Acquisition of Additional Eastern Morocco Interest

14 June 2021            

Sound Energy plc

("Sound Energy", the "Company" and together with its subsidiaries the "Group")

Acquisition of Additional Interest in Eastern Morocco Portfolio

Sound Energy plc, the Moroccan focused upstream gas company, is delighted to announce that it has entered into a sale and purchase agreement with Schlumberger Holdings II Limited (the "Seller") to acquire the entire issued share capital of Schlumberger Silk Route Services Limited ("SSRS") (the "Acquisition").

Acquisition Highlights:

·    The Group will have increased participating interests in in the Anoual and Greater Tendrara exploration permits in Eastern Morocco (the "Exploration Permits")  by 27.5% to 75%, together with full control over its 75% participating interest in the Tendrara Concession

·    Accretive acquisition on highly attractive terms

·    Positions Sound Energy to generate enhanced returns, cashflow and value as it moves forward the phased development of the TE-5 Horst

·    Significantly enhances discovered and undiscovered resource position

·    Increased participating interest to 75% will not impact the planned phased development strategy in East Morocco and underlines Sound Energy's position as a leading gas developer in country

·    Sound Energy will remain fully funded for its increased 75% working interest of planned phase 1 Tendrara Concession capital investments required until first gas, subject to finalising funding arrangements previously announced with Afriquia Gaz, our strategic partner and a major participant in the Moroccan gas industry

SSRS holds a 27.5% participating interest in the Anoual and Greater Tendrara exploration permits in Eastern Morocco together with a 27.5% indirect interest in the Tendrara Concession (the "Concession") through its contractual relationship with the Group. Following completion of the Acquisition, Sound Energy will control operated working interests of 75% in the Exploration Permits and in the Concession.

In consideration for the Acquisition, the Group shall make an initial payment of US$1 (one US dollar) to the Seller in cash on completion and may make future payments to the Seller pursuant to a Profit Sharing Deed ("PSD").

Under the principal terms of the PSD, the Group will pay to the Seller an amount equivalent to between 8% and 11% of total net profits (after costs, taxes and other applicable deductions) arising from the Concession over a period of 12 years from first commercial production from the Concession. In the event of a cash disposal by the Company of part or the whole of the SSRS's interest in the Exploration Permits (the "SSRS Permit Interest") on or before 28 February 2023, the Seller would be entitled to receive from Sound Energy 27.5% of the net cash proceeds related to the disposal of the SSRS Permit Interest, rising to 55% of proceeds related to the SSRS Permit Interest in the event of such a disposal occurring prior to 31 December 2021 (the "Exploration Permit Disposal Right").

The Acquisition is conditional upon the Seller taking the necessary steps (including settling all intercompany balances) on or before 5 September 2021 to sell the entire issued share capital of SSRS to Sound Energy on a cash-free, debt-free basis at completion. Upon completion of the Acquisition, Sound Energy will grant to the Seller a share charge over 100% of the share capital of Sound Energy Morocco East Limited, the Company's wholly owned subsidiary, in connection with the PSD and the Exploration Permit Disposal Right. Under the terms of the PSD, there is a mechanism for reducing this share charge upon certain milestones having been met and also for replacing the share charge with an alternative security mechanism following the first payment arising from the PSD.

As at 31 December 2020, SSRS had unaudited net assets of US$ 87.1 million and recorded a loss for the year before tax of US$ 0.2 million.

The table below summarises the Discovered Gas Originally in Place and the Contingent Resources for the Tendrara TE-5 Horst within the Concession evaluated by RPS Energy Consultants Ltd ("RPS"), as announced by the Company on 20 December 2017 and 23 January 2018 and the net interest to the Company on completion of the Acquisition.

Discovered In-Place volumes and Contingent Resources

Pursuant to completion of the Acquisition, Sound Energy will control rights to an additional 104 billion cubic feet (Bcf) of certified² 2C Contingent Resources and acquire an additional 5.3 trillion cubic feet (Tcf) of unrisked exploration upside potential³ in TAGI features across the Anoual and Greater Tendrara exploration permits.

Commenting, Graham Lyon (Executive Chairman) said:

"We are delighted to have increased our working interest in our principal assets in Eastern Morocco on highly attractive terms. This accretive transaction will, when completed, underline Sound Energy's position as the leading gas developer in Morocco and position us to generate enhanced returns, cashflow and value as we move forward the phased development of the TE-5 Horst. The increased position on the licences significantly enhances our discovered and undiscovered resource position in Eastern Morocco as we continue to deliver on our phased development strategy. Importantly, upon securing the funding envisaged under the Heads of Terms previously entered into with Afriquia Gaz, the Company will remain fully funded for its increased 75% working interest of planned phase 1 Tendrara Concession capital investments required until planned first gas.

¹ Contingent Resources are technical volumes i.e.no economic limit test applied

² RPS Energy Consultants Limited

³ Company internally estimated, unrisked original gas in place

For further information please contact:

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 (as transposed  into the laws of the United Kingdom) (MAR). Upon the publication of this announcement, this inside information is now considered to be in the public domain.

The resource information contained in this announcement has been reviewed by Sound Energy's Vice President, Geoscience, Dr John Argent, who is a Chartered Geologist, a Fellow of the Geological Society of London and a Member of the Petroleum Exploration Society of Great Britain, with 25 years of experience in petroleum geology and management and who is the qualified person as defined in the guidance note for mining, oil and gas companies issued by the London Stock Exchange in respect of AIM companies.

Bcf means billion standard cubic feet of gas; Tcf means trillion cubic feet of gas; and best case, high case and low case estimates are consistent with SPE (The Society of Petroleum Engineers) PRMS (Petroleum Resource Management System) guidelines.

RPS Group Plc (http://www.rpsgroup.com/) are a global consultancy providing a range of services, including geological, geophysical and petroleum engineering services to the oil and gas industry. the in-place and contingent resource estimates.

Resources are all quantities of petroleum (recoverable and unrecoverable) naturally occurring on or within the earth's crust, discovered and undiscovered, plus those quantities already produced. Contingent Resources are those quantities of petroleum estimated, as at a given date, to be potentially recoverable from known accumulations but where the applicable project(s) are not yet considered mature enough for commercial development due to one or more contingencies. The Tendrara TE-5 Horst is classified under Contingent Resources as a number of requirements to satisfy the Final Investment Decision ("FID") in maturing to commercial development remain in progress, including execution of one or more Gas Sales Agreements ('GSAs') and securing financing agreements.

Forward looking statements

Certain statements in this announcement are forward-looking statements which are based on the Company's expectations, intentions and projections regarding its future performance, anticipated events or trends and other matters that are not historical facts. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Factors that would cause actual results or events to differ from current expectations, intentions or projections might include, amongst other things, changes in oil prices, changes in equity markets, failure to establish estimated petroleum reserves, political risks, changes to regulations affecting the Company's activities, delays in obtaining or failure to obtain any required regulatory approval, failure of equipment, uncertainties relating to the availability and costs of financing needed in the future, the uncertainties involved in interpreting drilling results and other geological, geophysical and engineering data delays in obtaining geological results and other risks associated with offshore exploration, development and production. Given these risks and uncertainties, readers should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date of such statements and, except as required by applicable law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.