Italy-focused oil junior Sound Oil announced Monday that it has secured a rig for its forthcoming Nervesa appraisal well, onshore northern Italy.
Sound said it signed a 'letter of intent' with LP Drilling for the use of a hydraulic type TB2100 S rig on Nervesa between Dec. 1, 2012 and Feb. 1, 2013. It estimates that the remaining spend for the appraisal well is approximately $3.8 million (EUR 2.9 million).
Under the terms of the agreement with LP Drilling, Sound also has the option to use the same rig for the Strombone appraisal well immediately following the Nervesa well.
Sound estimates that the Nervesa gas discovery has some 21 billion cubic feet of contingent recoverable resources (on a P50 basis). Previous testing flowed gas at 3.3 million cubic feet per day from a single sandstone. The Strombone onshore oil discovery is estimated to contain some 6.4 million barrels of P50 contingent recoverable resources.
In a company statement, Sound CEO James Parsons commented:
"The company continues on track to drill the Nervesa appraisal well, having now secured the rig. The independently assessed annual cash flows (after tax) from Nervesa are estimated to be above $14 million pa initially and stay above $12 million for each of the first seven years, generating a total [net present value] of $62 million."
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