£6.4 million placing, and far

RNS Number : 5311C

Solo Oil Plc

16 November 2009

 



16 November 2009

Solo Oil Plc

("Solo" or "the Company")

Placing to raise £6.4 million

and

Farm-in to the Ruvuma Basin, Tanzania

Solo Oil Plc announces that it has placed a total of 1,280,000,000 new ordinary shares of 0.01p each in the Company (Placing Shares) at a placing price of 0.5 pence per share to raise £6.4 million ("the Placing") and has signed a Farm-out Agreement with London Main Market listed Aminex PLC ("Aminex") to earn a 12.5% interest in the Likonde-1 well in Tanzania.

Aminex currently has a 50% interest in the Ruvuma PSA and the remaining 50% is held by Tullow Oil PLC ("Tullow") which is the operator.  Post transaction, Tullow will own 50% of Likonde-1 well, Aminex 37.5% and Solo Oil 12.5%.

Likonde-1 is the first well scheduled to be drilled on the Ruvuma production agreement (PSA) in southern Tanzania with spudding likely to occur in about two months, the precise date depending on rig move logistics.  A rig contract has been signed.

Under the terms of the farm-out agreement Solo will: 

(1) Reimburse Aminex for 12.5% of pre-drilling costs amounting to US$1.25 million and 

(2) Pay 18.75% of the drilling cost of Likonde-1 amounting to $3.4 million.  

After the drilling of Likonde-1, Solo will have earned the right to participate in any further drilling on the licences covered by the Ruvuma PSA through contributing 12.5% of ongoing costs.  If Solo exercises this right it will also then become a full party to the Ruvuma joint operating agreement.

The Farm-out agreement is subject (1) to formal approval from the Government of Tanzania and (2) to passing of the relevant resolutions at the Company's' general meeting as referred to below.

Placing

The Placing has been done in two stages. Under the first placing, the Company intends to issue 224,700,000 new ordinary shares at a price of  0.5 pence per share raising gross proceeds of £1,123,500 (before expenses) ("First Placing"). The First Placing is subject only to the admission of the new ordinary shares to trading on AIM,  which is expected to take place on the 23 November 2009. 

Following the First Placing, the Company intends to issue a further 1,055,300,000 new ordinary shares at a price of 0.5 pence per share raising gross proceeds of £5,276,500 (before expenses) ("Second Placing"). The Second Placing is, inter alia, conditional on the resolutions being duly passed by the Shareholders at the General Meeting, scheduled for 9 December 2009 to provide the necessary authorities to issue the shares, and on admission of the new ordinary shares to trading on AIM which is expected to take place on the 11 December 2009.

The Placing Shares will, when issued, rank pari passu in all respects with the Company's existing ordinary shares in issue. Application is being made for the Placing Shares to be admitted to trading on AIM, following which, the Company's total issued share capital will be 2,080,320,634 ordinary shares. The Placing Shares will represent approximately 61.5% of the enlarged issued share capital of the Company.

In conjunction with the placing arrangements, the Company has agreed to issue to Astaire Securities options over 60,000,000 Ordinary Shares to be issued at a price of 0.5 pence per share exercisable in whole or in part at any time up to and including the third anniversary of the admission of the new Ordinary Shares subject to the Second Placing closing.

A circular convening the General Meeting is being sent to Shareholders today, and a copy will be available shortly on the Company's website www.solooil.co.uk

Use of Proceeds

The Placing proceeds will provide the Company with the funds to pursue its new investing policy as approved by shareholders on 17 July 2009 and specifically will be used to farm in to the Likonde- 1 well scheduled to be drilled on the Ruvuma production agreement in southern Tanzania. Participation in this agreement will cost approximately £ 2.79 million. 

The balance of the funds which is expected to exceed £3 million is expected to be used to strengthen the Company's balance sheet and for general working capital purposes.

Information on the Ruvuma PSA

The Ruvuma PSA covers approximately 12.000 sq Kilometres in the extreme south-east of Tanzania of which roughly 80% is onshore and 20% offshore. Within the PSA are two specific, adjoining licence areas, known as Lindi and Mtwara. The first well to be drilled under the Ruvuma PSA will be on the Likonde prospect, an anticlinal structure associated with a strike slip fault. As noted above, the Likonde-1 well is expected to be spudded in about two months and drilled to a depth of approximately 3,200 metres to test multiple targets throughout the Tertiary, Cretaceous, Jurassic and Permo-Trias Karoo intervals. Aminex have reported that "the Likonde prospect is thought to have the potential for up to 500 million barrels of oil in place."

Commenting, Solo Chairman David Lenigas said: 

"This exciting farm-in opportunity with Aminex and Tullow is the first oil and gas deal undertaken by the Company since it changed its investment strategy in July of this year. Likonde -1 is the first hole being drilled in one of the last unexplored major onshore basins in Africa."

"The Company acknowledges this transaction has been successful due to the corporate broking team of Astaire Securities."

Further information

The technical information contained in this announcement has been extracted from publically available information from Aminex Oil PLC's disclosures.

For further enquiries:

Solo Oil PLC
David Lenigas/Kiran Morzaria	[phone]
Beaumont Cornish - Nominated Adviser
Roland Cornish	[phone]

Rivington Street Corporate Finance	[phone]
Dru Edmonstone

 

END

 

 

MSCXELFFKFBEFBF