Genuine attempt by BoD to limit dilution to shareholders holders, delivery of small marginal (low risk) assets building towards the bigger plays and adding much needed revenue to cover cost base is to be commended!
It's a lesson other AIM companies should have learned. Not sure of the upside from here though. Nervesa (II) looks priced in as an expected success. Still lots of time to get in before badile when it might drift. 12p is giving quite some resistance which it did this time last year.
Sound Oil announced that first gas from its onshore Casa Tiberi field in Italy was transported to the local gas distributor on 28th July 2014. An initial production rate of 9,600 standard cubic metres of gas per day (scmd) was recorded from the Lower Pliocene Cellino formation. As per the agreement with Prometeo Srl, gas will be priced at the spot rate, whereas an annual contract will be negotiated in September. Additionally, Sound Oil completed the £14m institutional funding by allotting the remaining loan notes worth £5.5m to Greenberry, a wholly owned subsidiary of Continental Investment Partners. Sound Oil also issued 52.8 million detachable warrants to Greenberry to subscribe for new Sound Oil shares at 10.4 pence per share any time during the loan period.
Our view: Sound Oil has achieved a major milestone with the first gas output at the Casa Tiberi field, its second Italian onshore gas field. The company continues to encash the ongoing onshore gas discoveries in Italy, which is likely to be boosted with first gas at the 24 Bscf Nervesa expected in the next twelve months. Moreover, inclusion of an institutional investor and the farm-in on Nervesa enables the company to exploit the potential of its assets. Given the lucrative low-risk asset base, the company is well placed to become a mid-cap Mediterranean focused upstream oil and gas company. We retain a Speculative Buy rating.
I have been a share holder and a regular viewer of this board for about 4 years now. What I think is great is the enthusiasm and effort people put into the research side of things, especially crudhope.
I work in the oil and gas industry so know how volatile this sector can be. However, I now have a substantial holding and I am confident that this company will give investors "out of this world" returns in the next 28 to 24 months time.
The northern and southern parts are divided by a fault so it is necessary to drill again to access the gas there , not just to increase production . They think it will be an easier drill than the first and that possibly a third well will be drilled to maximise revenue.
My understanding is that depending on the quality of the gas they will need to use varying processes it in order to meet the quality specifications of the pipeline near by. I believe that there are skid mounted mini plants that do the job, not the possibly envisaged Easington type operation =)
Joe, re Nervesa being larger.............I guess there is the possibility of finding more gas slightly deeper.....maybe that is what was meant as the 'hidden gem' on the Carita license. Maybe they are hoping the Southern end could surprise them but don't want to say anything at this stage.
I'd tend to agree with your scepticism. However, if by some miracle they actually manage stump up the cash in escrow I think it would be sensible to use it. It is a good farm out deal, we are keeping control and providing the expertise, making our own funds available for use elsewhere.
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