Sound Oil Provides Italian Work Program

Source: www.gulfoilandgas.com 1/14/2014, Location: Europe

Sound Oil, the European / Mediterranean focused upstream oil and gas company, is pleased to confirm its 24 month Italian work programme.

The Italian programme has been updated to reflect recent permitting and funding progress and is focused on:
Accelerating material cash flows from existing discoveries on the Carita (Nervesa) and Santa Maria Goretti ("SMG") permits.
Prioritising the high upside exploration prospects, including Badile.
Funding key drills, including Nervesa and Badile, through the introduction of partners.
Building a portfolio of producing assets to cover the Company's essential overheads.
Capturing rig cost synergies and minimising rig non availability risk.

The 24 month programme will include:
Maintaining strong production from Rapagnano, an onshore gas field, in the Marche region.
Field development of Casa Tiberi, a second onshore gas discovery in the Marche region, during H1 2014. Production skid construction began in Q4 2013. The combination of Rapagnano and Casa Tiberi cash flows are expected to completely fund the Italian cost base.
Farm out, secure the drilling permission and then drill a second appraisal well addressing the southern structure of the Nervesa discovery (24Bscf, US$66 million NPV10) in Q2/Q3 2014 with a view to accelerating production and cash flow from this flagship asset. A letter of intent has recently been signed for the rig and first gas from the northern structure is expected in mid 2015.
Contracting of a 3,000 horsepower electric rig to cover Badile and Laura, thereby securing significant cost efficiencies.
Securing the drilling permission, farming out and then drilling the Badile prospect (178Bscfe, Euro 486 million NPV10 Best estimate), currently scheduled for Q4 2014 - Q1 2015. Badile is the largest and most strategic asset in the portfolio with an independently assessed High case NPV10 exceeding Euro 1.7 billion and Low case NPV10 of Euro 101 million.
Drilling an appraisal well H1 2015 in the onshore SMG permit, in the Marche region. A CPR is being commissioned in Q1 2014 on this low risk discovery.
Drilling the Laura discovery (30Bscf, US$86 million NPV10) in H2 2015 using a long reach deviated well from onshore. The permit for Laura is expected to be awarded shortly.
Preparation for drilling the Zibido prospect (16MMbo; US$185 million NPV10), a second material exploration prospect in Po Valley, Northern Italy.

James Parsons, Sound Oil's Chief Executive Officer, commented:
"This programme continues our intention to drill, at a minimum, two material wells every year whilst focusing our financial and human resources on the game-changing wells such as Badile, where operations should commence around the end of this year. In addition the programme builds a broad portfolio of producing assets, now with the addition of the recently awarded SMG permit.

The combination of today's announced work programme, Directorate changes and funding initiatives position our Company to fully exploit the potential of our Italian assets."


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