The fact that this week’s news from Sound Energy PLC's (LON:SOU) Italian operations wasn’t a more exciting event in the market perhaps reflects that most investors are now interested mainly in the group’s Moroccan success.
Sound and its shareholders are naturally focussing on Morocco, where recent successes at the Tendrara project point to what could be a significant new gas operation.
Success at Tendrara where it has drilled two wells, has flagged up the world-class potential of its Tendrara acreage.
Sound Energy’s Badile project “ticks a lot of boxes”
Sound Energy almost ready to go in Italy
Sound Energy enjoys a scorcher in Morocco in 2016
Over in Italy, meanwhile, the company has been looking forward to Badlile for some time.
“Before Tendrara came along Badile was going to be the big groundbreaking well for the company,” oil and gas companies expert Malcolm Graham Wood said in an interview.
“It has got potential for a huge amount of gas and the company say its chance of success are around 34%, which is quite high for a well like this.
“It ticks a lot of boxes.
“It is potential a very substantial reservoir … the market for natural gas in Italy is very strong, so if they have a discovery here this is still extremely meaningful for the company.”
Graham Wood reckons Badile could potentially be worth around 50p per share for Sound Energy.
On Thursday, Sound Energy told investors that the Badile well in Italy will begin in March.
Much of the preparation such as ground work has already been done, while the conductor pipe at the top of the drill hole has been set.
At the same time the rig has been mobilised and should be on site and assembled by the end of next month, the company added. Badile, in Italy’s Piedmont Lombard Basin region, is being drilled as an exploration well.
The plan is to go to a total depth of 4,600m to test the hydrocarbon potential of the Lower Jurassic Conchodon Dolomite.
An independent assessment suggests the target could be host to around 178bn standard cubic feet of gas with a net present value of £400mln. That figure is what’s called a ‘best case’, unrisked estimate. It sits at in the middle of the range with the ‘high case’ forecast being 670bn cubic feet and the ‘low case’ 46bn cubic feet.
Badile is part of a portfolio of Italian assets on which the original Sound Oil was founded.
It includes smaller producing assets Casa Tiberi and Rapagnano as well as a host of exploration and appraisal opportunities that could help turn the valuation dial.
Recently Sound expanded its collaboration with oil service giant Schlumberger from Morocco to Italy with the latter helping fund Badile after agreeing to provide €7.5mln of drilling services.
Sound Energy’s success to date, which has seen the share price rocket 320%, was been based on impressive drill results from Tendrara and Badile may provide it with a second leg to the business.