28 April 2015

Sound Oil plc

("Sound Oil" or the "Company")

Placing, Issue of Warrants and Intended Open Offer

Sound Oil, the European / Mediterranean focused upstream oil and gas company, is pleased to announce a placing to raise a total of £12.0 million, before expenses, through the issue of 63,157,895 new ordinary shares (the "Placing Shares") at a price of 19 pence per ordinary share (the "Placing") with an equal number of detachable warrants to subscribe for new ordinary shares in the Company at a price of 24 pence per ordinary share for a period of 5 years from issue (the "Warrants").

Should all of the Warrants be exercised, the average issue price of all equity issued in connection with the Placing would be 21.5 pence.

The Placing Shares and the Warrants will be issued by the Company in two tranches, further details of which are provided below.

The net proceeds of the Placing will provide the Company with additional funding to execute various strategic corporate and asset acquisitions, which are currently under negotiation. Further details of these potential acquisitions were included in the Company's Preliminary Results announcement for the year ended 31 December 2014 made earlier today.

Ordinary Share Issue and Issue of Warrants

Metano Capital SA ("Metano"), a wholly owned subsidiary of Continental Investment Partners SA ("Continental"), has agreed to subscribe for a total of 63,157,895 new ordinary 1p shares in the Company ("Ordinary Shares") at a price of 19 pence per Ordinary Share (a 10.1% premium to the 30 day VWAP and a 43.4% premium to the 90 day VWAP). The new Ordinary Shares subscribed for by Metano are to be subsequently placed with various pre-identified institutional investors who are unconnected to Continental (the "Secondary Placing").

In connection with the Placing, the Company will also be granting a total of 63,157,895 warrants to subscribe for new ordinary shares in the Company exercisable at a price of 24 pence per share over a term of 5 years to Continental. The exercise price of the Warrants represents a 39.0% premium to the 30 day VWAP and an 81.1% premium to the 90 day VWAP.  The majority of the Warrants will be subsequently placed by Continental with various pre-identified institutional investors under the Secondary Placing. It is expected that the Warrants will be listed on the Vienna Stock Exchange and should therefore be freely tradeable.

Continental is contractually precluded from exercising any Warrants that it holds to the extent that any such exercise would see Continental's (together with its related parties or concert parties) ownership exceeding 29.9% of the issued share capital of the Company.

The Placing Shares and the Warrants are to be issued in two tranches, the second of which is conditional, inter alia, on the approval of Sound Oil shareholders:

First Tranche

A first tranche of 48,000,000 new Ordinary Shares (the "First Tranche Shares") and 48,000,000 Warrants (the "First Tranche Warrants") will be issued immediately following settlement on or by 22 May 2015, raising £9.1 million before expenses.

Second Tranche

A second tranche of 15,157,895 new Ordinary Shares (the "Second Tranche Shares") and 15,157,895 Warrants (the "Second Tranche Warrants") will be issued on or before 30 June 2015, subject to, inter alia, the receipt of shareholder approval of the necessary resolutions to enable the issue of the Second Tranche Shares and the exercises of the Second Tranche Warrants. The Company will be convening a general meeting for the purpose of considering, inter alia, the necessary resolutions shortly.

Continental (or an affiliate of Continental) will be paid a fee of 8% of the gross proceeds of the Placing (the "Placing Fee"), payable in two proportional tranches.

Following the issue of the First Tranche Shares, Continental will be directly and indirectly interested in 116,193,750 Ordinary Shares, representing 24.87% of the Company's enlarged issued ordinary share capital, as enlarged by the First Tranche Shares.

Application will be made to the London Stock Exchange for the First Tranche Shares, which rank pari passu with the Company's existing issued Ordinary Shares, to be admitted to trading on AIM. Dealings are expected to commence at 8.00 a.m. on or by 26 May 2015. Following the issue of the 48,000,000 First Tranche Shares, the Company will have 467,207,065 Ordinary Shares in issue and there are no shares held in treasury. This is the total number of voting rights in the Company and may be used by shareholders as the denominator for the calculations by which they determine if they are required to notify their interest in, or change to their interest in, the Company under the Disclosure Rules and the Transparency Rules.

Intended Open Offer

The Company also announces that existing shareholders will be offered the chance to participate in an open offer of new shares and warrants up to a maximum of €5.0 million.  This open offer will be priced at 19 pence per new share and with warrants attached on the same basis as the Placing, thereby enabling existing shareholders to benefit from similar terms to the new investors. The Company looks forward to updating shareholders in this regard in due course.

Related Party Transactions

Following the issue of the First Tranche Shares, Continental will be interested, as set out above, in 24.87% of the Company's issued ordinary 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 therefore, Continental is deemed to be a related party of the Company. As a result, the Placing and the payment of the Placing Fee constitute related party transactions pursuant to Rule 13 of the AIM Rules for Companies.

The independent directors of Sound Oil, being Simon Davies, James Parsons, Luca Madeddu, Andrew Hockey and Gerry Orbell, consider, having consulted with the Company's nominated adviser, that the terms of the Placing and the Placing Fee are fair and reasonable insofar as Sound Oil's shareholders are concerned.

The Company is also pleased to invite investors to a conference call with the Executive Team at 12 noon (BST) on 1 May 2015.  Details can be obtained from Howard Chapman at h.chapman@soundoil.co.uk.

James Parsons, Chief Executive Officer of Sound Oil, commented:

"We see the current environment as one of genuine opportunity, our recent progress having secured a strong platform for ambitious growth across the wider Mediterranean region.

I am very pleased to have secured this institutional funding in anticipation of the potential transformational transactions announced earlier today, which will continue our progress towards a mid cap oil and gas company."

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