Saturday, 26 April 2014

Sound Oil

Recently I caught up with Sound Oil both prior and during the UK Investor Show on the 5th April. I shared my thoughts (Click here) Whilst at the event I spent a great deal of time meeting and greeting companies and investors alike, The event exceeded my expectation and to think this was only year two...

Sound Oil had one, if not the best stand at the event from a visual aspect and the very fact they had a comprehensive team in attendance really did echo how serious they were taking the event. Italian MD Luca Maddeddu presented the breakout room presentation (Click Here). Which really did start to show the shape and strength Sound Oil had made over the past 12 months, Both under the stewardship of Luca and Leo in Italy along with Stuart and James in London. The misfire of 2011 boils down to the company thrusting itself into the minds eye of many P.I's during a particularly bullish period in the markets, After a choppy couple of years divesting unachievable assets in Indonesia and reshaping the old Board we today see a streamline company with a proven method of value creation which formed its head of steam in Friday's announcement (Click here) of a £14 million injection at an average price of 9p from institutional investors Continental Investment Partners SA.

Operationally the company has Rapagnano delivering first revenues with Casa Tiberi on target to deliver first gas in 1H 2014 or first half of this year, these projects will keep the register ticking over respectably whilst the bigger success of Nervesa continues to prove rewarding. In September 2013 we were informed:

''A stabilised total gas flow rate of 2.7 MMscfd from multiple sandstone intervals in the Upper Miocene San Dona Formation .''

The Company is also pleased to confirm that, following a revision of its reservoir model for the full field, the P50 estimate of recoverable gas resources at Nervesa has increased from 21 Bcf (with an estimated NPV10 of US$58m) to 24 Bcf (with an estimated NPV10 of circa US$66m).

So with an increased recoverable resource proven at the Nervesa project which is already to spud a second well during the first half of the year which should initiate cash flows of $60m+ throughout 2015, coupled with game changing assets like Badile it seems straight forward to understand how the company managed to secure investment into the company on such favourable terms.

Badile should become apart of Sound Oils ever evolving active operations later in the year, to scale Badile against the respectable cash cow of Rap and CT-1 then its pretty much like Jack and the Giant beanstalk. The small seed of Badile has been planted and with is 60% increase on the previous CPR then we should start to see further high end growth creation from here (7p)

James Parsons, Sound Oils Chief Executive Officer, commented:
"Badile remains the largest and most strategic asset in Sound Oil's portfolio. We continue to prepare the Company for drilling this asset with a view to capturing the upside NPV, which now exceeds US$2 billion."

Full Rns here

Sound Oil feature on page 54 of Fridays times as '' Deal of the day '' I guess the front page is the next step for the small cap Mediterranean E&P company. I urge readers to now look at the transformational makeup of the board. '' If they can't do it then nobody can '' - Foundations look a lot stronger and with a much more robust asset portfolio.

28/04/14 Today's Q&A Live - Click here

Stay tuned (Click here for audio thoughts) follow me on twitter here

Onshore low cost deviated drill to offshore Laura asset anyone???

All the best


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(These are but opinions derived from my own experiences and thoughts and do not adopted as statement of fact)

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