Solo Oil Plc Licence Extension and Tanzania Strategy Update (8867K)
27 Aprile 2020 - 08:00AM
UK Regulatory
TIDMSOLO
RNS Number : 8867K
Solo Oil Plc
27 April 2020
27 April 2020
Solo Oil plc
("Solo" or "the Company")
Licence Extension and Tanzania Strategy Update
Solo (AIM: SOLO), the AIM investing company, provides the
following update regarding its 25% non-operated interest in Ruvuma
PSA Joint Venture (the "JV") in Tanzania.
The Company is pleased to note that it has received confirmation
from the Operator, Ndovu Resources Limited, that the Mtwara
Exploration Licence, which sits within the Ruvuma PSA, and contains
the Ntorya Gas field has been formally extended by the Ministry of
Energy of Tanzania.
The key terms of the extension are as anticipated and consistent
with those previously set out as follows:
During the period of one year commencing from 17 April 2020, the
JV will:
-- Acquire 200 square kilometres (surface coverage) of 3D
seismic (min. expenditure of US$7 million)
-- Drill the Chikumbi-1 exploration well (min. expenditure of
US$15 million)
-- Complete the negotiation of the Gas Terms for the Ruvuma PSA
with the Tanzania Petroleum Development Corporation ("TPDC")
-- Using the data gathered from Chikumbi-1 and the seismic
acquisition, prepare and submit an application for a Development
Licence for the Ntorya Location area.
It is noted that receipt of this extension was one of the last
remaining conditions required for Aminex PLC (the owner of Ndovu
Resources Limited) to close the farm-out agreement with ARA
Petroleum Tanzania Limited ("ARA").
It is acknowledged by all parties that the full work programme
is unlikely to be completed during this extension period and Solo
understands that the Operator will therefore apply for an
additional extension(s) as necessary and as permissible under the
current legislation. In the meantime, the Company, with its JV
partners, will continue to prepare for this work programme. Solo
notes that the above costs are minimum expenditures per the
extension terms. The Operator has previously announced an estimate
of $40m for the work programme, which would imply an expenditure
amount US$10 million for Solo's 25% interest over the work
programme period, which will extend into 2021. The JV partners are
evaluating the cost of the work programme in light of current
market conditions and expect the near-term programme to be
delivered at significant savings to previous estimates. The Company
further notes that the Operator has already performed many
pre-drilling and pre-seismic technical planning and contractual
acquisition activities.
Tanzanian strategy update
As previously announced on 2 March 2020, the Board launched a
formal process to explore value realisation options for its assets
in Tanzania. The Company has seen an encouraging level of interest
in its Tanzanian assets and a number of interested parties have
requested access to the data room. The Board remains confident in
the inherent value of its 25% interest in the licence - supported
by the abovementioned extension, which provides clear visibility on
the route to commercialising this strategically and economically
important asset.
The Company will consider reasonable offers and remains
pragmatic in the context of the challenges faced by energy market
participants against the current global backdrop. The Board will
base any decision on what is in the best interests of Solo's
shareholders and will provide further updates in due course.
Commenting on the update, CEO Tom Reynolds said: "This extension
is incredibly encouraging and reflects a prolonged period of
engagement between the JV and the Tanzanian government. The Ruvuma
asset is strategically and economically important for the country
and contains significant upside potential and value that can now be
unlocked as a result of this extension, particularly where there is
substantial regional demand for natural gas.
An additional benefit, which will interest prospective
counterparties, is that existing gas production in Tanzania is
typically sold under term sale contracts which are largely
insulated from the volatility in global commodity markets. This
renewal provides a clear line of sight to the commercial
development of this asset and increases Solo's optionality to
realise value from it."
For further information:
Solo Oil plc
Tom Reynolds, CEO
Doug Rycroft, COO +44 (0) 20 7440
Romina Mele-Cornish, CFO 0642
Strand Hanson Limited, Nominated Adviser
& Broker +44 (0) 20 7409
James Spinney / Ritchie Balmer / Rory Murphy 3494
Buchanan, Financial PR +44 (0) 20 7466
Ben Romney / Kelsey Traynor / James Husband 5000
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of Article 7 of the Market Abuse Regulation 596/2014.
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END
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