Sound Oil, the European / Mediterranean focused upstream oil and gas company, announces that it has signed a Letter of Intent ("LOI") for the forthcoming well addressing the Nervesa discovery on the Carita permit in Northern Italy.
As previously announced, following the first Nervesa appraisal well in summer 2013, the Company plans to drill a second Nervesa appraisal well once final governmental approval has been obtained. This well is expected to spud during the first half of 2014 and will appraise the Southern limb of the Nervesa discovery. The Company has, following a tender process, signed the LOI with Hydro Drilling International SpA to lease a HH220 hydraulic drilling rig for the well. The Company estimates that this second appraisal well will cost approximately Euro 5 million, including contingency.
The rig contract is expected to be signed during Q1 2014. Under the terms of the LOI Sound Oil has also secured the option to utilize the same rig for either the third appraisal well on the Nervesa discovery (if required) or for a new exploration well in the Carita Permit.
The Company also announces it is currently in discussions with potential farm in partners for the appraisal and development of the Nervesa discovery.
James Parsons, Sound Oil's Chief Executive Officer, commented:
"Nervesa is a 24Bscf gas discovery which was originally discovered by ENI in 1985 and was drilled successfully by Sound Oil in the summer of 2013. The discovery has an estimated NPV10 of circa US$66 million and is expected to provide material cash flows to the company from 2015.
This second appraisal well is a relatively shallow well with a minimal deviation, addressing the southern area of the discovery and targeting a bottom hole location up-dip from the original ENI well."
Source: Sound Oil
