Update - acquisition of interest in Tanzania

RNS Number : 7730W

Solo Oil Plc

12 November 2014

 



For Immediate Release, 7 am                                                                             12 November 2014

Solo Oil plc

("Solo" or the "Company")

Update - acquisition of interest in Kiliwani North Gas Field, Tanzania

Solo Oil plc (AIM: SOLO) is pleased to announce that, further to the announcement of 14 October 2014, it has been advised by Aminex PLC ("Aminex") that the conditions precedent which are remaining to close the acquisition of an initial 6.5% of the Kiliwani North Development Licence ("KNDL") in Tanzania are the formal approval from the Tanzanian authorities and the completion of the Deed of Assignment, both of which are expected to occur shortly.  The Kilwani North gas field is due to commence production in the first quarter of 2015.

In addition, Aminex have advised that construction work for the 2 kilometre long tie in pipeline from the new Songo Songo gas processing plant to the Kiliwani North 1 ('KN1') well has now commenced and is expected to be completed by year end and that the Songo Songo processing plant and pipeline remain on schedule and there are no anticipated delays to the commencement of production which is expected early next year.

The KNDL contains the KN1 well which is expected to produce at an approximate rate of 20 million cubic feet per day ("mmscfd") (equivalent to more than 3,000 barrels of oil per day) in 2015.  Independently verified gross in-place unrisked mean gas resources of the well, computed by Isis Petroleum Consultants Pty Ltd, are estimated as 45 billion cubic feet ("bcf"). 

The Songo Songo gas processing plant is connected with the newly constructed 36-inch gas pipeline from Mnazi Bay near Mtwara in the south of Tanzania to the national capital Dar es Salaam in the north, and this provides an immediate route to monetise the Kiliwani North gas production.  

Ndovu (Aminex's nominated joint operator of KNDL together with the Tanzanian Petroleum Development Corporation) is in advanced negotiations on a gas sales agreement with the Tanzanian authorities and these negotiations are expected to be satisfactorily concluded in the near future.  

Solo and Aminex are already partners in the Ruvuma Production Sharing Contract ("Ruvuma") in southern Tanzania, with respectively 25% and 75% working interests, and where newly acquired seismic data has extended the potential of the Ntorya appraisal area.  The partners in Ruvuma have recently announced an upgrade of the mean gas in-place estimate to 2.3 trillion cubic feet ("tcf") by combining the Ntorya discovery with the adjacent Likonde prospect.

Neil Ritson, the Company's Chairman, commented:

"This agreement, which we now expect to close shortly, will be a major landmark for Solo as it will lead to the Company's first gas production and revenue from Tanzania.  We have recently reviewed the draft gas sales agreement and are confident that it can be signed shortly and supports our belief in the commerciality of gas from our various interests in Tanzania."

The key terms of the KNDL acquisition are set out below: 

1.         The Initial Acquisition, as announced on 14 October 2014, consisted of a cash payment of US$3.5 million for 10% of Aminex's 65% interest in KNDL, representing a 6.5% interest in the entire KNDL, payable initially as a refundable deposit of US$250,000 within 7 days of 13 October 2014, which has been paid, the balance of US$3.25 million becoming payable upon completion of the formal acquisition agreement. Completion of the Initial Acquisition was subject to existing partner approvals which has now been granted and receipt of written approval from the Tanzanian authorities to the assignment, within 45 days of 13 October 2014.  Aminex and Solo have mutually agreed to extend this deadline another 45 days to allow for this governmental approval which is expected to be confirmed shortly.  The parties also agreed to enter into a formal acquisition agreement within 30 days of 13 October 2014, but have extended this by mutual agreement in line with the deadline on formal assignment.

2.         The Second Acquisition will consist of an option by Solo to acquire a further 10% of Aminex's 65% interest in KNDL (a further 6.5% interest in the entire KNDL) on the same terms as the Initial Acquisition.  This option was to be exercisable within 45 days of 13 October 2014, however, Solo and Aminex have mutually agreed to amend this to be 30 days after receiving formal approval from TPDC to the assignment in the Initial Acquisition.

Competent Person's Statement:  

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chairman and Director for Solo Oil Plc who has over 35 years of relevant experience in the oil industry.  Mr. Ritson is a member of the Society of Petroleum Engineers, an Active Member of the American Association of Petroleum Geologists and is a Fellow of the Geological Society of London.

Glossary:

bcf                       - billion cubic feet of gas

mmscfd               - million standard cubic feet of gas per day

prospect              - a potential accumulation that is sufficiently well defined to represent a viable drilling target

tcf                        - trillion cubic feet of gas

For further information:

Solo Oil plc Neil Ritson	[phone]
Beaumont Cornish Limited Nominated Adviser and Joint Broker Roland Cornish	[phone]
Old Park Lane Capital Plc Joint Broker Michael Parnes Shore Capital Joint Broker Pascal Keane Jerry Keen (Corporate Broker) Bell Pottinger                            Public Relations Henry Lerwill	[phone] [phone] [phone]

 

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