Investor Presentation Q4 2016 Revised 13.12.2016
Building a Mid-cap African & European Gas Company I T A L Regional gas strategy underpinned by Balanced and evolving portfolio, including Y low cost potential multi Tcf development Strong European gas demand and local pricing → (Tendrara: Eastern Morocco) Pan European / African Strategic Partnership → with Schlumberger Two remaining Strategic Plays Supportive Cornerstone Investor → Badile (Italy) and Sidi Moktar (Morocco) → Strong thematic positioning Bold growth agenda Sheltered from recent oil price decline → Significant opportunities in distressed oil sector → Carbon consciousness and global warming → Limited competition from cash constrained peers → driving transition to gas O C C O R Journey so far... O M Acquisition of Securing cost Introduction of Acquisition of Introduction Successful Italian onshore covering Cornerstone Moroccan onshore of Strategic drilling in gas portfolio production Investor gas portfolio Partner Eastern Morocco Investor Presentation Rapagnano Continental Tendrara, Sidi Schlumberger TE6 & TE7 Q4 2016 Investment Partners Moktar, Meridja (Tendrara, Badile) Slide 1
The Team Brian Mitchener Leonardo Spicci EVP, Exploration EVP, Production & Development Over 36 years experience in Oil & Gas exploration Over 25 years experience in Oil & Gas James Parsons including as Regional General Manager Exploration management and operations across at BG, Vice President International Exploration for Kazakhstan, north Africa and Italy. Reservoir Chief Executive Officer Africa at Statoil and 22 years with BP Exploration. geologist background with 23 years with Chartered Geologist, and a past President of the ENI E&P Over 20 years in Oil & Gas Geological Society’s Petroleum Group strategy, general management, M&A and finance across Luca Madeddu Leonardo Salvadori Europe, South America and Central America Managing Director, Morocco Managing Director, Italy Over 25 years managerial experience across Over 30 years upstream experience with 12 years with Royal Dutch Shell Europe, Asia and South America. Reservoir ENI and Dana Gas in exploration, business geologist background with 22 years with Specialist in restructuring, development and general management ENI E&P funding and growing small listed upstream companies; qualified accountant Mary Hood Will Holland Joined Sound Energy in 2011 EVP, Finance/CFO EVP, Business Development Over 20 years upstream experience across a 10 years upstream experience with range of operational, commercial and financial Gulf Keystone and Deloitte. Qualified roles. 10 years as an engineer with Halliburton. Investor Presentation Chartered Accountant and Chartered Subsequently Director in Macquarie’s Oil & Q4 2016 Company Secretary Gas team Slide 2
Compelling Regional Case for Gas Badile Morocco Italy Zibido → Low risk emerging market → Stable demand with high gas (7% annual growth) dependency Growing gas → Gas increasingly → Strong domestic gas network Rapagnano penetration replacing other fuels SMG Dora / Dalla → Circa 90% hydrocarbons → Circa 90% hydrocarbons I imported from Algeria imported from Algeria T A and Russia → GME pipeline ownership L Disadvantaged Y → Recently introduced energy policy transitions to Morocco in 2021 supply position to encourage commercialisation → New Gas Agency under Laura of domestic hydrocarbons discussion → 10 year tax holiday → 37.9% government net take → Thereafter 35% net government (24% corporation tax, 3.9% regional Top quartile take (30% Corporation tax and income tax plus 10% royalty above fiscal terms 5% royalty after 10.6 Bscf) 0.9 Bscfannually) Tendrara I Meridja Tendrara II Tendrara Assets Production O Sidi Moktar C Low risk discoveries Investor Presentation C Exploration O Q4 2016 High upside exploration R O M Slide 3 = Other Assets
Eastern Morocco: N Tahaddart Power A Flagship development E N A R 2 x 400 MW R E T I D E with multi Tcf potential M Oued Dhar Doum El Makhazine Tendrara 4 x 400 MW 2 x 400 MW (27.5% interest; 25% paying; Operated) Oujda Meridja (55% interest; Operated * ) → Strategic Partnership where Schlumberger C Al Wahda I co-fund and technically de-risk the asset. T N Rabat (Schlumberger 27.5% interest in Tendrara A 4 x 400 MW 120km L and paying 80% on 1st well; 75% on 2 nd T A and 3 rd wells**.) MERIDJA Casablanca → Continuity of the Algerian Triassic Province TENDRARA and Saharan Hercynian platform → Play type: gas discovery with condensate- TENDRARA light oil shows in the Lower Triassic sequence; TAGI and Paleozoic sand objectives → Tendrara, eight exploration permits 14,500 km 2 acreage, seven wells drilled; Meridja one reconnaissance licence 9,000km 2 Marrakech → First well (TE-6): 28m net pay, flow achieved pre stimulation, 17mmscf/d on test → Potential for super-giant (multi Tcf) connected gas field O → TE-7: 32mmscf/d after clean up C Investor Presentation → TE-8 (step out appraisal well) early 2017 C Q4 2016 O R Slide 4 O * Subject to the completion of option exercise M ** Subject to ministerial approval of the additional 17.5% transfer
Showcase Tendrara: Illustrative Aerial View (TAGI Only) Long Term Upside Potential 0 40 80km Near Term Potential MERIDJA TE-8 (Sound Energy:2017) 1 ,800 km 2 TE - 2 (AGIP:1967) 1- 1.5 Tcf 75km 2 3-4 Tcf, TE - 9 (2018) 250km 2 Provisional location TENDRARA TE-6 300 Bcf (Sound Energy: 2016) 17km 2 Pressure PRESSURE (KG/CM2) TE-5 300 350 400 450 500 Depth TE-7 (Sound Energy:2016) (MPE:2006) -500 Plot WATER GRADIENT 1.23KG/CM2/10M TE-2 TE-4 (MPE:2006) TE-1 -1000 TE-6, TE-5 (AGIP:1966) TE-3 600-700 mt TVDSS (M) Potential TE-7 -1500 Gas Column TE-1 TE-3 (ONHYM:1984) Investor Presentation -2000 Q4 2016 GAS GRADIENT -2500 Slide 5 All volumetric estimates are 100% - Gross TE4 data unreliable; requires re-entry.
Pathway to Commercialisation Current phase 2017 & 2018 2019 Finalise • EPC Facilities TE-7 Horizontal Development development well • EPC Pipeline plan & FIRST GAS • Development wells Concession application • Further step out wells & re-entry TE-8 Step-out • Seismic acquisition appraisal Self funding Return to Material exploration & Shareholders Cash flows development Investor Presentation Q4 2016 Slide 6
Northern Italy Strategic Play Z O O M Badile Zibido Milano 3D Seismic Rapagnano Badile Coverage SMG Dora / Dalla Net effective ownership 80%; operated I T A → Po Valley (Northern Italy); 45 km SW of L SNAM Y analogous ‘Malossa’ gas field Gas → Permit located close to Milan, with a tie-in Pipeline Laura available c. 2 km from the Badile permit → Play type: Inverted fault block; gas-condensate in Mesozoic (TD c. 4,600 m) → All permissions to drill secured → Well cost of EUR 25 m (100%; tested and Lacchiarella completed); chance of success 34% → 142 Bscfe: 85 Bscf gas and 10 mmboe Badile condensate (net best-case prospective resources) Tendrara I → Farm-out secured with Schlumberger funding Tendrara II Zibido EUR 7.5 m of first well in exchange for an option Tendrara on 20% of the licence Badile drill site Sidi Moktar O Low C Up to EUR 1,404 m EUR C Sidi Moktar 88m O NPV10 (Best Estimate R Badile O Low EUR 396 m) Permit M 37 Lacchiarella 2 Pavia k Best Best +EUR +105 = Pipeline Badile 3D seismic 308m Recoverable → resource Investor Presentation 538 Bscf NPV10 Q4 2016 (Eurocent 31/cbm) High +396 Recoverable resource (Bscf) Slide 7 High +EUR 1,008m
Southern Morocco Z O O M Strategic Play Jorf Lasfar Power Plant Sidi Moktar State owned Phosphate Net Effective 25% interest, carried for Plant (OCP) Safi Chemicals Plant first USD 18 m gross; operated* Tahaddart Power 2 x 400 MW → Play type: gas discovery (Kechoula) in Oued the Lower Liassic sequence, (73 Bscf Dhar Doum El Makhazine net to Sound, initial estimate, single 4 x 400 MW 2 x 400 MW accumulation most likely) Sidi Moktar II Chichaoua → Two wells drilled with positive gas Meskala Al Wahda indications from log and gas shows in Rabat 4 x 400 MW Plant the Liassic; extended well test planned Planned Casablanca in 2017 New Sidi Moktar I → Triassic across multiple blocks Phosphate Plant considered analogous to the adjacent Meskala field → 211 Bscf exploration potential targeting Marrakech the Triassic (TAGI) objective; net to Sound → Asset is located 10km from the O A C Meskala gas processing plant C O Investor Presentation R O Q4 2016 M Slide 8 *Heads of Terms for Partnership arrangements announced 10 March 2016
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