Sound Energy (SOU) AI Stock Analysis

• Market Cap: £18.73M
• Dividend Yield: N/A
• Average Volume (3M): 2.05M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.70
• Revenue Growth: N/A
• EPS Growth: N/A
• Country: UK
• Employees: 13
• Sector: Energy
• Sector Strength: 52
• Industry: Oil & Gas Exploration & Production
• EPS (TTM): >-0.01
• Shares Outstanding: 2,080,622,600
• 10 Day Avg. Volume: 1,817,433
• 30 Day Avg. Volume: 2,049,575
• PEG Ratio: >-0.01
• Price to Book (P/B): 1.21
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -2.53
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): -0.2
• Revenue Forecast (FY): £7.54M

• Rating: 53 Neutral
• Price Target: 0.89p ▼(-12.94% Downside)

The score is held back primarily by weak financial performance (large recent losses, rising leverage, and persistent negative cash flow). Technicals are moderately supportive with price above key moving averages and positive MACD. Earnings-call guidance provides some upside from near-term production and contracted sales, but debt and project delays remain meaningful risks, while valuation is constrained by negative earnings and no dividend support.

Positive Factors

Ten-year take-or-pay offtake

A secured 10-year take-or-pay contract materially de-risks volume and price exposure, providing a predictable baseline of cash flow for project finance and operations. Over the medium term this supports debt servicing, underwriting of phase capex and reduces commercialization risk versus uncontracted gas sales.

Near-term first gas/LNG production

Transitioning from explorer to producing operator with first gas materially shifts the company’s risk profile. Commencing sales enables real cash generation, validates upstream development and creates a runway to fund follow-on phases and contracted deliveries, improving long-term revenue visibility if operations are stable.

Partner-funded exploration and local partners

Local strategic partners and fully funded exploration materially reduce execution and financing risk. Partner contributions lower near-term capital needs, provide local market access and technical capability, and increase the chance of successful reserve upgrades without solely burdening corporate liquidity.

Negative Factors

Markedly higher leverage

A sharp rise in leverage reduces financial flexibility and increases refinancing and covenant risk. With a thinner equity cushion, adverse commodity or project shocks more quickly force restructuring, asset sales or dilutive equity raises, all of which can impede long-term project delivery and shareholder value creation.

Persistent negative cash flow

Sustained negative operating and free cash flow necessitates ongoing external funding for operations and capex. Over months, this raises the probability of dilutive financings, higher-cost debt or slowed investment in phase completion, weakening the company's ability to capitalize on near-term production and contracted sales.

Execution delays and license risk

Project timing and permitting slippages increase capex uncertainty, push out revenue realization and can erode contracted economics or tax-window benefits. Persistent execution risk can escalate costs, strain partner relationships and delay the cash flow needed to reduce leverage, undermining medium-term recovery prospects.

Sound Energy Business Overview & Revenue Model

Company Description

Sound Energy plc, through its subsidiaries, engages in the exploration, appraisal, and development of oil and gas assets. It holds 75% interests in the Greater Tendrara license covering an area of 14,411 square kilometers; Anoual license totaling an area of 8,873 square kilometers; and Tendrara production concession that covers an area of 133.5 square kilometers located in Eastern Morocco, as well as Sidi Mokhtar license covering an area of 4,712 square kilometers located in Southern Morocco. The company was formerly known as Sound Oil Plc and changed its name to Sound Energy plc in September 2015. Sound Energy plc was incorporated in 2005 and is based in London, the United Kingdom.

How the Company Makes Money

Sound Energy Financial Statement Overview

Summary

Weak fundamentals: highly volatile and minimal revenue, a very large net loss in 2024, worsening leverage as equity fell and debt rose, and consistently negative operating and free cash flow indicating ongoing cash burn and elevated funding risk.

Income Statement

Earnings quality and consistency are weak. Revenue has been minimal and volatile (including near-zero revenue in 2024 and 2020), while profitability deteriorated sharply in 2024 with a very large net loss versus prior years. The business did show profitability in 2021–2022, but the return to deep losses in 2023–2024 highlights an unstable operating profile and limited visibility on sustainable margins.

Balance Sheet

Leverage and equity trends worsened meaningfully. Total debt increased while equity collapsed in 2024 (debt-to-equity rising to ~2.2x from ~0.2x in 2023), and returns to shareholders were deeply negative in 2024. While prior years showed a much more conservative leverage profile, the latest balance sheet indicates higher financial risk and reduced cushion against further operating setbacks.

Cash Flow

Cash generation is consistently negative. Operating cash flow and free cash flow were negative across all periods provided, including 2024, implying ongoing cash burn to fund operations and investment. Although free cash flow improved versus the prior year in 2024 (less negative), cash conversion remains a key weakness and likely requires continued external funding or balance sheet support.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	0.00	0.00	4.00K	43.00K	223.00K	0.00
Gross Profit	-42.00K	-128.00K	4.00K	5.72M	4.25M	-9.78M
EBITDA	-5.36M	-124.19M	-6.73M	6.55M	2.56M	-15.18M
Net Income	-8.12M	-150.82M	-7.16M	4.97M	2.42M	-22.12M
Balance Sheet
Total Assets	51.56M	58.39M	204.22M	212.06M	176.59M	171.81M
Cash, Cash Equivalents and Short-Term Investments	2.83M	7.89M	3.02M	3.86M	2.91M	4.47M
Total Debt	37.83M	37.71M	33.41M	30.47M	20.04M	24.74M
Total Liabilities	39.97M	41.37M	37.51M	33.97M	21.54M	26.95M
Stockholders Equity	11.60M	17.02M	166.71M	178.09M	155.06M	144.86M
Cash Flow
Free Cash Flow	-10.44M	-8.14M	-3.75M	-5.84M	-2.96M	-3.11M
Operating Cash Flow	-6.42M	-3.50M	-1.50M	-3.92M	-1.55M	-1.83M
Investing Cash Flow	4.55M	3.80M	-2.95M	-6.19M	-1.20M	-1.28M
Financing Cash Flow	2.39M	4.35M	3.82M	10.42M	1.09M	3.19M

Sound Energy Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$15.17B	7.61	4.09%	5.20%	3.87%	-62.32%
SOU	53 Neutral	£18.73M	-2.31	-45.38%	―	―	―
EOG	53 Neutral	£15.54M	―	―	―	―	―
MATD	50 Neutral	£18.12M	-1.74	-56.16%	―	―	―
ZEN	49 Neutral	£20.11M	-19.89	-1.55%	―	65.32%	97.00%
PRD	47 Neutral	£27.91M	-7.97	-12.26%	―	―	―
JOG	44 Neutral	£31.03M	-19.23	-6.74%	―	―	―

Sound Energy Corporate Events

Sound Energy Marks Key Milestones at Morocco’s Tendrara Gas Project and Secures Anoual Permit Extension

Sound Energy has reported further operational progress at its Tendrara Phase I gas development in eastern Morocco, with operator Mana Energy successfully flowing both TE-6 and TE-7 wells and fully testing their associated sections of the gas gathering system, marking completion of a key part of the surface facilities. The company is also preparing to commission nine on-site power generation engines, including seven gas-fired units that will soon be run on Tendrara gas to cut diesel use, lower operating costs and reduce Scope 1 emissions, while it continues to assess bridging finance options ahead of first gas. In exploration, the Moroccan authorities have approved an extension of the Anoual Exploration Permits’ complementary period to September 2028, with a firm commitment to drill the M5 exploration well targeting Triassic reservoirs and an option for additional 3D seismic and drilling, reinforcing Sound Energy’s long-term position in a highly prospective area where its cost exposure to M5 is capped at US$2.57 million.

The most recent analyst rating on (GB:SOU) stock is a Hold with a £0.91 price target. To see the full list of analyst forecasts on Sound Energy stock, see the GB:SOU Stock Forecast page.

Sound Energy Commences Gas Commissioning at Tendrara Development

Sound Energy PLC announced the commencement of initial commissioning activities for the TE-5 Horst development project at the Tendrara Production Concession, marking the entry of first gas into the gas gathering system. This development, in collaboration with Mana Energy Ltd and Italfluid Geoenergy S.r.l., aims to supply LNG to Moroccan industrial consumers under a ten-year agreement with Afriquia Gaz. The project is expected to generate revenue from late Q1 or Q2 2026, positioning Sound Energy as a revenue-generating entity and advancing its role in Morocco’s energy transition.