Sound Oil diversifies into Italy

15th Dec 2010 14:56

Sound Oil is raising £3.7m in order to help to finance the acquisition of 96% of Consul Oil & Gas, which has oil exploration licences in Italy. AIM-quoted Sound is paying £4.62m in cash and shares for 96% of Consul - £1.39m in cash and the rest in shares at 1.2p each. The other 4% of Consul will be bought for $93,333 and 11.1m shares. The share placing is also at 1.2p a share. Additionally, Sound is buying RAB Octane (Master) Fund's loan and associated interest from RAB to Consul of approximately €1.15m. Sound has also agreed a £10m Standby Equity Distribution Agreement ("SEDA") with YA Global Master SPV Ltd, an investment fund managed by Yorkville Advisors LLC. The facility lasts for three years. This will provide additional cash for the work programme on Sound's licences as well as running costs of the business. Gerald Orbell, chief executive of Sound, is one of the owners of Consul, which was founded in 2006. Sound says that it is adding a portfolio of low-risk developments with near term revenue potential. Consul has 17 oil and gas exploration permits and applications in Italy. Sound's exploration interests are in Indonesia. Fugro Robertson Limited estimates that Consul's licence areas hold a minimum of 13 mmboe of net contingent resources with a combined success case value of US$226m. In addition, exploration potential for 284bcf of net prospective resources has been identified in two prospects in one permit.