Solo Oil Plc - Strategy Update
("Solo" or "the Company")
Under the stewardship of the recently appointed and experienced Board, Solo is seeking to assemble a balanced, full lifecycle portfolio comprised of production, development and exploration assets that provide a sustainable path for growth alongside funded G&A.
Leveraging the requisite technical, corporate and operating expertise of the Board, the Company intends to achieve scale through organic and acquisition led growth and has set a net production target of at least 5,000 boepd within the next three years.
In order to achieve this strategic vision, the Company has identified the following key strategic drivers:
· Transition to an operating company to provide Solo greater control over the outcome of its investment decisions;
· Disciplined investment strategy to be delivered by capital efficient transactions;
· Targeted acquisition strategy based on well-defined screening criteria in place to deliver shareholder value;
· Targeting acquisitions that can attract a wide audience of potential non-equity funding partners through transaction structures that limit or negate the Company's requirement to raise equity;
· Delivered in parallel with a continued focus on value realisation of existing assets;
· Future focus on cash flow to build a self-sustaining business;
· Strong pipeline of deal flow - Solo has recently evaluated more than 15 target acquisitions across a number of geographies and the Company remains active in a number of ongoing processes; and
· The Board and senior management have the necessary operating expertise, M&A capabilities and industry relationships to deliver on the strategy.
As part of a wider review of the Company and its growth strategy, the Board has identified the following strategic objectives as being core to long-term value creation and will shape the business going forward around these considerations:
· The Board recognises the importance of free cash flow in building a sustainable business;
· The Board continues to assess opportunities for future growth and has identified the dynamics of the European import gas market as being particularly attractive;
· In parallel with its portfolio rationalisation strategy, the Board is actively screening acquisition opportunities and has set a net production target of at least 5,000 boepd within 3 years;
· Initial screening focus is on European gas assets and also North African countries with benign jurisdictions and attractive pricing dynamics
· The Board is seeking to develop a 'low-cost' investment model that maximises risk adjusted value returns to shareholders and minimises equity dilution; and
· The inorganic growth model is not dependant on the rationalisation of the Company's existing assets due to the focus on capital efficient transaction structures.
The Board is actively reviewing acquisition opportunities and is involved in a number of ongoing processes. Further updates will be provided if, and when, appropriate. Any acquisition would be consistent with the strategy, set out above to create a scalable oil and gas business with a focus on capital efficiency and one that can deliver shareholder returns in all oil price environments.
The Board has made good progress against the key objectives outlined at the AGM in
The Board continues to progress with its intention to divest or relinquish the balance of the non-core investments within the portfolio, as well as some historical early-stage seed investments that fall below disclosable thresholds. As part of the portfolio rationalisation, the Company has signed Heads of Terms ("HoT") with
Commenting on the strategy update, Executive Chairman
"This strategic update sets out the ambitious growth vision for the Company and reflects the significant efforts of the Board through H2 2018 and beyond. We believe that the market dynamics have created compelling and realistic opportunities that will enable the Board to transform the operational and financial profile of the business in the near-medium term. The strategies that we intend to implement mean that this transformative growth can be delivered in parallel with our existing focus and structured in ways that ensure transactions are value accretive for existing shareholders. We believe that pursuit of this growth strategy will enhance our ability to maximise value from our existing portfolio of assets.
"With the price of Brent back around
"We see improving liquidity in the market for assets but there is often a lack of realism when it comes to value and few transactions are actually closing. Solo is excellently positioned to capitalise on this dynamic by leveraging a strong Board with an excellent track record in the execution of M&A deals and, following recent divestments, the funding to support our efforts. The Company is involved in a number of processes which, if successful, would be expected to derive significant value for our shareholders and be the platform for long-term sustainable growth. We look forward to updating the market on these various processes as and when there are material developments."
For further information:
+44 (0) 20 7440 0642
Nominated & Financial Adviser
+44 (0) 20 7409 3494
+44 (0) 20 7408 4090
+44 (0) 20 7466 5000
This announcement contains inside information as stipulated under the Market Abuse Regulations (EU) no. 596/2014.
This information is provided by RNS, the news service of the
Quick facts: Solo Oil PLC
Market Cap: £7.19 m
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