TIDMSOLO
RNS Number : 2576P
Solo Oil Plc
09 October 2019
THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS
RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OF FROM THE
UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER
JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION
WOULD BE UNLAWFUL
9 October 2019
Solo Oil plc
("Solo" or "the Company")
Reverse Takeover Transaction and Suspension of Trading
Acquisition of package of assets from ONE-Dyas, Board and
Executive Management Update, securing of Mercuria debt facility,
fundraising and associated open offer, proposed change of name,
share capital re-organisation and temporary suspension from
trading
Solo (AIM: SOLO), a natural resources investing company focused
on acquiring a balanced portfolio of production, development and
exploration assets, is pleased to announce that its wholly owned
subsidiary, Scirocco (Netherlands) Energy B.V., has entered into a
binding sale and purchase agreement ("SPA") with ONE-Dyas B.V.
("ONE-Dyas") to acquire a package of non-operated interests in
natural gas fields from ONE-Dyas in the Dutch sector of the North
Sea (the "Proposed Transaction").
The consideration for the Proposed Transaction comprises an
upfront payment of EUR30.1 million (the "Upfront Consideration"),
plus a future deferred payment of EUR2.0 million upon first
production from future development of the hydrocarbons currently
designated as 2C resources contained within one of the fields to be
acquired. Solo anticipates the Proposed Transaction will be funded
through a combination of a new debt facility with Mercuria Energy
Group Ltd ("Mercuria"), new equity and existing resources.
The Proposed Transaction is classified as a reverse takeover
transaction pursuant to the AIM Rules and accordingly the Company's
shares will be temporarily suspended from trading on AIM as of
07:30 a.m. today. Completion of the Proposed Transaction is
therefore subject to approval by Solo's shareholders at a general
meeting to be convened in due course ("General Meeting") and the
raising of below mentioned equity & debt and regulatory,
government and partner consents. In order to convene the General
Meeting, the Company is required to publish an AIM Admission
Document which details, inter alia, the Proposed Transaction. It is
intended that the Admission Document will be published by mid Q4
2019.
To underpin this transformational transaction for the Company
and reflect on its ongoing strategic evolution towards a European
gas, infrastructure and energy player focused on delivering
investor returns in the transitional energy economy, Tom Reynolds,
an existing Non-Executive Director, will step into the role of
Chief Executive Officer (with immediate effect). Aligned to this
change, the Company also proposes, subject to shareholder approval
being obtained at the General Meeting, to change its name to
Scirocco Energy plc ("Scirocco Energy" or "Scirocco") and to
undertake a share capital re-organisation.
Key Highlights
-- Diversified portfolio of high quality, high margin producing assets
o Three core areas with 14 gas fields, producing c.99% gas / 1%
condensate
o High quality operators in ONE-Dyas, Neptune Energy Limited
("Neptune") and TOTAL S.A. ("TOTAL") within a stable fiscal and
regulatory environment
o Mid-life assets, with relatively low abandonment
expenditure
o ONE-Dyas retaining an interest in certain of the assets and
remaining as operator, demonstrating commitment to, and quality of,
the assets
o Self-funding balance sheet going forward with follow on
development potential funded by re-investment of free cash flow
-- Increased reserves and stable, growing production
Solo's pro-forma net 2P reserves at 1 January 2019 are expected
to increase by 3.6mmboe Associated net 2P NPV10 of c.EUR40 million
(pre-tax)
o Net average production in H1 2019 from the ONE-Dyas Assets was
approximately 1,750boepd expected to increase to approximately
2,125boepd in 2020
-- Significant development upside within each core area
o Incremental 2C resources of 7.5mmboe at 1 January 2019
-- Associated net 2P + 2C NPV10 of c.EUR99 million (pre-tax)
o Near field resources and proximity to existing
infrastructure
o Well defined work programme to convert 2C to producing 2P
reserves
o Potential for production increase to over 3,300boepd by
2022
-- Funding of acquisition through a combination of debt and equity
o Binding commitment for a debt facility of EUR18 million from
Mercuria Energy Group Ltd ("Mercuria") to fund part of the Upfront
Consideration
o Company intends to raise approximately GBP20 million in equity
("the Placing") to fund the balance of the Upfront Consideration,
posting of decommissioning security and for working capital
purposes
o Peel Hunt LLP ("Peel Hunt") appointed as bookrunner to the
Company, alongside Canaccord Genuity Limited, in connection with
the Placing
o Company intends to launch a simultaneous open offer with
publication of the Admission Document to allow existing
shareholders the opportunity to invest on the same terms as new
institutional investors
-- Creating a self-funding platform with clear path to increased scale and value
o The acquired assets immediately deliver cash flow for
re-investment
o Development programme targeting 2C contingent resources is
self-funded from free cash flow
o Provides optionality to extract maximum value from wider
portfolio in Tanzania
o Basis for future organic and inorganic growth
-- Continued corporate evolution
o Strengthened executive management team with appointment of
experienced CEO, CFO and COO, with Alastair Ferguson transitioning
to Non-Executive Chairman
o The broader executive team has the required experience in
North Sea M&A, public markets and gas value chain
o Proposed name change to Scirocco Energy plc to reflect
transformational nature of transaction
A presentation for investors will be uploaded on the website and
the management team will be hosting a conference call at 9:00 a.m.
today. Please contact solo@buchanan.uk.com for the
dial-in-details.
Alastair Ferguson, Non-Executive Chairman, commented:
"We are delighted to have agreed this truly transformative
transaction with ONE-Dyas to acquire working interest positions in
a package of mid-life gas field assets. This SPA is the culmination
of 12 months of hard work by the Board in re-determining the
Company's strategy. Our priority has been on ensuring the first
deal we bring to shareholders is value accretive and reflects the
ambition of the Board to build a new mid-cap company backed by high
quality assets and stable cash flow. This is a major step towards
the Board's strategic goal of evolving into a European gas,
infrastructure and energy player focused on delivering investor
returns in the transitional energy economy."
Tom Reynolds, CEO, added:
"I am delighted to step up to the role of CEO at this pivotal
juncture in the Company's development and look forward to driving
the growth agenda, building on this significant transaction. The
acquisition transforms Solo into a leading independent producer in
the Netherlands and secures a portfolio of cash-generative,
producing assets that sets us on a path to sustainable growth. We
are excited by the low-risk development opportunities within the
portfolio and we look forward to pursuing the work programme to
prove up the development potential which offers a clear route to
growing net production volumes. The acquisition of this asset
portfolio provides an enviable platform for growth in line with our
stated strategy and in support of our longer term ambitions of
producing 20,000 boepd in the next five years."
For further information:
Solo Oil plc
Alastair Ferguson, Chairman
Tom Reynolds, Chief Executive Officer
Douglas Rycroft, Chief Operating
Officer +44 (0) 20 7440 0642
Strand Hanson Limited
Nominated Adviser
James Spinney / Ritchie Balmer /
Rory Murphy +44 (0) 20 7409 3494
Gneiss Energy Limited +44 (0) 131 225 3783
Financial Adviser +44 (0) 20 7418 8900
Paul Weidman +44 (0) 20 7523 8000
Peel Hunt LLP +44 (0) 20 7466 5000
Richard Crichton / James Bavister solo@buchanan.uk.com
/ John Gilbert
Canaccord Genuity Limited
Henry Fitzgerald-O'Connor / Adam
James
Buchanan
Financial PR
Ben Romney / Chris Judd / Kelsey
Traynor / James Husband
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation 596/2014.
ONE-Dyas Transaction
Under the SPA, Solo, through its wholly owned subsidiary,
Scirocco (Netherlands) Energy B.V., will acquire non-operated
working interest positions in 14 gas fields across three core areas
("ONE-Dyas Assets") from ONE-Dyas for the Upfront Consideration of
EUR30.1 million, plus a future deferred payment of EUR2.0 million
upon first production from future development of the 2C resource
contained within one of the ONE-Dyas Assets. Solo anticipates the
Proposed Transaction will be funded through a combination of a new
debt facility with Mercuria, the Placing and existing
resources.
The ONE-Dyas Assets produced approximately 1,750boepd in 1H 2019
and are expected to produce approximately 2,125boepd in 2020. The
effective date of the Proposed Transaction is 1 January 2019 (the
"Effective Date"). The assets have 3.6mmboe of net 2P reserves (as
at 1 January 2019) with an associated 2P NPV10 of c.EUR40 million
(pre-tax) net to Solo. In addition, the acquired assets secure
incremental low cost / low risk net contingent 2C resources of
7.5mmboe. The acquisition delivers a net 11.1mmboe of 2P + 2C
resources with an associated NPV10 of c.EUR99 million (pre-tax) as
at 1 January 2019 (3.3mmboe of 2P reserves and 10.8mmboe of 2P + 2C
resources as at 30 June 2019).
The acquisition signals a transformational move for the Company
from an investing company into an operating company with a strong
focus on the European gas and energy markets in line with the new
strategy. The Board believes that the acquisition of mid-life Dutch
assets with low exposure to decommissioning liabilities represents
a major step towards establishing Solo as a major independent
player in the European gas market and the first step towards the
Company's production target of 20,000boepd within five years.
The transaction aligns Solo with operators with a long history
of high-quality performance in the North Sea. The acquisition
rationale is supported by strong macro dynamics around gas demand
in Europe. The assets provide revenue from a fiscally stable and
low risk political operating arena and creates a platform for
significant growth from future acquisitions.
Following this transaction, Solo will have a self-funding
balance sheet with assets in the Netherlands and Tanzania,
providing significant medium-term organic and inorganic growth
opportunities to recycle free cashflows to drive value for our
shareholders.
Temporary Suspension of Trading
By virtue of its size, and as mentioned above, the Proposed
Transaction constitutes a reverse takeover in accordance with Rule
14 of the AIM Rules for Companies. Accordingly, at the request of
the Company, the Company's ordinary shares will be suspended from
trading on AIM with effect from 07:30 a.m. today and will remain so
until either the publication of an AIM Admission Document setting
out, inter alia, details of the Proposed Transaction or until
confirmation is given that the SPA, and associated discussions,
have been terminated.
As part of the AIM Admission Document, a competent persons
report in respect of the ONE-Dyas Assets is being prepared by SLR
Consulting Limited ("SLR") and an updated competent persons report
in respect of Solo's existing Tanzanian assets is being prepared by
RPS Energy Consultants Limited.
Board and Executive Management Update
Solo is delighted to announce that Mr Tom Reynolds will step
into the role of Chief Executive Officer from his current role as
Non-Executive Director. This will further enhance Solo's strong
executive team, broadening the range of skills and experience which
the Company can utilise as part of its continued future growth
path.
Mr Reynolds is a Chartered Engineer and has over 30 years'
experience in the energy sector, including senior business roles
with BP plc, Total SA and British Nuclear Fuels plc, as well as a
number of private equity and publicly-listed, independent oil and
gas firms.
Tom's specialism sits within strategic planning, investment
management and cross-border M&A in the oil, gas, energy and
infrastructure sectors and he has considerable experience in the
public markets, including holding board seats on various companies
listed in London, Oslo and Toronto. Mr Reynolds grew Oslo listed
Bridge Energy ASA in his capacity as CEO through a series of
acquisitions before its introduction to trading on AIM, prior to
its US$150 million sale to HitecVision-backed Spike Exploration
Holding AS in 2013 at a 50% share price premium.
Mr Alastair Ferguson will continue to play a significant role on
the Board of the Company as Non-Executive Chairman with his
extensive experience of gas commercialisation, E&P operations
and governance. Since his appointment as Non-Executive Chairman of
Solo in August 2018 (later Executive Chairman) he has led the
company through a significant period of portfolio rationalisation
and was instrumental in the turnaround of the Company and the
development of the new success strategy focused on European gas and
the energy transition.
Funding for the Proposed Transaction
As part of the funding for the Proposed Transaction, Solo has
entered into a binding commitment letter for an acquisition
financing facility with Mercuria of up to EUR18 million, subject to
documentation being agreed and certain customary conditions
precedent being fulfilled.
The Company is also pleased to announce the appointment of Peel
Hunt LLP as the Company's Bookrunner, alongside Canaccord Genuity
Limited, to coordinate the Placing.
Gneiss Energy Limited is acting as financial adviser to Solo on
the Proposed Transaction.
Change of Company Name and Share Capital Reorganisation
To reflect the Company's ongoing strategic evolution towards a
European gas, infrastructure and energy player focused on
delivering investor returns in the transitional energy economy, as
part of the Proposed Transaction the Company intends to change the
name of the Company, subject to shareholder approval at the General
Meeting, to Scirocco Energy plc.
The Company also intends to undertake, subject to Shareholder
approval at the General Meeting, a share capital reorganisation,
further details on which will be contained in the AIM Admission
Document.
Principal terms of the Proposed Transaction
The initial cash consideration is EUR30.1 million, to be
adjusted for working capital movements from the Effective Date. A
future deferred payment of EUR2.0 million is contingent upon the
first period of 30 days of continuous production from future
development of the 2C resource contained within one of the ONE-Dyas
Assets. Completion of the Proposed Transaction is conditional,
inter alia, on:
-- Regulatory approval in the Netherlands;
-- the receipt of appropriate consents and transfer relating to the assets to be acquired;
-- the confirmation that no pre-emption rights have been
exercised in respect of the Interests, (these three CPs being
referred to as the "Consent Conditions")
-- the passing of appropriate resolutions approving the Proposed
Transaction in a General Meeting of the Company ("GM
Condition");
-- Admission ("Admission Condition").
A deposit of EUR1 million is due to be paid to ONE-Dyas within
one working day of signing of the SPA ("Deposit"). If the Proposed
Acquisition does not proceed, the Deposit is repayable to Scirocco
(Netherlands) Energy B.V. (the Company's recently incorporated
wholly owned subsidiary) unless (a) a defined Buyer Breach
(insolvency or breach of fundamental warranties), in which ONE-Dyas
retains the entire Deposit or (b) if the GM Condition and the
Admission Condition are not satisfied but the Consent Conditions
are satisfied, in which case ONE-Dyas retains EUR500,000 of the
Deposit with EUR500,000 being returned to Scirocco (Netherlands)
Energy B.V..
The SPA can be terminated (a) if any of the Conditions Precedent
(as defined below) (to the extent not waived) have not been
satisfied by the 28 February 2020 (the "Long Stop Date"), (b) if
any pre-emption rights over the assets being acquired pursuant to
the SPA are exercised before Completion (subject to the acceptance
of such exercise by Scirocco (Netherlands) Energy B.V.), (c) for
failure to deliver the completion deliverables on the completion
date (subject to the right for the non-defaulting party to delay
Completion or proceed to Completion without limiting the right to
claim damages) or (d) in the event of Buyer Breach before
Completion.
A more detailed summary of the SPA is set out below.
Principal terms of the Mercuria debt package
Mercuria is one of the largest integrated energy and commodity
trading companies in the world. Mercuria's activities encompass all
key energy products and a wide range of dry bulk commodities,
alongside physical elements of the energy business including
production, logistics and storage interests.
The acquisition facility with Mercuria will comprise a senior
loan of EUR14 million, which will amortise over a period of four
years and will carry an annual interest rate of LIBOR plus 7.0% per
annum, and an additional junior loan facility for a further EUR4
million, which will amortise over a period of five years and will
carry an annual interest rate of LIBOR plus 12.0% per annum.
Mercuria will also provide gas marketing and gas hedging services
to the Company, as part of the Proposed Transaction.
Background to the ONE-Dyas Assets
The net 2P reserves attributable to the ONE-Dyas Assets as at 1
January 2019 are estimated to be 3.6mmboe. These reserves will be a
significant addition to Solo's existing net 2P reserves of c.30kboe
attributable to its working interest position in the Kiliwani North
project, Tanzania.
The working interests of the ONE-Dyas Assets being acquired are
laid out in the table below.
Licence / Field Operator Proposed Transaction
working interest
L08-D ONE-Dyas 25.00%*
---------- ---------------------
L11c-Gillian ONE-Dyas 25.00%*
---------- ---------------------
M07-A ONE-Dyas 15.00%*
---------- ---------------------
M07-B ONE-Dyas 15.00%*
---------- ---------------------
K09ab-A Neptune 5.09%
---------- ---------------------
K09ab-B Neptune 8.63%
---------- ---------------------
K09ab-C Neptune 9.53%
---------- ---------------------
K09ab-D Neptune 8.63%
---------- ---------------------
K09c-A Neptune 10.26%
---------- ---------------------
K09c-C Neptune 10.26%
---------- ---------------------
K12-L Neptune 5.18%
---------- ---------------------
K12-G Neptune 10.32%
---------- ---------------------
L10-M Neptune 21.43%
---------- ---------------------
K06-D TOTAL 2.16%
---------- ---------------------
*only a partial divestment is planned by ONE-Dyas in these
assets - ONE-Dyas will retain operatorship and a reduced working
interest
L08-D & L11c Gillian Fields
L08-D and L11c-Gillian are two producing gas fields, located in
blocks L08a, L08b, L11b and operated by ONE-Dyas.
At the end of 2018, ONE-Dyas reported that these fields had
produced a total of 636.5million Nm(3) of gas for L08-D and
195.0million Nm(3) of gas for L11c-Gillian (approximately 24Bscf
and 7Bscf, respectively).
The L08-D and L11c-Gillian fields are both tilted fault block
structures which have the mid Permian, Rotliegend Group, Slochteren
Formation ("ROSL") as the reservoir. This reservoir is divided into
an Upper Slochteren Member ("ROSLU") and a Lower Slochteren Member
("ROSLL"), with the ROSLU further sub-divided for reservoir
management purposes. The ROSLU is the more important of these two
reservoir intervals which are separated by shales of the Silverpit
Formation, Ameland Member. These clastic reservoirs were deposited
under continental, desert and semi-desert conditions in
depositional environments including alluvial fan, aeolian dunes,
fluvial and sabkha deposits. The reservoir intervals have variable
Net/Gross ratios (average range of 45-80%) and average zonal
porosities in the range 10-13%.
The contiguous L08-D, L11c-Gillian and L11-B fields have all
been developed from the L11b-A production platform, which was
installed by previous operator Chevron. L11-B ceased production in
2009. ONE-Dyas assumed operatorship of the L11b-A platform in
2016.
L08-D was discovered by the L08-16X well in 2004, lying to the
north-west of the platform and has been in production since 2009
via three production wells: A06, A08 (2013) and A09 (2015).
L11c-Gillian lies to the south-east of the platform and was
discovered in 2015 by the deviated well L11-14, which was renamed
A07Z and tied in for production. A second production well, A10
(also known as Gillian-2) was drilled in August 2018. A07Z was
hydraulically stimulated in 2017 resulting in a significant
productivity improvement. A similar hydraulic stimulation was
applied to the new A10 well and would be planned for any future
development wells in the area.
Processing facilities on the L11b-A platform include separation,
compression and dehydration, with gas export via the NGT pipeline
system to Uithuizen.
The approved work programme for these assets includes a
side-track of the A06 well (A06X) into an L08-D fault block just to
the north-west of the A06 and A09 wells. Also proposed in the 2019
programme are A09 production enhancement activities intended to
close a gap in production performance with the A06 and A08
wells.
L08-D - New Satellite Developments
Two satellite developments are considered for the L08-D area,
these being L08-D South and L08-D North. The rationale behind these
satellite developments is that the majority of L08-D South
currently remains un-drained and the L08-D North area is not
connected to the current L08-D development.
Phase 1 of the L08-D further development (L08-D South) would
consist of an unmanned satellite platform located on the
south-eastern corner of the field with three long-reach wells
drilled from the platform. These wells would be designed to allow
lateral side-tracks to be drilled later to increase the number of
production locations to up to six. Similarly, to L11c- Gillian,
these wells are likely to be stimulated.
Subject to the results of Phase 1, Phase 2 would re-use the same
development concept in the L08-D North area to the north east.
Production from L08-D South and North would flow to the L11b-A
platform, bypassing compression, and would be exported via the NGT
pipeline to Uithuizen.
SLR has considered the Chance of Development for these new
developments and has assigned a risk factor of 75% for L08-D South
and 50% for L08-D North.
M07-A & M07-B Fields
The M07-A and M07-B producing gas fields are located in Block
M07 and are operated by ONE-Dyas.
At the end of 2018, ONE-Dyas reported that this field had
produced a total of 716.7million Nm(3) of gas from M07-A and
622.8million Nm(3) of gas from M07-B (approximately 27Bscf and
23Bscf respectively).
For the M07-A Field, the reservoir is the Lower Triassic,
Volpriehausen Formation, whilst for the M07-B Field the reservoir
is the Upper Jurassic, Scruff Formation (specifically, the Schill
Grund and Spiculite members).
The Triassic Volpriehausen Formation was deposited under
semi-arid to arid conditions and comprises a clastic reservoir of
fluvial, aeolian, lacustrine and lagoonal deposits. Average
petrophysical properties for the Volpriehausen reservoir are
55-100% Net/Gross and 15-20% porosity, although quality is variable
due to depositional facies variations and diagenetic
overprints.
The M07-A Field (Triassic reservoir) and M07-B Field (Jurassic
reservoir) have both been developed by drilling from the M07-A
minimum facilities mono-tower platform. ONE-Dyas assumed
operatorship of the licence in 2011. The platform can accommodate a
maximum of three wells and all slots are currently in use.
A commercial agreement has been reached with NAM for L09-FF
compression capacity to be made available to the M07 Fields from 3Q
2019. A compression test was carried out in May 2018 demonstrating
increased production rate without back-out of the NAM
production.
ONE-Dyas has identified the following further potential
development opportunities:
-- The M07-10 well was drilled to appraise the eastern flank of
M07-B in 2016 but found tight reservoir. This well could be
stimulated in an attempt to establish commercial production from
the area via satellite tie-back.
-- Alternatively, the A01X platform well slot could be reused
for further appraisal of the area and potentially add
production.
K09/L10-M/K-12-G Cluster
The K09/L10-M/K12-G Cluster is located in the K09ab and K09c
licences, the K12-G Unit and the L10-M Unit.
This area contains five producing fields and four currently
non-producing fields (planned for potential future production). The
K12-L Field has reached its Cessation of Production point and is
scheduled for abandonment. All fields are operated by Neptune,
except for K06-D Field which is operated by TOTAL. The individual
fields are a series of unitised and non-unitised assets.
The gas fields of the K09/L12-M/K12-G Cluster all share the same
clastic reservoir interval, that being the mid Permian, Rotliegend
Group, Slochteren Formation ("ROSL"). This reservoir is divided
into an Upper Slochteren Member ("ROSLU") and a Lower Slochteren
Member ("ROSLL"). The ROSLU is the volumetrically more important of
these two reservoir intervals which are separated by shales of the
Silverpit Formation, Ameland Member. These clastic reservoirs were
deposited under continental, desert and semi-desert conditions in
depositional environments including alluvial fan, aeolian dunes,
fluvial and sabkha deposits. The reservoir intervals generally have
high Net/Gross ratios (with an average range of 60-90%) and average
zonal porosities are in the range of 10-14%.
Tom Reynolds, Chief Executive Officer, career summary
Tom started his career in 1991 in a variety of commercial,
marketing and technical roles with British Nuclear Fuels. In 1997,
he joined Total SA, holding a number of commercial roles, including
portfolio management and acquisition and divestment processes. From
2000 he was BP plc's commercial manager for the Foinaven and
Schiehallion fields. He originated and negotiated the commercial
framework for the new West of Shetlands Pipeline System, including
third party field tariff arrangements.
He joined 3i plc as an investment manager in early 2003, making
a pre--IPO investment in Pearl Energy and a private placement in
CH4 Energy Limited to support the acquisition of the Markham Field.
From 2004 until 2008, Mr Reynolds served as CIO of Energy
Development Partners, structuring, marketing and successfully
closing EDP's first equity fund of US$350 million as a novel
approach to development project finance on both the United Kingdom
Continental Shelf ("UKCS") and Dutch sector of the North Sea.
In 2008, Tom led the UK team of Silverstone Energy Limited,
delivering production and reserve growth within the North Sea and,
subsequently, in 2010, managed its merger with Oslo--listed Bridge
Energy AS and a further doubling of production through the
acquisition of a series of high margin assets. Following a
successful secondary listing on AIM, he grew the enlarged business
through acquisitions and successfully delivered its sale in 2013 to
Spike Exploration Holding AS, a private company backed by
HitecVision. The group was sold for approximately US$150 million, a
c.50% premium over its pre-approach share price. In 2014, he joined
Iona Energy Inc., a distressed UKCS player, replacing the
management team and leading turnaround activities, including the
financial restructuring on its US$350 million high yield bond.
More recently, Mr Reynolds has been involved in providing
strategic, valuation, investment and corporate finance advice to a
broader range of energy companies including serving as a mentor to
early stage companies within The Oil & Gas Technology Centre
(www.theOGTC.com) sponsored start--up programme.
Mr Reynolds is a Chartered Member of the Institution of Chemical
Engineers and holds a first class honours degree in Chemical and
Process Engineering from the University of Strathclyde.
Qualified Person's Statement
Rosemary Johnson-Sabine, Solo's principal technical adviser, who
has over 25 years of relevant experience in the oil industry, has
approved the technical information contained in this announcement.
Mrs Johnson-Sabine is a geophysicist by background having of
international experience with major, mid-size and small oil and gas
companies. She has worked in business development, exploration and
development stages of the industry with a documented history of
exploration success winning UK Explorer of the year award from Wood
Mackenzie and decorated for services to the energy industry in the
UK with an OBE. Rosemary holds a Bachelor of Science in Geology and
Geophysics from the University of London, and is a member and
ex-President of industry associations PESGB and EAGE and also a
member of SEG.
Glossary
boepd - barrels of oil equivalent per day
Bscf - billion standard cubic feet
mmboe - million barrels of oil equivalent
kboe - thousand barrels of oil equivalent
kboepd - thousand barrels of oil equivalent per day
Nm(3) - normal cubic meter
Summary of the SPA
A sale and purchase agreement has been entered into on 8 October
2019 by Scirocco (Netherlands) Energy B.V., a wholly owned
subsidiary of the Company as buyer, the Company as Guarantor to
certain of Scirocco (Netherlands) Energy B.V.'s obligations, and
One-Dyas B.V as seller, in respect of the Interests ("Acquisition
Agreement").
The Acquisition Agreement is conditional upon (a) the written
approvals of the Minister of Economic Affairs and Climate Policy of
the Netherlands (Minister van Economische Zaken en Klimaat)
("Minister"), (b) the unconditional approval by EBN B.V., a company
designated by the Minister for the purpose of state participation
under sections 81 up to and including 97b of the Dutch Mining Act
2003 (Mijnbouwwet) of Scirocco (Netherlands) Energy B.V. becoming a
party to the Agreements of Co-operation (as far as applicable); (c)
no pre-emption right in respect of the Interests to be acquired
having been exercised, or any such pre-emption right having been
waived by the party capable of exercising such right, (d) the
receipt of all other necessary cooperation and/or consents required
under the agreements related to the Interest to be acquired, (e)
the approval of the acquisition at the general meeting of the
Company ("GM Condition") and (f) Admission taking place ("Admission
Condition"). The conditions must be satisfied by the Long Stop
Date, or such other date as agreed in writing by Scirocco
(Netherlands) Energy B.V. and ONE-Dyas or the Acquisition Agreement
terminates, together the "Conditions Precedent". All Conditions
Precedent can be waived by Scirocco (Netherlands) Energy B.V. and
ONE-Dyas agreeing to such waiver. Conditions Precedent (a), (b) and
(c) above are referred to as the "Consent Conditions".
The consideration for the Interests is EUR30,100,000 ("Initial
Consideration") which is to be adjusted by a working capital
adjustment.
In addition to the Initial Consideration, deferred consideration
of EUR2,000,000 will become payable on the day after the first
period during which L08-D South produces for a period of 30
consecutive days. This is a contingent payment which is wholly
dependant on such production.
A deposit of EUR1,000,000 ("Deposit") is payable within one
working day of signing of the Acquisition Agreement. On completion
of the Acquisition Agreement, the Initial Consideration payable
will be reduced by the amount of the Deposit. If the Acquisition
Agreement terminates, the Deposit is repayable to Scirocco
(Netherlands) Energy B.V. unless (a) there has been an insolvency
event relating to Scirocco (Netherlands) Energy B.V. after
execution of the Acquisition Agreement or a material breach of
warranties granted by Scirocco (Netherlands) Energy B.V. relating
to title and capacity as well as anti-bribery and anti-money
laundering ("Buyer Breach") or (b) if the Acquisition Agreement
fails to complete solely as a result of the GM Condition and the
Admission Condition not being satisfied (providing that the Consent
Conditions have been satisfied) in which case ONE-Dyas retains
EUR500,000 of the Deposit with EUR500,000 being returned to
Scirocco (Netherlands) Energy B.V..
The Acquisition Agreement can be terminated if (a) any of the
Conditions Precedent (to the extent not waived) have not been
satisfied by the Long Stop Date, (b) if any pre-emption right is
exercised before Completion (subject to Scirocco (Netherlands)
Energy B.V.'s acceptance of such exercise, in which case the
Acquisition Agreement will proceed to Completion with the
pre-empted Interest excluded from the Acquisition Agreement, and a
corresponding reduction in Consideration), (c) failure to deliver
the Completion Deliverables on the completion date (subject to the
right for the non-defaulting party to delay Completion or proceed
to Completion without limiting the right to claim damages) and (d)
in the event of Buyer Breach before Completion.
ONE-Dyas has granted customary warranties and indemnities to
Scirocco (Netherlands) Energy B.V. including warranties relating to
the Interests and covering title, capacity to sell, confirmation
that the Licences are in full force and effect, confirmation of no
encumbrances and no disputes.
Scirocco (Netherlands) Energy B.V. has granted customary
warranties to ONE-Dyas in respect of title, capacity, solvency and
anti-bribery and anti-money laundering.
The Acquisition Agreement is governed by the laws of the
Netherlands with the jurisdiction for any disputes being the
competent court on Amsterdam, the Netherlands.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCMLBATMBIMMIL
(END) Dow Jones Newswires
October 09, 2019 02:00 ET (06:00 GMT)
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