1 February 2013
Sound Oil plc
("Sound Oil" or "the Company")
Italian Portfolio Update
Sound Oil, the Italian focused upstream oil and gas company is pleased to provide an update across its Italian portfolio.
Potential Acceleration: Laura Discovery (Offshore Southern Italy)
Laura is a 30 Bscf discovery in the Gulf of Taranto, previously discovered by ENI in 1980 with an independently assessed NPV10 of US$86 million. As previously advised the award of the Laura permit is expected in the first quarter and the Company plans to drill this discovery in 2014.
The Company has recently commenced discussions with the Italian Ministry of Economic Development ("UNMIG") with a view to accelerating the development of the Laura discovery by applying directly for a production concession (rather than a permit to drill an appraisal well). Moving directly to a concession would accelerate production from the Laura discovery by at least one year.
Farm In Offer: Badile Exploration Well (Lombardy Region)
Badile is a 185 Bcsf / 23 MMbo exploration prospect onshore in the Po Valley some 30 km southeast from the geologically analogous Villafortuna-Trecate field (estimated recoverable reserves of ~250 MMbo). Badile has an independently assessed success case NPV10 of US$410 million (gas case) or US$266 million (oil case).
The Company is pleased to confirm it has recently received a farm in offer from a high quality potential partner. The offer is currently under review / negotiation and the Company is considering its strategic options for this asset.
Operations Update: Nervesa Discovery (Veneto Region)
Nervesa is a 21 Bscf gas discovery which was discovered by ENI in 1985 and was put into production for several years. The discovery has an independent assessed base case value of circa US$60 million and is a near term flagship project for the Company.
Operations to prepare the Nervesa site, to allow access and equipment storage, are continuing with ground leveling, laying of protective geotextile membranes and perimeter ditch construction now complete. These operations will continue until 12th February, at which point final written authorization from UNMIG is required to proceed with the cellar excavation and completion of the site. Whilst the Company has not yet received this final written authorization (following the the successful "Conferenza Servizi" on 21st January) this is not yet affecting operations onsite.
Operations Update : Rapagnano Field (Marche Region)
Work on revamping of the field facilities is continuing. Following an unexpected request for additional documentation by UNMIG, the facilities are now targeting successful commissioning by the end of February with first commercial gas shortly thereafter.
Portfolio Rationalisation : Sale of non-core assets
The Company has completed a full review of its asset portfolio and is strategically focusing on game-changing assets which will accelerate its growth to a mid cap producing oil / gas company. Following this review a structured divestment process is being commenced for a package of non-core assets.
James Parsons, Sound Oil's Chief Executive Officer, commented:
"The Company is making good progress on its core strategic objectives, including potentially accelerating production from the Laura discovery.
Whilst Italian approval processes are causing operations at Nervesa and Rapagnano to progress slower than we would have liked, both are moving forward and our focus remains on delivering a successful well and commercial first gas for our shareholders."
For further information please contact:
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser
Tel: 44 (0)20 7131 4000
Westhouse Securities - Broker
Tel: 44 (0)20 7601 6100
Buchanan - Financial PR
Tel: 44 (0)20 7466 5000
The estimated gas resource volumes and values mentioned above are based on P50 contingent resources and NPV10 estimates included in Competent Person's Reports prepared by Fugro Robertson Limited in July 2010 and October 2011. "P50" refers to a 50% chance of finding a given volume and is consistent with SPE (The Society of Petroleum Engineers) guideline; NPV10 refers to net present value at a discount rate of 10%; Bscf means billions of standard cubic feet. MMbo means millions of barrels of oil. 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.