SOLO OIL PLC Completes Initial Acquisition of Kiliwani North
Solo today confirms that further to its announcements on 14 October and 17 December 2014 the Company has now signed the Asset Purchase Agreement with Aminex plc ("Aminex") for the first 6.5% interest in the Kiliwani North Development Licence ("KNDL") at a total consideration of US$3,500,000. Further, Solo and Aminex have agreed to amend the terms of the original heads of agreement to allow Solo the option to purchase the additional 6.5% interest, on the same terms as the first 6.5% interest in the KNDL, during a period of 30 days after the Gas Sales Agreement ("GSA") has been approved by the Tanzanian Authorities.
Kiliwani North Development Licence, Tanzania
The KNDL contains the Kiliwani North 1 ("KN1") well, which Aminex and Solo expects to produce at approximately 20 million feet per day in early 2015. Once producing this will represent a major milestone, providing first revenues from Tanzania. Independently verified resources at Kiliwani North are estimated to be 45 billion cubic feet of gas-in-place. Construction of a 2 kilometre pipeline from KN1 wellhead to the new Songo Songo processing plant, at zero cost to the Company, is underway and expected to be completed shortly. The partnership has been notified by the Tanzanian Petroleum Development Corporation ("TDPC") that pressure testing of the pipeline is expected to commence during first quarter 2015.
The only conditions precedent remaining are the formal approval by the Tanzanian Authorities and the formal signing of the Asset Assignment Agreement by all partners; which the companies expect to receive shortly.
The key terms of the acquisition are set out below:
1. The Initial Acquisition will consist of a cash payment of $3.5 million for 10% of Ndovu's 65% interest in KNDL, representing a 6.5% interest in the entire KNDL; and
2. The Second Acquisition consists of an option for Solo to acquire a further 10% of Ndovu's 65% interest in KNDL (a 6.5% interest in the entire KNDL) on the same terms as the Initial Acquisition within 30 days of the signing of the GSA.
Aminex and Solo are already partners in the Ruvuma Production Sharing contract in Tanzania, with respectively 75% and 25% interests, where gas was discovered in 2012 at Ntorya-1. Ndovu is the operator of both the Ruvuma Production Sharing Agreement and the KNDL.
Horse Hill-1 Discovery, Weald Basin UK
In other news, Solo has been informed by UK Oil & Gas Investments PLC ("UKOG") that it has agreed terms with US-based NUTECH Ltd. ("NUTECH"), one of the world's leading companies in petrophysical analysis, for consulting services in connection with the Company's Horse Hill-1 ("HH-1") discovery in the UK's Weald Basin and in the area of the Company's joint application in the UK Landward 14th Licence Round for new acreage on the Isle of Wight.
Headquartered in Houston, Texas, NUTECH is a global oil services company specialising in reservoir evaluation and optimisation at all stages of the exploration and production life-cycle. NUTECH will assist in the assessment of reservoir parameters, including oil in place volumes and rock mechanical properties, encountered in the HH-1 discovery.
Solo will participate directly with UKOG in the work so as to assist by applying the Company's expertise in play evaluation. As a consequence the results of the UKOG-NUTECH work will be available to Solo.
Solo holds an indirect 6.5% interest in the HH-1 discovery through its 10% holding in Horse Hill Developments Limited.
Neil Ritson, Solo's Chairman, commented:
"Our first gas revenue from Tanzania moves a step closer with the acquisition of the initial tranche of Kiliwani North as agreed last year. The imminent signature of the gas sales agreement and the completion of the hook-up of KN-1 to the Songo Songo gas processing plant will make this a reality in the next few months."
"Good progress is also being made in assessing the Horse Hill discovery in the UK and the agreement between Solo, UKOG and NUTECH will significantly enhance our understanding of the results, especially in the Kimmeridgian Limestone which shows significant promise at the well and regionally."
Qualified 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.