Sound Oil announced the signature of a rig contract with LP Drilling SrL 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 March 1. 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 March 25 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 $3.87 million (EUR 2.9 million) including rig costs, of which Sound Oil will fund $1.87 million (EUR 1.4 million), with the balance being paid directly by the funding contract with CSTI.
Sound Oil's Chief Executive Officer James Parsons commented:
"Nervesa is a 21 Bscf 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 $60 million.
Operations to prepare the site for this flagship project are now complete.
We are pleased to have received confirmation from the Italian permitting authorities that there are no outstanding issues and that the "Autorizzazione" will be awarded immediately after the Italian elections. Assuming the Autorizzazione is received as expected March 1, we expect the well to spud April 1. While this is later than originally expected it does enable the rig to be mobilized in the first quarter and spud to occur shortly thereafter.
The signature of the rig contract is the final step to ensure the Company is ready for the drilling of this key well."
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