Sound Oil To Produce Gas by the Year-End

PUBLISHED: 01 Oct 2012 @ 11:21 | Comments (0) | More info about Kenneth G. Mondero

Heavy trading of shares of Sound Oil plc (LSE:SOU) was seen earlier today after the independent oil and gas explorer said the regional authorities have approved its Environmental Impact Assessment in relation to the Rapagnano gas project in Central Italy, sparking hopes the company will start producing gas soon.

Sound Oil stocks spiked 21.1% to 0.57 pence with over 40 million shares traded by 11:30 AM GMT, as shareholders engaged in the buy and sell of the AIM-listed equity to take advantage of the attractiveness of the near-term potential of the said project, which in the company’s timeline will start producing gas by December 2012 after over 10 years of non-production.

The final approval of Italy’s Ministry of Economic Development is the last piece of document Sound Oil needs to start operations at the 8.5 square kilometre concession, which it expects to receive in a month’s time.

Sound Oil obtained provisional award for the acreage in 2011 through its subsidiary, Apennine Energy, which holds 100% interest in the field that was previously operated by ENI after discovering gas back in 1952.

The field has historically produced over 4.1 billion cubic feet of gas before the well was shut-in in 2001 for water saturation but Sound Oil estimates about 1.1 bcf are still left within that can be recovered in the next 13 years.

Development of the project will be financed by an Italian engineering firm, which will provide 52% of the estimated capital cost to put the well online again.

As at 30^th June 2012, Sound Oil has £5.1 million cash, with no debt, to fund the other 48% share in the development of the Rapagnano gas well.

The well was closed in 2001 when high amount of water was encountered in the upper reservoir and the company was planning to close the upper reservoir and re-open the lower reservoir where associated water production is low.

“Rapagnano represents a key strategic milestone of achieving first revenue for Sound Oil. We are pleased that the key environmental approvals in the application process have now been granted and that the project is progressing to the expected schedule,” Sound Oil’s Chairman and Chief Executive, Gerry Orbell, said in a statement.

Company Spotlight

Sound Oil plc, a UK-incorporated oil and gas exploration and appraisal company, joined trading on the Alternative Investment Market in 2005.

Apart from Italy, Sound Oil also has interests in Indonesia.

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