Sound Oil (LON:SOU) has decided to abandon the second Nervesa appraisal well without performing side-track operations.
The company said it was not able to establish stabilised flow rates from the well, and it has been concluded that the lower section of the targeted reservoir is insufficiently permeable.
Top hold facilities will, however, be retained to enable any future sidetrack plans.
Sound Oil said it will now focus on bringing online production from the first Nervesa appraisal well and it expects to begin construction work there soon.
Chief executive James Parsons described the result as “a frustrating but relatively minor set-back”.
"The company remains very well positioned with a diverse and well balanced portfolio of assets in Italy and Morocco and a strong cash balance,” he said.
"We are rapidly approaching commercial production at the first Nervesa well, the drilling of the first appraisal well in Morocco and the permitting and farm out of the Badile exploration well.
Parsons highlighted that Sound Oil will have more than €26mln later this month, following the completion of a second tranche of placing shares.
In April the company announced a £12mln placing, which was split in two parts. Subsequently, the company also launched a £3.46mln open offer, making new shares available to existing investors.
This morning, Sound Oil told investors it had received a strong response from eligible shareholders and it has decided to extend the open offer timetable. Shareholders now have until June 23 to subscribe for new shares.
In a separate statement the company also informed investors that it has now had environmental approval for the offshore D503-BR-CS permit, in the Adriatic Sea, which hosts the Dora and Dalla assets.
Dora is a gas discovery from 1972, and Dalla is an nearby exploration prospect. Together the assets have an estimated value of €66mln.
Following the environmental green light Sound Oil expects the award of the D503-BR-CS permit to follow.
“We look forward to the permit award which will add another high value existing gas discovery to our portfolio,” Parsons added.
“The Dora discovery sits adjacent to significant ENI infrastructure and, similar to the Company's other discoveries, will benefit from very strong Italian gas prices."