Sound Oil reveals strong funding position

Sound Oil on Wednesday reported a strong funding position ahead of its Nervesa appraisal well.

The Italy-focused oil and gas company added 5.99% at 10:49 after it unveiled a cash balance of $12.4m with no debt.

The group expects to start the appraisal drilling on the Nervesa discovery with a cash balance between $14m to $15m.

The fifth and sixth tranches of the share placement announced in July have been closed, generating a total of £1.9m. The seventh and final pricing period will expire on February 11th.

The estimated total remaining expenditure on the Nervesa appraisal well, which has an independently assessed net present value of about $60m, was some $1.8m.

Chief executive James Parsons said Sound Oil was approaching the initiation of operations on the Nervesa appraisal well and the first achievement of first commercial gas on Rapagnano, following successful tests on the wells last week.

"It is expected that after both operations are complete the company will be positioned with circa $12m cash in the bank, a 13-year revenue stream from Rapagnano and a large scale and de-risked discovery (Nervesa), with alternatives on the table for its development into a significant producing asset or partial sale.

"Sound Oil now has one of the strongest balance sheets in the small cap oil and gas sector and we are continuing to evaluate various alternatives which would enable the Company to complete the entire 2013 drill programme without equity dilution," he said.

RD