An upgrade to the Santa Maria Goretti (SMG) gas prospect onshore Italy lifts Sound Oil (SOU:AIM) 6.1% to 11.4p. The independent audit or competent person's report (CPR) estimates the target contains a prospective resource of 32 billion cubic feet (bcf)– up 82% on the previous reckoning - with a net present value of €52 million.

Web chart - Sound Oil - July 2014

Westhouse Securities reiterates its 'add' recommendation and 14p price target, commenting: 'SMG was previously carried in our EMV (ending market value) at 18bcf, so with the new resource number our valuation increases from 2.8p per share risked (7p per share unrisked) to 5p per share risked (12.5p per share unrisked), based on 40% chance of success. Good news for Sound, however, drilling will occur in 2015 at the earliest.

'There is no change to our view and we note that one of the most material catalysts for Sound will be progress on a farm-out at the Badile asset in Italy, potentially adding another 8p/share to our current valuation.'

Alongside May's finals (21 May) the company indicated it was still looking for a partner on the 178 bcf Badile prospect ahead of drilling in late 2014, early 2015.

Issue Date: 15 Jul 2014