Proactive Investors
At Badile, drilling authorisation is awaited
Nervesa is due to start production later this year.
Sound Oil (LON:SOU) said preparations for a well at the Tendrara project, onshore Morocco, are now at an advanced stage.
Ahead of drilling operations an office has been opened and an in-country team has been hired.
Sound also revealed it has received an evaluation of the onshore Tendrara project by SLR Consulting, which has identified 170bn cubic feet of contingent gas resources – with a high estimate of 490bn and a low estimate of 16.6bn.
Condensate resources are estimated at 470,000 barrels, with a high estimate of 4.2mln and a low estimate of 0.39mln.
The contingent resource estimates come with a 22% chance of success.
An additional ‘best estimate’ of exploration targets amounted to 740bn cubic feet, with the high estimate set at 2.4tn cubic feet and 200bn cubic feet.
Economic analysis of the project, based on a development plan drawn up in 2013, gave a range of net value estimates between €64.18mln and €100.79mln.
Chief executive James Parsons said: “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.”
Elsewhere, in Italy, the company continues to move the Nervesa project towards production by the end of this year.
The company said that production skid construction is on-track to be installed next month, and that all required equipment for the project is now on site.
It also highlighted the recent award of the production concession by the Italian authorities, and that a gas sales agreement was signed last month.
Separately, at the Badile project the permit has been extended until the end of next year – or twelve months from final authorisation for a well.
Sound expects it will receive the authorisation this year, and it said it continues farm-out efforts for the project.
Cantor Fitzgerald said: “The company has outperformed its peers since the beginning of the year, but despite recent price moves we believe that Sound still represents compelling value at its current share price.”
Shares are up 40% on the year but slipped back 3% to 15p today.
Jamie Ashcroft
