For immediate release
28 June 2011
SOUND OIL PLC
("Sound Oil" or "the Company"")
Sound Oil is pleased to announce the following news concerning its Italian and Indonesian assets.
Marciano-1ST Well Completion, Basilicata, Italy
Testing operations at the Marciano-1ST well have produced gas at rates up to 98,000 scmd (~ 3.5 MMscfd) from one of the two perforated zones before the well had to be restrained due to site flare restrictions. The test will continue to determine a stabilised flow rate and information from the test flow will be used to determine the scope for early commercialisation of the well.
Sound Oil has a 100% operated interest in the Marciano project located on the Fonte San Damiano Concession.
Bangkanai PSC, Kalimantan, Indonesia
The Operator of the PSC, Salamander Energy Bangkanai Limited, has today signed on behalf of the joint venture group a Gas Sales and Purchase Agreement to supply the Indonesian state electricity company PT PLN with up to 20.3 MMBtu per day (~20 MMscfd) of gas from the Kerendan Field. The gas price has been struck at $4.79/Mscf ($5.08/MMBtu) escalated at 3% per three years. The gas will be used in a power plant to be constructed adjacent to the field. Sound's net proven reserves in this project are 6.1 Bscf.
The signing of the GSA secures the extension of the PSC contract and will allow the implementation of development of the Kerendan Field and the fulfilment of outstanding exploration drilling commitments. First gas from the field is expected in mid 2013.
The Operator has informed its partners that an exploration drilling programme will commence later this year to drill two wells to target prospective resources in Oligocene carbonate and deeper Eocene sandstone objectives. The first well (Sungai Lahei-1) will drill the Kerendan Deep prospect and also act as a first development well for the Kerendan field.
Sound Oil has a 5% interest in the Bangkanai PSC with all its costs carried until first gas from the Kerendan Field.
Commenting on these announcements Gerry Orbell, Sound Oil's Chairman and Chief Executive Officer, said:
"This is a very encouraging result from Marciano where the upper sand has tested gas at very good rates. The next step is to re-certify the production equipment on site and then to generate revenue. Elsewhere, in Indonesia, the Gas Sales and Purchase Agreement has been signed today with the government electricity utility and this opens the way for the operator to move along with developing Kerendan and drilling the large exploration prospect at Sungei Lahei. Altogether today is a very good day for the Company."
For further information please contact:
Gerald Orbell, Chairman
Tel: 44 (0)7903 861 145
Tel: 44 (0)207 466 5000
Tel: 44 (0)207 600 1658