Solo’s participation in the Horse Hill gave the AIM-quoted firm some excitement, plenty of headlines and ultimately September ‘s disposal delivered a profitable exit.
The foray into UK onshore oil exploration started with a £600,000 investment in February 2014 (albeit additional investments followed) and it sold out for £4.5mln worth of UK Oil & Gas shares, which were sold shortly thereafter.
It remains to be seen whether or not the exit was ‘well timed’, whether a longer-term view with an additional investment of funds would’ve paid off, or, whether an opportunity has been missed.
Nevertheless, on a strategic level, the UK assets were always something of a sideshow from Tanzania where the company has a material stake in what could be a world class scale project.
Kiliwani North: simple cash-generating asset
Solo has an 8.3918% in the Kiliwani North field which, in 2016, gave the company its first production generated revenue.
After around 2 years of operation, Kiliwani’s single well has just gone through an upgrade programme and it will be back online in the coming weeks and months – there’s also some potential for greater upside from the asset, as deeper prospectivity is also being assessed.
In 2017, Kiliwani North yielded some 15 mmscfd of production and generated £600,000.
Ruvuma: the flagship asset in the Tanzania portfolio
The company owns 25% of Ruvuma, an expansive and high potential area which already hosts the Ntorya gas field development project.
Here, the asset development is set to be driven by The Zubair Corporation which is acquiring a 50% stake in stake Ruvuma via a farm-out transaction with current operator Aminex. It will leave Aminex with 25% of the asset, the same as Solo.
In early August, Solo announced a funding of up to £3.6mln - via the sale of shares - as it makes preparations for a step up in operational activity in Tanzania. The Horse Hill stake sale, further UK divestments have further boosted the coffers.
In mid-December, Solo managing director Dan Maling told investors he is confident that the Tanzania-focused explorer will be fully funded for 2019’s planned activities.
Zubair plans to conduct a minimum work programme including the establishment of an early production system for Ntorya, targeting a minimum gross rate of 40mln cubic feet of gas per day (MMcf/d) which amounts to 6,700 barrels equivalent.
It will also drill, complete and test a new well, Chikumbi-1 which will be a follow-up to the successful wells of at Ntorya. The well will be located up-dip from both the Ntorya-1 and Ntorya-2 wells. The well is expected to delineate the Ntorya gas field in a significantly thicker section of the reservoir system and is also intended to evaluate a deeper exploration target.
Success is expected to lead to production into the existing Madimba gas processing plant, before being integrated into a wider field development.
The partners will additionally acquire, process and interpret 3D seismic data within the Ntorya project area.
Elsewhere, an additional prospective area has been identified within the Kiliwani North and Nyuni Area concessions which will be the subject of new seismic data acquisition, with plans to acquire some 275 kilometres of 3D seismic.
The aim is to find the undrained compartments of the Kiliwani North structure and to high-grade the Kiliwani South prospect to ‘drill-ready’ status.