Last checked at 4 Sep 2013 07:00
4 September 2013
Sound Oil plc
("Sound Oil" or the "Company")
Successful Nervesa Well Test
Sound Oil, the European / Mediterranean focused upstream oil and gas company is pleased to announce a positive well test at the onshore Nervesa discovery in Northern Italy.
The well test achieved a stabilised total gas flow rate of 2.7 MMscfd from multiple sandstone intervals in the Upper Miocene San Dona Formation using a dual string completion.
The Company is also pleased to confirm that, following a revision of its reservoir model for the full field, the P50 estimate of recoverable gas resources at Nervesa has increased from 21 Bcf (with an estimated NPV10 of US$58m) to 24 Bcf (with an estimated NPV10 of circa US$66m).
Following these successful results, the Company will continue with its plans to:
(i) apply for a Production Concession with a view to achieving first gas sales at Nervesa in 2015;
(ii) drill a second well at Nervesa, addressing the Southern part of the structure; and
(iii) secure a Reserve Based Lending ("RBL") facility to provide funding for the next stage of Sound Oil's development;
In anticipation of securing an RBL facility, the Company has entered into an asset backed bridge loan facility (the "Bridge Loan") for some £2.5 million with a syndicate of private investors. The Bridge Loan matures in February 2015, carries a coupon of 10% per annum and an average annual fee of 9%. It is the Company's intention to repay the Bridge Loan with a portion of the proceeds from the RBL facility. The Company has also renewed its existing Standby Equity Distribution Agreement ("SEDA") with Yorkville Advisors LLP for a period of three years on the pre-existing terms and without an upfront fee.
Beyond Nervesa, the Company will continue with the second phase of its strategy, which includes preparing for 2014 drilling at Laura and Badile.
The Company is pleased to invite investors to a conference call on 6th September 2013 at 1100. Details can be obtained from Annabelle Griffiths at A.Griffiths@soundoil.co.uk.
James Parsons, Sound Oil's Chief Executive Officer, commented:
"This is a significant milestone for the Company.
In October 2012 we set a strategy of transformational growth through the drilling of four material wells in Italy within twenty-four months. Nervesa, the first of those wells, has been successful and is expected to provide material cash flows from 2015 as well as enabling the funding of a portion of the forward drill programme.
The Company is now working on securing an attractive Reserve Based Lending facility and exploring the possibility of a partial sale of the discovery. In the meantime the bridge loan provides short term flexibility.
We are now set to move to the next stage of our evolution and a step closer to achieving mid cap status."
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 |
The information contained in this announcement has been reviewed by Sound Oil's Italian Managing Director, Luca Maddedu, a qualified petroleum geologist.
The gas resource volumes and values mentioned above are based on P50 contingent resource estimates.
Scmd means standard cubic metres of gas per day; MMscfd means million standard cubic feet of gas per day; Bcf means billion standard cubic feet of gas; NPV10 refers to a net present value at a discount rate of 10%; best estimate and P50 refer to a 50% chance of finding a given volume consistent with SPE (The Society of Petroleum Engineers) guidelines.