Sound Oil Reports Incident at Pasundan-1

Sound said that and incident occurred Saturday on the Pasundan-1 exploration well that led to cessation of drilling activities at the site, located approximately 50 km southeast of Jakarta, Java, Indonesia. Sound is a participant (through its wholly owned subsidiary Mitra Energia Citarum Limited) as a 20% shareholder in BPREC, the operating company.

While operating below the 30-inch conductor, damage occurred to surface facilities of the rig caused by uncontrolled movement of equipment. There were no injuries to any personnel on the rig or the wellsite, downhole conditions remained stable and there was no impact on the environment.

Currently BPREC is dealing with the incident according to its agreed accident investigation procedures and is preparing the necessary report to BP Migas, the regulatory authority. A full inspection of the damage to the rig and an estimate of repairs is being undertaken. The operator's preliminary estimate is that repairs will take approximately 10 days. During this period BPREC will not be liable for rig contract costs.

Gerry Orbell, Chairman of Sound Oil, commented: "This incident is an unfortunate start to the drilling of Pasundan No 1 but at least no one was hurt. Apart from the delay, the incremental cost of this incident to Sound Oil is expected to be minimal."