Sound Oil turns down offer for Badile prospect in Italy

Sound Oil said Tuesday it turned down a farm-in agreement for its Badile exploration prospect in northern Italy.

The company received an offer from an undisclosed Italian oil and gas major but decided to retain its wholly-owned operated position at the prospect, saying: "The offer did not reflect the potential of this major asset."

MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

The prospect has an independently assessed success case net present value of $410m gas and $266m oil. The exploration well is forecast to cost about €20m plus contingency.

Chief Executive Officer of Sound Oil, James Parsons, said: "I am pleased to have secured an offer from a credible potential partner, which validates our technical view of the asset.

"We have chosen to retain the upside exposure and also control of project budgets and timelines. We will now prepare for drilling and continued de-risking of the asset whilst remaining open to offers..."

In coming months the company will submit a drilling request and Environmental Impact Assessment to the Italian permitting authorities, targeting a 2014 Badile well.

A technical team will be recruited for the well which will reach a target depth of 5300 metres.

Shares fell 1.72% to 7.12p at 09:29 Tuesday.

MoneyWeek is written by a team of experienced and award-winning journalists, plus expert columnists. As well as daily digital news and features, MoneyWeek also publishes a weekly magazine, covering investing and personal finance. From share tips, pensions, gold to practical investment tips - we provide a round-up to help you make money and keep it.