment-heavy period. However, cash is light and the company flags a material uncertainty around going concern pending additional financing.

Metric	H1 2025	H1 2024	FY 2024
Loss after tax – continuing	£5.526 million	£125.088 million	£126.624 million
Cash and short-term deposits	£2.831 million	£0.235 million	£7.895 million
Loans and borrowings	£37.647 million	£35.534 million	£37.707 million
Net assets	£11.623 million	£19.560 million	£17.017 million
Administrative expenses	£1.437 million	£1.398 million	£4.586 million
Foreign exchange (loss)/gain	£(3.866) million	£0.155 million	£2.294 million
Deferred consideration asset	£20.082 million	not disclosed	£21.045 million

At 31 August 2025, unaudited cash was approximately £2.1 million. Management is working to access up to $5.0 million of the new facility to fund Sound’s Phase 1 capex and notes other potential funding routes (debt, equity or equity-linked). The board adopted the going concern basis, but explicitly highlighted the need for additional financing as a material uncertainty.

Debt structure and key instruments

• Secured bonds: €25.32 million, maturing 21 December 2027, effective interest about 6.5%.
• Afriquia Gaz loan note: $18.0 million facility, weighted effective interest about 6.2%, principal repayments commence December 2028.
• Convertible bond interest outstanding: £0.6 million (discounted carrying amount £0.355 million across the instrument).

Why this update matters

• Line of sight to first revenue: commissioning of the mLNG plant and successful well tests are the last big operational hurdles. If the $25 million facility is accessed as planned, Phase 1’s EPC route should be fully funded at the consortium level.
• Diversification with carries: the Managem deal gives Sound exposure to two potentially meaningful exploration shots without cash drain, plus a Phase 2 development carry and a $1.5 million milestone on first gas.
• Strategic optionality: HyMaroc and the renewable JV expand the Morocco footprint beyond gas. Financial details are not disclosed, so think of these as options rather than near-term earnings drivers.
• Risk remains funding and timing: cash is tight, and Phase 2 depends on FEED completion, EPC selection and debt close. Facility access terms for Sound’s $5 million share are still being finalised.

Operational colour: what’s already built at Tendrara

There’s tangible progress at site: the LNG storage tank foundation and shells are completed, firefighting systems, fencing and lighting are in, and gas plant packages have arrived via Moroccan ports. Flowlines and wellhead kit have been delivered, and the TE‑6/TE‑7 conversion to corrosion‑resistant tubing is done. Throughout 2025, equipment is being assembled ahead of commissioning in the final quarter.

Governance, team and Morocco partnerships

Zeus was appointed as NOMAD and corporate broker. A new CFO, Andy Matharu, joined full time on 1 September 2025 with a focus on balance sheet restructuring. The company notes the passing of its HSSE Manager, Sean Gallagher, and recognises ongoing support from Moroccan ministries and ONHYM.

What I’ll be watching next

• Confirmation that Sound has accessed its $5 million share of the new facility and any remaining conditions precedent.
• Commissioning milestones at the mLNG plant – especially O&M contract finalisation with Italfluid and first gas in Q4 2025.
• FEED update results for Phase 2 and selection of the pipeline EPC contractor – the gate to debt close and FID.
• Formal approvals for the Grand Tendrara and Anoual licence extensions and drill timing for SBK‑1 and M5 (both funded by Managem).
• Any detail on HyMaroc and the renewable JV economics, permitting and timelines.

Bottom line: constructive momentum, but finance is the swing factor

This reads as a company transitioning from development into early production with credible partners in-country. The EPC switch, bank facility and successful well tests are all positives. The counterweight is the balance sheet – low cash and material borrowings – and the dependence on partner-led processes for Phase 2 financing and execution.

If first gas lands by year-end 2025 as guided, the narrative could shift decisively to cash generation. Until then, this is about hitting commissioning milestones, closing funding, and keeping costs tight. For more detail, see the company’s site at soundenergyplc.com.