Sound Oil, the upstream oil and gas company with assets in Italy and Indonesia, announces that it is in advanced discussions with an established oil and gas fund to finance appraisal drilling on the Strombone field, in the Torrente Alvo permit, onshore Italy.
The Strombone discovery has been the subject of a Competent Persons Report undertaken by Fugro Robertson which confirmed a P50 best estimate of contingent oil resources (2C) at Strombone of 6.4 MMbo with a NPV10 success case of US$131.0 million. The appraisal drilling is scheduled for the end of 2012.
Whilst still subject to contract and due diligence, the funding would be provided through a US$6 million unsecured loan, extendable to US$9 million by mutual consent. The loan is not repayable should there be no production from the licence and will entitle the fund to a percentage of the gross revenues from the licence in the success case. Final terms will be announced following contract signature.
Gerry Orbell, Sound Oil's Chairman and Chief Executive, commented:
"We are very pleased to have agreed commercial terms on the funding of one of our core assets without the issue of new equity and expect to sign contracts within the next two weeks. Sound will have added significant shareholder value from the combination of the Celtique acquisition (where a 50% working interested in the Strombone asset was acquired) and securing this financing. We will disclose further information when contracts are signed."
For further information please contact:
Gerry Orbell, Chairman & Chief Executive
James Parsons, Chief Financial Officer
Tel: +44 (0)1372 365745
Smith & Williamson - Nominated Adviser
Tel: +44 (0)20 7131 4000
Investec - Broker
Tel: +44 (0)20 7597 4000
Tel: +44 (0)20 7466 5000
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. "MMbo" means millions of barrels of oil; "P50" refers to a 50% chance of finding a given volume and is consistent with SPE (The Society of Petroleum Engineers) guidelines.
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