Sound Oil Plc (LON:SOU), the AIM listed oil and gas exploration company with interest in two Production Sharing Contracts (PSC) based in Indonesia, has recently released its half year report which provides a bit of sweet and sour news for its investors. [1] The company highlights announced include, the completion of a Citarum Seismic Project which has identified a number of interesting leads and prospects, detail that planning is underway for a 3 well exploration programme due to commence Q12011 and that Sound Oil has a £9.1m cash in the bank which covers the planned work programme. On the downside Sound Oil has reported as expected a hefty loss after tax of £13.9 million in the first six months of 2010 which is almost entirely down to the adjusted book value of its Bangkanai PSC in which it announced earlier this year that it had transferred a 29.99% interest to the operator in return for maintaining a 5% carried interest in the asset saving an anticipated £22m in operating costs. [2]
Sound manages its Indonesian assets through its subsidiary company Mitra Energia Limited, with the near term focus centring around the Citarum PSC (20% working interest) and a simultaneous 3 well programme that is set to commence following the ‘exploration well 1’ site preparation scheduled for February 2011. [3]
Commenting on the forthcoming programme the Sound Oil Chairman and CEO Gerry Orbell, noted:
“Plans are in preparation to drill three exploration wells commencing in Q1 2011 in fulfilment of the remaining firm drilling commitment on the licence. The final locations will be decided in autumn 2010 and will be chosen from an inventory of existing prospects in the Jonggol (western) area and from any structures identified in eastern areas from the new seismic data.” [4]
The first exploration period under the Citarum PSC is due to end in October 2010, however, based on the firm drilling plans submitted to BPMigas the Indonesian Government regulatory authority for petroleum exploration and production activities, Sound fully expect a further one-year extension to be granted. With regard to the Bangkanai PSC which has suffered delays, Sound Oil have a potential production revenue stream under the new carried agreement with no upfront cost involved through exposure to an…
