Kiliwani North Update

RNS Number : 2428A

Solo Oil Plc

06 June 2016

 

FOR IMMEDIATE RELEASE, 7 am                                                                                                     6 June 2016

SOLO OIL PLC

("Solo" or the "Company")

Kiliwani North Update

Solo Oil plc has received an update from the Kiliwani North production operations in Tanzania from the operator Ndovu Resources Limited (a subsidiary of Aminex plc) ("Ndovu") and is pleased to provide the following highlights:

·     Commissioning of the power generation system and other auxiliary facilities has been completed.

·     Commissioning of the gas plant and sub-sea pipeline commenced on 1 June 2016

·     On 2 June the first Kiliwani North-1 ("KN-1") gas was processed and entered the pipeline system connecting the Songo Songo plant with the national pipeline.

·     During the commissioning, gas rates are planned to ramp up to 30 mmscfd while pressuring up the plant and pipeline.

·     Ndovu and its partners have invoiced for April and May gas production in accordance with the terms of the signed Gas Sales Agreement ("GSA").

As previously advised, all gas produced during the build-up to full production rates will be paid for under the terms of the GSA signed with the sole buyer, Tanzania Petroleum Development Corporation ("TPDC"). Solo will receive US$3.00 per mmbtu (approximately US$3.07 per mcf) with expected net cash revenues of US$1-1.5 million per annum.

Initial production rates remain carefully managed to allow for testing and commissioning of the gas processing plant and pipeline, while recording critical pressure and flow rate measurements to determine the optimal flow rate to maximize the life of the reservoir.  Together with TPDC the operator plans to conduct a well test during the production build up to determine the optimal flow rate. It is this optimal flow rate that will become the Commercial Production Rate under the GSA and the Ndovu intends to flow gas at that rate for as long as possible prior to a natural decline in production.   Based on the initial pressure response from the KN-1 well it is expected that the well will be operated at approximately 30 mmcfd gross (4,500 barrels of oil equivalent per day).

Neil Ritson, Solo's Chairman commented:

"I visited the Songo Songo gas plant last week and was very impressed with the quality of the facilities and the progress being made with commissioning.  I am encouraged by the work that has been undertaken by TDPC and Aminex, and expect that we will now reach the expected offtake rate in the next few months."

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 38 years of relevant experience in the energy sector.  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.

For further information:

Solo Oil plc Neil Ritson	[phone]
Beaumont Cornish Limited Nominated Adviser and Joint Broker Roland Cornish	[phone]
Shore Capital Joint Broker Jerry Keen (Corporate Broker) Bell Pottinger                            Public Relations Henry Lerwill Cassiopeia Services LLP Investor Relations Stefania Barbaglio	[phone] [phone] [phone]

Notes to editors

Solo's assets in Tanzania comprise:

Kiliwani North Development Licence ("KNDL") (7.175%, non-operator)

The Kiliwani North Field has been independently estimated to contain 28 bcf gross contingent (2C) resource and will produce dry clean gas under high natural pressure (1,600 psi) from a high quality Neocomian late Cretaceous reservoir.  The Kiliwani North-1 well was tested at 40 mmcfd.  The gas will be sold at the well head in $US at a fixed price and fed directly into the Tanzania's new pipeline infrastructure to Dar es Salaam. Solo holds options to increase its equity in the KNDL to 10% as certain project milestones are achieved.

​Ruvuma Production Sharing Agreement (25%, non-operator)

The Ruvuma PSC acreage includes Solo's Ntorya-1 onshore Cretaceous gas discovery which has been independently ascribed 70 bcf gross contingent (2C) resource in the Ruvuma Basin.  The well tested at 20 mmcfd.  Appraisal drilling is anticipated to commence in 2016.

Glossary:

bcf	billion cubic feet
contingent resources	those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies
GSA	gas sales agreement
KN-1	Kiliwani North-1 well
KNDL	Kiliwani North Development Licence
mmbtu	million British thermal units
mscf	thousand standard cubic feet
mmscfd	million standard cubic feet of gas per day
PSC	Petroleum Sharing Contract
reserves	reserves are defined by the SPE as those quantities of petroleum, here oil and gas, which are anticipated to be commercially recovered from known accumulations from a given date forward
TPDC	the Tanzanian Petroleum Development Corporation
US$	United States of America dollars

 

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