Last checked at 19 Feb 2013 07:00
19 February 2013
Sound Oil plc
("Sound Oil" or "the Company")
Badile Prospect Update
The Board of Directors has decided to retain Sound Oil's 100% operated position and the significant upside in its exciting Badile exploration prospect in Northern Italy.
As announced on 1st February, the Company received an offer to farm into the Badile prospect and, while the commercial terms of the offer remain confidential, the Company can now confirm the offer was received from an Italian Oil and Gas Major with deep knowledge of the area after conducting extensive technical due diligence. In the Board's view, however, the offer did not reflect the potential of this major asset.
Badile is a 185 Bcsf (gas case) / 23 MMbo (oil case) exploration prospect onshore in the Po Valley some 30 km southeast from the geologically analogous Villafortuna-Trecate field (estimated recoverable reserves of ~250 MMbo). The prospect has an independently assessed success case NPV10 of US$410 million (gas case) or US$266 million (oil case). The exploration well is forecast to cost some €20 million plus contingency.
In the coming months the Company will:
·; Submit a drilling request and Environmental Impact Assessment ("EIA") to the Italian permitting authorities, targeting a 2014 Badile well with Sound Oil as operator
·; Recruit a high quality project specific technical team to ensure the successful delivery of this high pressure / high temperature well which will reach a target depth of 5300 metres
James Parsons, Sound Oil's Chief Executive Officer, commented:
"I am pleased to have secured an offer from a credible potential partner, which validates our technical view of the asset.
We have chosen to retain the upside exposure and also control of project budgets and timelines. We will now prepare for drilling and continued de-risking of the asset whilst remaining open to offers (either after securing the EIA approval, or indeed after delivery of a successful exploration well in 2014).
Badile is a material exploration prospect with the potential, in the success case, to significantly accelerate our growth. I am pressing forward to maximize its value to shareholders."
For further information please contact:
Sound Oil James Parsons, Chief Executive Officer
| j.parsons@soundoil.co.uk |
Smith & Williamson - Nominated Adviser Azhic Basirov David Jones
| Tel: +44 (0)20 7131 4000 |
Peel Hunt - Broker Richard Crichton Charles Batten
| Tel: +44 (0)20 7418 8900 |
Buchanan - Financial PR Tim Thompson Tom Hufton
| Tel: +44 (0)20 7466 5000 |
Note
The estimated gas and oil resource volumes and values mentioned above are based on best estimate prospective resources and NPV10 success case estimates with an 18% risk factor included in a Competent Person's Report prepared by Fugro Robertson Limited in October 2011. Best estimate refers to a 50% chance of finding a given volume and is consistent with SPE (The Society of Petroleum Engineers) guidelines; NPV10 refers to net present value at a discount rate of 10%; Bscf means billions of standard cubic feet; MMbo means millions of barrels of oil. 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.