Sound Oil to focus on Indonesia assets after acquisition deal collapses

AIM-listed Sound Oil said on Friday that talks had collapsed over its potential acquisition of a company with assets in West Africa and it was now looking for other opportunities and would also press on with developing its assets at Bangkanai PSC, onshore Central Kalimantan and Citarum PSC in West Java.

The company said it remained debt free with approximately ?11 million cash.

The company, hwoever, said it was looking to reduce its level of exposure on the Bangkanai PSC by attracting new investors into the licence with a view to re-starting the stalled exploration activity on the block.

It also has received notice from operator Elnusa Bangkanai Exploration Ltd which sought to terminate Sound?s interest in the farm-in agreement because of delays in completion of the work program there. ?Sound has received legal advice that this is unfounded and it intends to contest this vigorously. It is possible that the Bangkanai PSC might lapse at the end of its initial exploration period which expires on 31 December 2009, although the Company believes that an extension will be granted to allow the development of the Kerendan gas field which has an approved plan of development,? the company said.

Elsewhere, the company said it had made considerable progress towards completing the outstanding work commitments on the Citarum PSC and is currently involved in an extensive 1,020 km seismic programme over the acreage, which extends over 2,878 sq km.

Sound has 35 percent non-operating interest in Bangkanai and 20 percent non-operating interest in Citarum.(alex)