Sound Oil to farm down its Carita licence in Italy

28th Apr 2014 13:26

Sound Oil, a Mediterranean-focused upstream oil and gas company, has signed non-binding heads of terms with Niche Group for a farm down of the company's onshore Carita licence in the Po Valley, Northern Italy. Under the heads of terms, Niche will acquire a 27.5% interest in the Carita licence, which includes the Nervesa discovery, in exchange for paying all of the costs of a second well to address the southern part of the structure, planned for second and third quarters of this year. Following the farm-out, the company will continue to hold a 72.5% interest in the licence. The second well, to be funded by Niche, is estimated to cost 6m euros. A binding agreement is expected to be entered into during the second quarter of 2014, the firm added. James Parsons, the Chief Executive Officer of Sound Oil, said: "We are pleased to confirm that we have agreed heads of terms for a 3.6-1 farm out on Sound Oil's flagship asset, Nervesa. This fully funds the next well addressing the southern part of the structure, enables us to achieve first gas on Nervesa without significant further capital and preserves the recently announced £14m funding injection for our world class Badile prospect and material Laura discovery. "This farm out, together with the introduction of our new cornerstone investor announced last week, positions Sound Oil as a substantively fully funded vehicle. The executive team will now turn its attention to the farm out of Badile." NR