8th Sep 2015 08:18
LONDON (Alliance News) - Sound Oil PLC Tuesday said it is still on track to begin producing gas from the onshore Nervesa field in Italy before the end of 2015 and said it has been informed by authorities its Badile permit will be extended.
The oil and gas company also provided an update about its recently agreed deal to acquire a majority interest in the Tendrara licence in Morocco.
All the necessary equipment and materials needed to begin production from Nervesa are now on site and the company said skid construction at the field is expected to be finished and installed by the end of October. Skids are steel pallets built to carry certain objects, particularly machinery and related equipment, from one spot to another.
In addition, the Italian Ministry of Economic Development has advised the company that the Badile permit will also be extended.
The permit is currently due to expire on March 23, 2016, but the Ministry has said the licence will be extended until the earlier of either December 31, 2016, or 12 months from when the Ministry awards the company final authorisation to drill the forthcoming well.
"The company expects to receive final authorisation to drill the well during the course of 2015 and continues with its efforts to identify and negotiate a farm in partner," it said.
In a separate statement Tuesday, Sound provided an update regarding its recent deal to acquire a stake in the onshore Tendrara license in Morocco.
Back in June, Sound entered into a farm-in agreement with the Moroccan Oil and Gas Investment Fund to operate and acquire up to a 55% stake in the Tendrara licence by funding exploration costs.
Sound's 55% working interest will be granted in two tranches, with an initial 37.5% awarded on completion of the transaction and the remaining 17.5% granted once Sound Oil commits on the second exploration phase, which would include the drilling of further wells.
Since striking the deal, Sound Oil has recruited SLR Consulting Ltd to evaluate the licence.
On Tuesday, it said SLR has estimated, based on Sound's potential 55% shareholding in the licence, that the company has best estimate contingent resources of 170.8 billion standard cubic feet of gas net to Sound and 470,000 barrels of condensate.
SLR has also concluded Sound only has a "22% chance of success" in recovering those 170.8 billion cubic feet of gas. There is also a further 740.2 billion cubic feet of gas in best estimate prospective resources which could be recovered across the remainder of the licence through further exploration.
Sound Oil has now opened a new office in Rabat in Morocco, where it has recruited an in-country technical team for the licence.
"I am pleased to report that this evaluation validates the scale of both the existing gas discovery and the exploration upside at the Tendrara licence. We believe this asset provides a compelling risk / reward balance and a strong platform for further consolidation in country," said Chief Executive James Parsons.
Sound Oil shares were trading flat on Tuesday at 16.26 pence per share.
By Joshua Warner; [email protected]; @JoshAlliance
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