The terrific 12-month rally enjoyed by Sound Energy (SOU) investors was set back this week, after drilling at the company's Badile well off the coast of Italy revealed water influx and non-commercial volumes of gas. The news caused Sound's shares to drop by as much as 40 per cent, before recovering around the 58p level.
Sound previously said that Badile could hold gross prospective resources of 178bn cubic feet of gas and condensate, implying a post-farm-out net present value of €396m (£347m) at a gas price of 31¢ per cubic metre. The well will now be plugged and abandoned.
A second market update was also poorly received. On Wednesday, Sound said it had encountered a "producible gas accumulation" at its Koba-1 well at the Sidi Moktar licence in Southern Morocco, which it believes could soon move to production. However, no detail was given on the resource potential and, in a shift to its drilling programme, Sound no longer intends to immediately re-enter the nearby Kamar-1 well.
