Sound Energy, the transition energy company, announces its unaudited half-year report for the six months ended 30 June 2023.

Development of the Moroccan Tendrara Production Concession

Phase 1 Micro LNG (''mLNG'') project (''Phase 1'')

• Site preparation activities completed by March 2023
• Completed mLNG tank foundations by May 2023
• Currently, extensive activity taking place offsite with our contractor and its sub-contractors designing and constructing plant equipment for delivery to site late 2023, early 2024
• Design, planning and procurement of equipment of workover of the wells TE-6 and TE-7 progressing with rigless activities planned for later 2023and rig activities scheduled for early 2024.
• Phase 1 LNG delivery scheduled to commence in 2024

Phase 2 Gas (pipeline) development (''Phase 2'')

• Receipt of binding conditioned term sheet in June 2023, for project financing from exclusive lead arranger, Attijariwafa Bank, Morocco's largest bank

Corporate

• In June 2023 entered into an exclusivity period and non-binding term sheet with Calvalley Petroleum (Cyprus) Limited for a partial divestment of a net 40% working interest in the Tendrara Production Concession and the Grand Tendrara exploration permit
• In May 2023 the Company entered into a full and final settlement of its tax disputes with the Moroccan tax authorities and received court papers in June 2023 confirming the withdrawal of the cases between the Company and Moroccan tax authority
• We have expressed our condolences to all those affected by the Morocco Earthquake of 8th September, and we have offered and given our support in country and continue to do so. As previously announced to the market at the time, our Sidi Moktar well assets are located some 100 kilometres to the northwest of the earthquake epicentre within our Sidi Moktar Onshore exploration permits, these have not been impacted by the earthquake in any way. Our operations and site development work at Tendrara Concession, Anoual and Grand Tendrara exploration permits some 600 kilometres away are unaffected.

Financial

• Drawdown of £2.5 million of up to £4.0 million senior unsecured convertible bond instrument in June 2023
• Full and final settlement of its tax disputes with the Moroccan tax authorities - phased payment schedule of approximately US$2.5 million as a full and final settlement against a claim of approximately US$24.0 million
• As at 31 August 2023, the Group had unaudited cash and short-term deposits of approximately £4.0 million (£1.4 million held as collateral for a bank guarantee against licence commitments)
• Post period end receipt of Tendrara Concession receivable of approximately £2.3 million

Graham Lyon, Executive Chairman said:
''I am grateful for continued support of all our shareholders and can say that the first half of 2023 saw significant advances preparing the Company for revenue generation.  Significantly, we have laid out a funding plan for Phase 2; have made steady progress on Phase 1 with mLNG tank construction and tank site preparation, well preparation and design engineering;  have identified a potential partner to enter the Tendrara area to work alongside us; removed the tax claim overhang; brought in new bridge funding and collected the receivables. All in all, a busy first half of the year.

There is much to do in closing and completing on these various initiatives and in positioning the Company for production and for further growth. As our key project in Morocco is considered of strategic importance in the country all efforts must be placed in ensuring a safe and efficient execution of our business plan within the resources available.

I would like to thank the Ministries in Morocco and ONHYM our state partner for their continued co-operation and increased support.''

KeyFacts Energy: Sound Energy Morocco country profile