Sound Energy (LON:SOU) has reduced the estimated cost of the Badile exploration well in the Piedmont Lombard basin in northern Italy by at least €5mln.
The Mediterranean-focused oil and gas company has completed a selective re-tendering of the Badile well programme now that the price of rigs and other services has dropped, in line with lower activity in the energy exploration sector.
The re-tendering has reduced the estimated total cost of drilling the well from €30mln to €25mln.
Sound Energy expects to receive final authorisation to start drilling the well either before the end of 2015 or early in 2016. It is still on the hunt for a farm-in partner to share the costs of the drilling, the company revealed.
"Badile remains the largest and most strategic asset in our portfolio with an independently assessed mid-case estimate of 178 Bscf [billion standard cubic feet] equivalent,” said James Parsons, Sound’s chief executive officer.
“The company, with its Mediterranean onshore gas strategy, has remained largely sheltered from current low oil prices and is now also benefiting from reductions to its capital costs as a result of increased availability of equipment and service providers.
“Securing this significant structural cost reduction is an important step prior to farming out the asset," he added.
Shares in Sound rose 4.6% to 14.65p on the news.