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Solo Oil PLC

Solo Oil to intensify efforts to divest Ruvuma stake as part of re-boot strategy

A new well at Ruvuma, Chikumbi-1 well, is scheduled to be drilled in the first half of 2020.

oil well
Solo's target is 5,000 barrels per day by 2021

Solo Oil PLC (LON:SOLO) is to step up efforts to divest its 25% stake in the Ruvuma licence in Tanzania.

Following the recent upgrade to Ntorya (a prospect on Ruvuma) by operator Aminex, Solo’s net share of resources at the licence has risen to more than 190 bcf (billion cubic feet) most likely gas - over 30mln barrels of oil equivalent. A new well at Ruvuma, Chikumbi-1 well, is scheduled to be drilled in the first half of 2020. 

Solo noted that its shares are currently trading at approximately a 50% discount to net asset value, a gap the board says it wants to close over the coming year

Aminex has aggreed a farm-out deal for most of its stake in Ruvuma to Omani group Zubair.

“The transaction has galvanised Solo's confidence in its ability to divest its interest at a significant premium to the value currently assigned by the market, and the company's efforts to realise value from this core investment have intensified," said Alastair Ferguson, Solo's chairman, in a statement accompanying the firm's full-year results, published late on Friday.

“Our interest in Ruvuma remains the jewel in our current crown, however the strategy to diversify the business in line with our strategic vision will ensure the company is not reliant on a binary divestment outcome, the timelines and value of which remain uncertain," he added.

Solo intends to build production up to 5,000 barrels per day by 2021 through acquisitions in Europe and North Africa. Losses in 2018 were little changed at £1.67mln (£1.66mln).

In a note to clients, analysts at ‘house’ broker Share Capital commented: “We maintain considerable confidence in Solo’s very ambitious strategy and (with our last published Risked NAV estimate standing at 3.5p/share) look forward to future newsflow, as the company pursues its objectives to build scale and provide important event-driven catalysts under its reinvigorated board.”

On Monday afternoon, Solo Oil shares were trading at 1.27p, down 9% on Friday’s closing price.

 -- Adds analyst comment, share price ---

 

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Price: £0.01

Market: AIM
Market Cap: £8.69 m
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