13 November 2014

Sound Oil plc

("Sound Oil" or the "Company")

Nervesa Reserve Based Lending - Signature

Sound Oil, the European / Mediterranean focused upstream oil and gas company, is pleased to announce signature of the Reserve Based Lending facility for the Nervesa discovery which was previously announced on 23 September 2014. 

The Company is pleased to confirm signature of a Euro 7 million, 24 month bullet loan issued at par with a 5% coupon (the "Loan").  The Loan is provided by Greenberry S.A. ("Greenberry"), an affiliate of Continental Investment Partners S.A. ("Continental"), Sound Oil's cornerstone investor.  The Loan is secured upon the Carita permit (which holds the Nervesa discovery) and after award of the first Nervesa production concession, expected during 2015, will be without recourse to the Company (see note 1 below for further terms of the Loan).  In addition the Company has conservatively decided to ringfence 50% of the free cash flows from Rapagano and Nervesa for the 24 month period of the Loan. This cash pool will then be applied towards the settlement of the Loan. 

Related Party Transaction

Greenberry is an affiliate of Continental. Continental is currently directly and indirectly interested in 15.48% of the Company's issued share capital and Marco Fumagalli, a director of the Company, is Managing Partner of, and a 25% shareholder in, Continental. Under the AIM Rules for Companies (the "AIM Rules") therefore, Continental is deemed to be a related party of the Company and the Loan is a related party transaction pursuant to Rule 13 of the AIM Rules.

The independent directors of Sound Oil consider, having consulted with the Company's nominated adviser, that the terms of the Loan are fair and reasonable insofar as the shareholders of Sound Oil are concerned.

James Parsons, Sound Oil's Chief Executive Officer, commented:

"This loan is the second major investment by our cornerstone institutional investor, funding the Company and demonstrating the value of our flagship asset, Nervesa.

The Company is approaching an exciting period of back-to-back drilling, which commences with site operations at Nervesa in December."

Note 1: As part of the Loan, Greenberry is being granted a 4% royalty on gross revenues from the Nervesa discovery within the Carita permit area and an introduction and commitment fee. Greenberry has agreed for the introduction fee to be paid in Sound Oil shares at an effective issue price of 16 pence per ordinary share. The effective issue price represents a 50.2% premium to the closing mid-market price per Sound Oil share on Tuesday 11 November 2014 and will result in the issue of 3,906,250 ordinary shares in the Company. A commitment fee of Euro 612,500 is payable in cash.

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