LONDON (ShareCast) - (Sharecast News) - Morocco-focussed upstream gas company Sound Energy has been notified that its former Italy subsidiary Apennine Energy has entered into a pre-sale agreement with a buyer, under which Appenine agreed to sell the area of land on which the Badile exploration well was drilled in 2017.
The AIM-traded firm explained that, on 8 April 2018, it completed the disposal of the former Italy portfolio through the sale of Sound Energy Holdings Italy (SEHIL) to Coro Energy, and as such, Apennine is a wholly-owned subsidiary of Coro.

As part of the disposal, Coro agreed to undertake the restoration and subsequent sale of the Badile Land, and to remit any net proceeds from a sale there to Sound Energy following completion.

Under the disposal, the company agreed to pay the Badile Land restoration costs of €0.87m (£0.78m) to Coro.

To date, Sound said it had paid €0.24m in administrative, permitting and preparatory costs, in relation to the proposed restoration activities.

It said Apennine had now entered into a binding pre-sale agreement with a buyer for the proposed sale of the Badile Land, under which the buyer had agreed, in addition to purchasing the land, to take responsibility for meeting the remaining costs of its restoration.

The restoration works would continue to be carried out by Apennine, but the costs of those activities would, under the terms of the pre-sale agreement, now be invoiced directly to the buyer, and not Sound Energy.

Under the agreement, the sale of the land would proceed in two independent stages, being an initial sale of 'area 1', on which there are no restoration works to be undertaken, for consideration of €0.3m, and a subsequent sale of 'area 2', which remains subject to restoration works, for €0.35m.

The restoration works on area 2 were pending a decision from Italian local authorities as to their proposed scope, with completion of the sale of area 1 not conditional on the sale of area 2.

Sound Energy said that, while the pre-sale agreement was binding as to its terms, the sale of area 1 remained subject to the entry of a further definitive area 1 land sale contract prior to 10 October, and the sale of area 2 would require the receipt of Italian ministerial certification of the completion of restoration activities, with a long stop date of 31 December 2023, as well as a further definitive area 2 land sale contract .

On completion of the sale of both areas, the firm said it expected to receive a total net consideration of €0.6m, net of administrative and legal costs.

"Confirmation that Sound Energy will not, pursuant to the pre-sale agreement, be exposed to the ongoing restoration obligations in Italy, and that Sound is expected to benefit from the terms of the sale of the Badile Land between Appenine and the buyer, will enable our small team to focus entirely on the company's strategy of transitioning the company into a cash-generating business with significant exploration potential," said executive chairman Graham Lyon.

At 1152 BST, shares in Sound Energy were down 1.33% at 2.04p.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE