Sound Oil has signed a rig contract with LP Drilling SrL (LP Drilling) for the forthcoming Nervesa appraisal well in Northern Italy.

The Company has recently been advised by the Veneto regional authority that the written "Autorizzazione" for the Nervesa appraisal drilling is expected to be delivered to the Company on the 1st March. The Company has therefore now concluded a contract to lease the TB 2100S hydraulic drilling rig for the appraisal well addressing the Nervesa gas discovery on the Carita Permit. The contract allows the Company to mobilize the rig on 25th March which the Company will do assuming the written permissions have been received by that point. All other terms are broadly consistent with the previously announced Letter of Intent signed last October. The Company estimates that the remaining spend for the appraisal well is approximately €2.9 million including rig costs, of which Sound Oil will fund €1.4 million (the balance being paid directly by the funding contract with CSTI).

James Parsons, Sound Oil's Chief Executive Officer, commented, "Nervesa is a 21Bscf gas discovery which was discovered by ENI in 1985 and was put into production for several years. The discovery has an independent assessed base case value of circa US$60 million.

Tags: Sound Oil plc