Sign up United Kingdom
Proactive Investors - Run By Investors For Investors

Q&A: Sound Oil fully funded for next 2 years

Sound Oil's CFO Stuart Joyner talks investors through the recent £14mln funding and what it means for the Italy-focused oil junior.

Sound Oil (LON:SOU), the oil and gas exploration company, has announced that it has signed a heads of agreement to inject £14 million into its Italian operations. Continental Investment Partners, which is investing on behalf of family offices in Italy, Switzerland and the UK, will become the company’s largest shareholder and the first major institutional investor.

Chief financial officer Stuart Joyner spoke to Proactive Investors’ Nigel Roberts about the plans for the funds...

Nigel: It’s quite complex deal, just describe in some detail exactly what it is and why you’ve decided to go down this route.

Stuart Joyner: Sure. We’re basically injecting a total of £14mln into the company through Continental Investment. It comprises two components; the first component is equity and is £8mln. We’re issuing 100mln new shares at 8p per share. 

The second component is £6mln and that effectively is a three year loan note with a 10% coupon.

It’s a significant amount of money. It will effectively fund our forward programme. We unveiled what we plan to do back in January and the funds that we’re raising today will go towards paying for that programme.

Nigel: What are the hurdles you have to get over before you get the entire £14mln?

Stuart Joyner: There’s been an immediate payment of £1.5mln from the £6mln loan. That is on signature. The remaining funds will come on completion of the deal which we expect within the next few weeks and months. Obviously, there has got to be technical due diligence by Continental and approvals by our own shareholders, but effectively it’s a two-stage payment.

Nigel: Apart from the capital, you also get some new directors. What do they bring to the party? 

Stuart Joyner: We’re thrilled to have Continental on board. They are a high quality institutional investor. Marco Fumagalli, who is their managing partner, will be joining our board with another appointee. Obviously, they will own a little over 23% of the company once the equity component completes. 

They are very well known in terms of investing in Italy. They represent Italian and non-Italian investors. Marco brings corporate finance skills and a good network within Italy. We’re delighted to have him on board.

Nigel: The regulatory environment in Italy is quite challenging shall we say, and certainly different from other parts of Europe. I know there are two other UK-listed companies like yourself in that region. Is there any informal cooperation to try and make the system work for you?

Stuart Joyner: Yes. I mean we network not only actually with the UK-listed E&Ps – although we have good relationships with those companies – but with other entities that have interests in Italy. I think there has been an improvement actually in terms of the Italian regulatory environment. You’ve got a new government, we’re seeing progress. There are talks ongoing in terms of how to improve the permitting process. 

As far as we’re concerned, we have been able to get stuff drilled and we are confident of bringing assets through to production. We bought our first field online Rapagnano in 2013. We’re expecting to bring Casa Tiberi on stream over the next few weeks and months. Nervesa, where some of this funding today will go, will be on stream in 2015 and that’s a significant asset. 

I think if you have the right approach, if you have a very strong Italian technical team with good reputations in Italy, you can get things done. I think our strategy in terms of investing in that capacity is paying off.

Nigel: With this £14mln looking like it’s coming into the company over the coming months, what does this do to the outlook for Sound Oil?

Stuart Joyner: It will fund the programme for the next 24 months, including the Nervesa drill in the second quarter of this year. That’s an exciting well, as well as Badile, where we hope to spud towards the end of this year and drill into next year. 

We also will be progressing Santa Maria Goretti, the licence award from 2013 that we announced. Obviously we’re hoping to drill Laura, which is an offshore prospect but we’re drilling that from the onshore and we hope to get the permitting on that sorted soon.

View full SOU profile View Profile

Sound Energy PLC Timeline

Related Articles

drill rig
August 31 2018
Multiple highly attractive development projects in shallow water on the North West Shelf of Western Australia.
oil and gas operations
April 09 2018
A 'high priority' exploration area is being advanced offshore Ireland, production growth is still on the cards onshore UK, and the company recently said it was looking at potential new opportunities.
offshore oil rig
May 08 2018
Life has been tough in the oil sector in recent years, but things started to pick up towards the end of 2017

No investment advice

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.

© Proactive Investors 2018

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use