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Solo Oil board pleased with turnaround progress

By Josh White

Date: Monday 11 Feb 2019

Solo Oil board pleased with turnaround progress

(Sharecast News) - Natural resources investment company Solo Oil issued a corporate, strategy, financial and operational update on Monday, reporting that it was in a "healthy" cash position.
The AIM-traded firm said it had a remaining small exposure to its UK Oil and Gas (UKOG) shareholding and no debt following the sale of its Horse Hill and Isle of Wight assets, and the repayment of its Riverfort debt facility.

It confirmed it was fully funded through this year's proposed drilling of the Chikumbi-1 well in the Ruvuma production sharing contract, onshore Tanzania.

On the management front, Solo Oil outlined a "strengthening and reconstitution" of its board, with incumbent non-executive chairman Alastair Ferguson assuming the role of executive chairman, while Dan Maling had stepped down from the board and from his role as managing director.

Those changes were effective immediately, with the company explaining that they were a continuation of the board restructuring that began in 2018, with the appointment of Jon Fitzpatrick and Tom Reynolds as non-executive directors.

It also said that its management team was "strengthened", with the secondment of experienced industry personnel from Gneiss Energy to support ongoing asset management and delivery of its business strategy.

Douglas Rycroft would take the role of general manager of operations, and John Daniel would be appointed as technical advisor.

Looking at its assets, Solo Oil saif Ruvuma monetisation options were being reviewed, adding that it had received "a number" of unsolicited indicative approaches by industry counterparties regarding its 25% interest in the gas development project.

It said planning was underway for the Chikumbi-1 well, which would be an additional appraisal and potential future producing well of the Ntorya Gas Field within the Ruvuma Gas Development.

At Kiliwani North, the board confirmed that intervention and workover operations had resolved the Kiliwani North-1 subsurface safety valve issue, with gas flowing to the plant during the test period.

The joint venture there, in which Solo Oil had a 8.3918% interest, was reportedly progressing with planning for the perforation of the lower zone, which had potential volumes of up to 8 BCF within a new reservoir.

Operations on the Kiliwani North development licence would remain a "key" 2019 focus, as the licence had "significant" upside in the Kiliwani South prospect of 57 BCF.

Solo Oil also said the operator had expressed plans to accelerate development by reprocessing 2D seismic and acquiring new 3D seismic data.

There were no further commitments on the licence, giving the company the ability to monetise new volumes quickly into existing infrastructure and under the existing gas sales agreement, Solo said.

At Helium One, progress was continuing to be made towards a multi-well drilling programme currently anticipated in late 2019.

Solo Oil said the management and Board of Helium One was exploring options to fund the programme on a drill-for-equity basis, minimising requirements of existing shareholders to fund the initial drilling.

It said it continued to see "significant" value in the Helium One project, driven by "strong" underlying fundamentals in the global supply and demand balance.

"During the second half of 2018 the new board has made good progress on implementing our turnaround plan and I am satisfied that we have already made good progress on delivering on our stated objectives in terms of monetising mature investments, strengthening the balance sheet and our joint venture management," said chairman Alastair Ferguson.

"We have now established an ambitious strategic vision of where we want to get to and are setting in place the foundations to achieve those objectives.

"Our current focus is two-pronged; maximise value from our existing portfolio, whilst simultaneously assessing opportunities that meet with our newly formed long-term growth strategy."

Ferguson said the company aimed to articulate that strategy in a detailed update in the coming months, to ensure shareholders had a "full insight" into Solo Oil's proposed direction of travel.

He added that the firm had a "strong board" in place with an "excellent track record" of merger and acquisition success, with the team described as being "well capable" of delivering long-term growth.

"Furthermore, following recent divestments, we are well funded with a more appropriate level of general and administrative expenses and access to deal flow.

"Solo is committed to minimising the overheads and administrative costs of running the assets, using a small executive team and purchasing other services as required," Ferguson explained.

"The board is confident that it has the right team in place to release value from the existing portfolio whilst simultaneously assessing new opportunities to materially enhance the value of the company for the benefit of all of our shareholders."

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