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Solo Oil back to drawing board as Dutch deal falters

Snapshot

  • Stake in Ruvuma project in Tanzania up for sale
  • The company also holds a 13.8% interest in Helium One
  • Wants greater hands-on control in future and to be operator
  • Looking at European gas assets
Tanzania

Quick facts: Solo Oil PLC

Price: 1.17 GBX

AIM:SOLO
Market: AIM
Market Cap: £7.58 m
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How it's doing

In March, Solo Oil PLC (LON:SOLO)  confirmed the proposed reverse takeover with ONE-Dyas gas has fallen through due to a failure to renegotiate terms after a slump in European gas prices.

Solo added it has enough cash to meet its commitments in Tanzania but has now set up a data room for anyone interested in acquiring its 25% stake in the Ruvuma PSC.

A formal sales process started in March, with Solo, in the meantime, looking for another portfolio of European gas assets to acquire.

Other assets

Kiliwani North -  Solo has an 8.4% stake 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 is yet to come back onstream.

Ruvuma - Solo also owns 25% of Ruvuma, an expansive and high potential area in Tanzania that 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 Ruvuma via a farm-out transaction with current operator Aminex.

It will leave Aminex with 25% of the asset, the same as Solo.

Zubair plans to conduct a minimum work programme 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.

Pre-drilling operations for the Chikumbi-1 well are ongoing, as the Tanzanian government is actively working to complete the farm-out.

 

What the boss says: Chief executive Tom Reynolds

 "It is clearly disappointing for management and shareholders that we could not complete the proposed transaction, however, the value of the asset package changed significantly after the signing of the SPA and it is the board's responsibility to ensure the company does not overpay for acquisitions." 

 

Inflexion points

  • Solo aims at establishing itself as a mid-cap E&P 
  • The Chikumbi-1 well is scheduled to start after the completion of the Aminex farm-out
  • A data room has been set up to sell Ruvuma stake
  • Looking at other European gas portfolios

 

 

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