Sound Energy PLC (SOU.L) Phase 1 – Loan Note Financing and LNG SPA Update

Phase 1 Development – Loan Note Financing and LNG Sale & Purchase Agreement

Sound Energy, the energy transition company, is delighted to announce the entry of binding conditional agreements in respect of an US$18 million Phase 1 Tendrara LNG Development loan note financing and that, with the other remaining conditions precedent to the Phase 1 LNG gas sales agreement announced by the Company on 29 July 2021 (the “LNG GSA”) now waived by the parties, the LNG GSA is now unconditional.

In satisfying the final material condition precedent to the LNG GSA, the Company has entered into agreements with Afriquia Gaz S.A. (the “Lender”) in respect of a US$18 million 6% secured loan note maturing in December 2033 (the “Loan”).

The Loan, which is secured on the issued share capital of Sound Energy Meridja Limited, will be available to be drawn down by the Company in whole or in tranches, at the Company’s election, over a three year period commencing on 24 December 2021 and will be applied towards the development of the Tendrara Production Concession.

Interest on the drawn principal of the Loan of a fixed 6% per annum will be payable quarterly but deferred and capitalised semi annually until the second anniversary of entry of the Loan agreements. Thereafter, principal and deferred interest will be repayable annually in equal installments commencing 7 years from the date of execution of the Loan agreements.

Conditions precedent to the Loan include a project contract with Italfluid Geoenergy S.r.l (Italfluid) for the provision of a gas processing and liquefaction facility relating to the Phase 1 development being effective and evidence being provided to the Lender of the issue by the Tendrara joint venture partners of “Notice to Proceed” to Italfluid.

Further announcements will be made, as appropriate, in due course.

Graham Lyon, Sound Energy’s Executive Chairman, commented:

“W e are delighted to have executed all loan note documentation which ensures that Sound Energy will be fully funded for its share of Phase 1 development capital. This is a key milestone for the Company and we will now move to issuing the Notice to Proceed to Italfluid and drawing down initial funding from the Afriquia Gaz loan in order to proceed with execution of the Phase 1 development.”

Sound Energy

Graham Lyon, Executive Chairman

[email protected]

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