1 August 2012

Sound Oil plc

("Sound Oil" or "the Company")

Rapagnano Engineering Appointment and Funding Contract

Sound Oil, the upstream oil and gas company with assets in Italy and Indonesia, is pleased to announce the appointment of the Italian engineering company CSTI Srl ("CSTI") as engineering contractor for the Rapagnano Gas Field ("Rapagnano") and a related funding contract.

Sound Oil has appointed CSTI to undertake the surface and facilities engineering for the Rapagnano project and has also signed an associated funding contract with CSTI.

Under the terms of the funding contract:

·     CSTI will fund directly €500,000 (52%) of the total capital required for the development of Rapagnano. These funds will be used to pay for facilities equipment and related services.

·     Based on the most likely remaining P50 reserves of 1.3 Bscf gas ("base case"), CSTI will receive 52% of the net cash flows (net of taxes, costs and royalties) from the project for a period of 30 months from first gas. Should the base case revenues not be achieved then the 30 month period is extendable by six months on the same terms and conditions. If following the six month extension the base case return to CSTI is still not achieved, then CSTI are entitled to 52% of the net cash flows until the €500,000 capital is repaid.

·     Sound Oil calculates that this would result in CSTI receiving 8.3% of the project's NPV10 in the base case.

·     Should gas production not start at Rapagnano for any reason, Sound Oil has no corporate liability to repay CSTI.

·     Sound Oil retains 100% ownership and control of the Rapagnano concession.

The Rapagnano field, located in the Fermo Province (Marche), onshore Italy, was discovered in 1952 and produced 4 Bscf gas from the Pliocene interval until 2001, when the well was shut down because of water influx from the upper of two separate gas-bearing reservoirs.  Sound Oil intends to re-complete the lower reservoir which has produced gas with minimal water for over 40 years. This interval has an estimated 1.3 Bscf gas reserves (P50) remaining which will be produced over a period of more than 10 years.

The Rapagnano project requires a total of approximately €960,000 capital and is estimated to achieve payback in approximately 12 months in the base case.

Final approval from the Italian authorities for the Rapagnano development is expected shortly.

For further information please contact:

The information contained in this announcement has been reviewed by Sound Oil's Chief Operating Officer, Dr M. J. Cope BSc PhD CGeol FGS, a qualified petroleum geologist. "Bscf" means billions of standard cubic feet of gas; "P50" refers to a 50% chance of finding a given volume and is consistent with SPE (The Society of Petroleum Engineers) guidelines; "NPV10" represents the Net Present Value calculated at a 10% discount rate.