16 May 2013
Sound Oil plc
("Sound Oil" or "the Company")
Rapagnano First Gas
Sound Oil, the Italian focused upstream oil and gas company, is pleased to announce that first gas was delivered from the onshore Rapagnano field to the local gas distributor on 15 May 2013. The initial production rate was 14,600 Scmd (0.50 MMscfd).
Under the gas sales agreement with Steca Energia srl, gas is priced initially at €0.316 per Scm (US$11.2 / Mscf), varying quarterly based on a basket of commodity prices (diesel, Brent and fuel oil as published in Platts) with an estimated average 2013 price of €0.320 per Scm. On this basis, gas deliveries are expected to yield an annual cash flow to the Company of circa €400,000 after operating costs.
The Company plans to produce a further 1.3 Bscf over a thirteen year period.
James Parsons, Sound Oil's Chief Executive Officer, commented:
"We are pleased to have achieved the strategic milestones of first gas and first revenue. Rapagnano is one of our smaller assets however it establishes the Company as a gas producer and builds a foundation for further growth.
We will now focus on our flagship Nervesa discovery, which we will be drilling shortly and has an independently assessed base case value of circa US$60 million."
For further information please contact:
Sound Oil James Parsons, Chief Executive Officer |
[email protected] |
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 |
Notes:
The Rapagnano future production volume mentioned above is derived from an in-house best estimate calculated from reservoir performance data collected from the re-entry and testing of the Rapagnano-1 well in January 2013. The quoted cash flow figure is consistent with this volume and the terms of the sales contract.
The Nervesa base case NPV10 estimate is derived from a P50 contingent resources estimate in a Competent Person's Report prepared by Fugro Robertson Limited in October 2011.
Scmd means standard cubic metres of gas per day; MMscfd means million standard cubic feet of gas per day; Mscf means thousand standard cubic feet of gas; Bscf 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. 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.
