24 June 2013
Sound Oil plc
("Sound Oil" or the "Company")
Nervesa Appraisal Well Update
Sound Oil, the European / Mediterranean focused upstream oil and gas company provides the following update on the Nervesa appraisal well.
Drilling on the well experienced a stuck drill pipe incident at 1087 metres while drilling in the Upper Miocene conglomerate formation. Following unsuccessful attempts to free the pipe, corrective action has been taken to cut the drill string at 884.5 metres, plug back with cement and drill a sidetrack. The planned sidetrack is still expected to reach the planned bottom hole location within two weeks. As a consequence of this operation the total well cost will increase by approximately £1 million.
James Parsons, Sound Oil's Chief Executive Officer, commented:
"The drilling team has reacted quickly and professionally to deal with the stuck pipe incident, having completed an assessment of its causes. The Company includes contingency in its budgets for such unforeseeable and uninsurable occurrences and remains committed to reaching the reservoir via the planned sidetrack.
The successful drilling of this flagship asset (21 Bscf; US$60 million NPV; US$20 million initial annual cash flows) remains the first step in unlocking the significant value inherent in the Sound Oil portfolio."
For further information please contact:
James Parsons, Chief Executive Officer
Smith & Williamson - Nominated Adviser
Tel: 44 (0)20 7131 4000
Peel Hunt - Broker
Tel: 44 (0)20 7418 8900
The estimated gas resource volume and value (on an NPV10 basis) figures mentioned above are based on a Fugro Robertson Limited best estimate of P50 contingent resources (Competent Persons Report dated October 2011). The future annual cash flows mentioned above are Company estimates in a success case scenario. Bscf means billion standard cubic feet of gas; NPV10 refers to net present value at a discount rate of 10%. 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.