Solo Provides Update on Acquisition of Interest in Kiliwani North Field

Source: www.gulfoilandgas.com 12/17/2014, Location: Africa

Solo Oil plc has been advised by Aminex PLC (Aminex) that, further to the Company's announcement of 11 November 2014, Aminex has now received confirmation from the Tanzanian Ministry of Energy and Minerals that the Minister has no objection to the proposed assignment in the sale of up to a 13% interest in the Kiliwani North Development Licence (KNDL) to Solo for a total consideration of $7 million.

Completion of the initial 6.5% interest now remains subject only to a formal Deed of Assignment being signed by all participating parties. Solo and Aminex have agreed to extend the deadline on the purchase of the initial and additional 6.5% to 30 January 2015 as a result of the longer than expected time taken to obtain the no objection notification.

The KNDL contains the Kiliwani North-1 (KN1) well, which is expected to start production at approximately 20 mmcfd in early 2015. Once the Deed of Assignment is complete and if Solo elects to take up its full 13% entitlement, the KNDL joint venture partners will be Ndovu Resources Ltd. (Aminex) 52% (operator), RAK Gas 25%, Bounty Oil 10% and Solo 13%.

Once producing, KNDL will represent a major milestone for Solo by providing first revenues to the Company from its Tanzanian assets. Independently verified resources at KNDL are estimated to be 45 billion cubic feet of gas in place. Construction of a 2 km pipeline from KN1 wellhead to the new Songo Songo processing plant has now commenced and is expected to be completed by the end of 2014.

Aminex has also reported that a Gas Sales Agreement for KNDL is largely complete and is expected to be signed prior to the commissioning of the 2 kilometre pipeline and the Songo Songo processing plant in early 2015.

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.

Neil Ritson, the Company's Chairman, commented:

"The final step in the process of receiving approvals to our acquisition of an interest in the soon to be producing Kilwani North development has now been received and we look forward to signature of the gas sales agreement and to the start-up of the production in 2015."

The key terms of Solo's KNDL acquisition are set out below:

1. The Initial Acquisition, as announced on 14 October 2014, consisted of a cash payment of US$3.5 million for 10% of Aminex's 65% interest in KNDL, representing a 6.5% interest in the entire KNDL, payable initially as a refundable deposit of US$250,000 within 7 days of 13 October 2014, which has been paid. The balance of US$3.25 million becoming payable upon completion of the formal acquisition agreement. Aminex and Solo have mutually agreed to extend the deadline on the Initial Acquisition to 30 January 2015.

2. The Second Acquisition will consist of an option by Solo to acquire a further 10% of Aminex's 65% interest in KNDL (a further 6.5% interest in the entire KNDL) on the same terms as the Initial Acquisition. Aminex and Solo have mutually agreed to extend the deadline on the Second Acquisition of 6.5% to 30 January 2015.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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