Sound Energy Regulatory News (SOU)

28 September 2012

Sound Oil plc

("Sound Oil" or "the Company")

Interim results for the six months ended 30 June 2012

Sound Oil (AIM:SOU), the upstream oil and gas company with assets in Italy and Indonesia, announces its unaudited interim results for the six months ended 30 June 2012.

Highlights

·; Following the submission of an application to drill Nervesa (Italy), significant progress towards drilling in December has been made, including long lead items delivered, land secured, rig identified and service contracts awarded

·; Application to drill the Strombone (Italy) discovery submitted

·; Drilling of the development wells at Kerendan (Indonesia) is progressing well

·; Cash at 30 June 2012 stood at £5.1 million with no debt

·; £1.0 million raised (before costs) post period-end in first two tranches of placement (at monthly VWAPs of 0.5615 pence and 0.4417 pence per share)

Gerry Orbell, Sound Oil's Chairman and Chief Executive, commented:

"The Company is part way through the busiest period in its existence. In the current half year we shall see the drilling of a number of development, appraisal and exploratory wells."

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Chairman's Statement

In Italy during the first half of 2012 we submitted applications to drill appraisal wells on the Nervesa and Strombone discoveries and to produce at the Rapagnano and Casa Tiberi gas fields. We anticipate that these applications will be approved shortly. Preparations for the Nervesa well are already well advanced and we are planning that this well will be drilled late in 2012. At Rapagnano we have formed an alliance with the Italian engineering group CSTI which will fund approximately 50% of the development costs and undertake the facilities engineering works. We are looking to build on this relationship in other areas of our portfolio.

We have been drilling at both of our Indonesian Production Sharing Contracts (PSC's) after a gap of several years. At the Citarum PSC where we have a 20% position, the Operator, Pan Orient, moved the rig to the Jatayu wellsite in March after abandoning the earlier Cataka - 1 well above the reservoir target due to continuous drilling problems. The Jatayu - 1 well encountered gas bearing and overpressured sandstones below 5,700 feet which ultimately required using a high density mud weight for safe drilling. When the well was deepened to below 6,000 feet, mud was lost into the formation. This indicates either that naturally occurring porous rocks had then been encountered, or that mechanical fracturing of the formation had occurred as a result of previous exposure to high-density drilling mud. These conditions caused drilling problems resulting in three sidetracks. Finally the Operator ran a 4 1/2" liner to 6,636 feet and the well was suspended in September pending the arrival of a slim-hole drilling rig on site. Pan Orient intends to use this rig to drill to the target horizon at approximately 7,500 feet. Meanwhile Pan Orient will move the conventional rig to the Geulis wellsite.

Elsewhere in Indonesia, at the Bangkanai PSC, the Kerendan Gas Field development drilling campaign commenced in August with the first of four deviated production wells which Salamander, the Operator, intends to drill from a common wellsite. Under the terms of the ratified Gas Sales and Supply Agreement, the Indonesian electricity utility PLN is required to purchase the supply of Kerendan gas starting in the second half of 2013. Following the Kerendan drilling, the Operator will move the rig to drill the deep West Kerendan - 1 well. This will be the first of two high impact exploratory wells at the PSC. Sound Oil has a 5% carried interest in this permit whereby Salamander bears all the Company's share of the cost of drilling the Kerendan production wells, the cost of all development and production facilities and the cost of two exploratory wells, up to the point when gas is first produced.

Shortly after the end of the reporting period the Company announced a private placement of shares, thereby further securing the Company's funding position despite continued cost overruns in drilling the Citarum well. The placement involved issuing 774,341,464 new ordinary shares in exchange for 7,143,300 subscription notes which are redeemed equally over each of the next seven months at an average monthly share price.

The seven month period is designed to cover the period when first revenue from Rapagnano is expected and the material Nervesa appraisal well is drilled. An open offer for shareholders to subscribe to new shares was also announced, scheduled for the end of the placement period.

At the end of June, the Company's cash position was £5.1 million with no debt. The loss after tax for the first six months of 2012 was £2.1 million, which includes £1.4 million in administrative expenses and a £0.6 million foreign currency translation loss.

The Company is part way through the busiest period in its existence and in the next half year we shall see the drilling of development, appraisal and exploratory wells on our properties. The Company conducted a review of its operations in the middle of the year and is taking steps to streamline the business involving both capital costs and business overheads.

Finally I would like to thank my colleagues within Sound Oil and on the Board for their contributions on behalf of the Company.

Gerry Orbell

Chairman

27 September 2012

Condensed Interim Consolidated Income Statement

for the six months ended 30 June 2012

Condensed Interim Consolidated Balance Sheet

at 30 June 2012

Condensed Interim Consolidated Cash Flow Statement

for the six months ended 30 June 2012

Notes to cash flow

Notes to the Condensed Interim Consolidated Financial Statements

1. Basis of preparation

The condensed interim consolidated financial statements were approved for issue by the directors on 27 September 2012. They do not represent statutory accounts within the meaning of section 435 of the Companies Act 2006. The comparative financial information is based on the statutory accounts for the year ended 31 December 2011. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies and did not contain statements under section 498(2) or (3) of the Companies Act of 2006.

The condensed interim financial information is unaudited and has been prepared on the basis of the accounting policies set out in the Group's 2011 statutory accounts and in accordance with IAS 34 Interim Financial Reporting.

The seasonality or cyclicality of operations does not impact on the interim financial statements.

2. Share-based payments

The Group has a Long Term Incentive Plan under which share options have been granted to the executive team.

No share options were awarded to Directors during the period however a total of 18,550,000 share options were awarded to the executive team.

A total expense of £23,000 (2011 full year of £260,000) has been recognised in the consolidated income statement from equity settled share options. Consistent with previous years, this amount is the fair value of all the equity settled options in existence at the end of the period, estimated at the date of the grant using a Black Scholes model.

3. Related party transactions

There were no sales or purchases to or from related parties, no guarantees provided or received for any related party receivables or payables and no other transactions with related parties, directors' loans and other directors' interests.

4. Loss per share

The calculation of basic loss per ordinary share is based on the loss after tax and on the weighted average number of ordinary shares in issue during the period. Basic loss per share is calculated as follows:

Diluted loss per share has not been disclosed as inclusion of unexercised options would be anti-dilutive.

5. Segment information

The Group's categorises its operations into two business segments based on exploration and appraisal and development and production.

The Group's exploration and appraisal activities are carried out in two geographic areas being:

In Indonesia under a Production Sharing Contract ("PSC"), Citarum, and in Italy under various licences and permits. The development and production activities are based in Indonesia under the Bangkanai PSC.

The Group's reportable segments are based on internal reports about components of the Group which are regularly reviewed and used by the board of directors, being the Chief Operating Decision Maker ("CODM"), for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.

To date the Group has no development activity which has resulted in production and no turnover and have therefore not provided information on revenue, products or services.

Details regarding each of the operations of each reportable segment is included in the following tables:

The segment results for the period ended 30 June 2012 are as follows:

The segments assets and liabilities at 30 June 2012 are as follows:

The segment results for the period ended 30 June 2011 are as follows:

The segments assets and liabilities at 30 June 2011 are as follows:

The segment results for the period ended 31 December 2011 are as follows:

The segments assets and liabilities at 31 December 2011 are as follows

6. Exploration and evaluation assets

7. Share Issues

On 6 February 2012, the Company placed 262,587,803 new ordinary shares at 1.5233p per share, raising £4 million and issued 157,552,682 three year warrants.

8. Post balance sheet events

On 16 July 2012, the Company placed 774 million new shares in a placement through Astin Capital Management in consideration for £7.1 million redeemable subscription notes and the cancellation of 217 million existing warrants.

The redeemable notes are redeemed in equal amounts in each of the next seven months at the average volume weighted price for each month.