Sound Oil reports positive well test in Northern Italy

4th Sep 2013 09:04

Sound Oil, a company focused in Europe and the Mediterranean, has announced a positive well test at the onshore Nervesa discovery in Northern Italy. The well test achieved a stabilised total gas flow rate of 2.7m square cubic feet per day (scfd) from multiple sandstone intervals. The group also confirmed that the 50% chance estimate of recoverable gas resources at Nervesa had increased from 21bn cubic feet (with an estimated net present value at a discount rate of 10% of $58m) to 24bn cubic feet (with an estimated net present value at a discount rate of 10% of around $66m). James Parsons, Sound Oil's Chief Executive Officer, said: "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."In anticipation of securing a reserve based lending facility, the group has entered into an asset backed bridge loan facility for around £2.5m 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%. NR