Morocco-focussed upstream gas company Sound Energy has agreed to divest majority stake in its eastern Morocco portfolio to an undisclosed UK company for $112.8m.

Under the terms of the non-binding heads of terms agreement, the UK-based firm will have exclusivity period expiring on 14 February 2020 to complete due diligence on the eastern Morocco portfolio and to finalise a binding sale and purchase agreement with Sound Energy.

Sound Energy plans to sell 51% (24.2% of a total of 47.5%) of its share in the eastern Morocco portfolio.

Earlier this year, the Moroccan-focused gas company has announced its decision to explore monetisation options for its interests in the Tendrara production concession, the Greater Tendrara petroleum agreement and the Anoual permits, in a bid to assess a sale of its eastern Morocco portfolio before making a final investment decision.

The firm, in a statement, said: “The Company has since entered into non-disclosure agreements with 23 companies and, following these, hosted some 15 management presentations which resulted in the Company receiving a number of non-binding offers for its Eastern Morocco Portfolio, delivering a range of valuations and risk / reward profiles.”

However, Sound Energy said that further exploration drilling is required to unlock full potential of the Tendrara basin.

Sound Energy to retain 23% stake in eastern Morocco portfolio

On completion of the latest deal, Sound Energy plans to retain a 23% overall stake in the eastern Morocco portfolio.

Additionally, the undisclosed buyer will have a one-year option to purchase a further 9% stake in Sound Energy’s remaining interest in eastern Morocco portfolio on the same terms.

Sound Energy chairman Simon Davies said: “The Proposed Transaction being progressed on an exclusive basis funds development of the Tendrara project, provides early monetisation of a substantial part of our established gas resources and retains upside for our shareholders through both future gas production and further exploration drilling.”

Last year, Sound Energy secured approval from the Moroccan government for the new eight-year Greater Tendrara petroleum agreement that combines the Tendrara and Matarka exploration areas.