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Solo Oil highlights opportunities as its investments advance

Last updated: 09:30 28 Sep 2017 EDT, First published: 06:05 28 Sep 2017 EDT

oil and gas operations
Appraisal drilling has advanced Ntorya towards development

Solo Oil PLC’s (LON:SOLO) interim results statement highlighted the irons the AIM-quoted investor has in the fire.

The emphasis was naturally on the Ntorya project in Tanzania where a successful recent appraisal has set the project up for development.

Solo has a 25% stake in the Aminex-operated project, though as the project moves towards development, the AIM-quoted minority partner will be seeking some form of transaction - to either bring in a funding partner or a complete divestment.

WATCH: Solo Oil boss delighted with estimated Ntorya gas resources boost

The assets value was recently boosted by an upgraded resource estimate by Aminex which now sees some 1.3 trillion cubic feet of gas at Ntorya.

“Solo has made significant advances in its investments in Tanzania in the last reporting period, especially in the Ntorya gas-condensate discovery,” the company said in a statement.

“Receipt of the requested 25-year development licence for Ntorya, which is expected in late 2017, will allow the finalisation of plans to commercialise Ntorya; which in Solo's case may involve the full or partial sale, or farmout, of the company's equity position depending on negotiating advantageous commercial terms with a third-party.”

Solo also has a 7.55% stake in the revenue generating Kiliwani North gas asset, which is producing at a gross rate of 15mln cubic feet per day and during the reporting period it also invested into a 10% stake in Tanzania focussed Helium One.

The company described the Helium One investment as a “potentially world class” opportunity with compelling economics and market dynamics.

READ: Solo Oil: Horse Hill gets green-light from Environment Agency

Onshore UK, meanwhile, the company has a stake in the ground breaking Horse Hill project where flow testing in the Kimmeridge play last year impressed.

The Horse Hill proposition continues to be de-risked by separate third-party projects in the play, and meanwhile, the Horse Hill partners are preparing for future programmes including long term production testing.

“Solo is currently reviewing the recent drilling and testing by other operators in the Weald Basin with a view to assessing future investment potential within the basin,” the company added.

In terms of financial results, the company reported a £306,000 loss for the period, whilst Kiliwani North contributed £451,000 of gas sales.

Solid set of results 

In a note to clients, analysts at Beaufort said: “These are a solid set of results held together by production and gas sales at Kiliwani North (produced 15mmcf per day in 1H17), plus the exploration success at Ntorya.“

They added: “We also note Solo's multiple other valuable assets including its 6.5% interest in Horse Hill and a 30% interest in a oil discovery on the Isle of Wight. We have a Speculative Buy recommendation.”

In afternoon trading, Solo Oil shares were changing hands at 5.5p each, down 0.25p on last night’s close.

 -- Adds broker comment, share price --

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on 21/7/17