Solo Oil, the AIM investing company targeting attractive production and development opportunities within the European Energy market, is pleased to announce its Unaudited Interim Results for the six months ended 30 June 2020.
- The Board elected not to conclude the acquisition of production and development assets offshore the Netherlands from ONE Dyas. Whilst it was a disappointment not to conclude the process, subsequent macro events have proven this to be the right decision, both then and now;
- The Company has made significant progress on its Tanzanian asset sales process and extracting maximum value from the Ruvuma asset, which is key to delivering our broader strategy. The Company continues to await the completion of the Aminex / ARA Petroleum farmout ahead of the expected conclusion of its own process;
- Securing a financing facility with Prolific Basins LLC which ensures that the Company is able to fund its near-term commitments;
- Successful reduction of G&A through aggressive cost cutting measures, and renegotiating contracts with advisors and contractors;
- Implementation of an options in lieu of cash salary scheme for the Board and Executive Management team as part of the cash management programme in 2020. The Board has agreed to extend this programme until the end of H1 2021 to ensure that the Company retains as much cash as possible within the business;
- The focus on cost discipline and cash preservation will continue indefinitely;
- The Board continues to screen acquisition opportunities and is seeking to invest in a broader European energy market strategy in opportunities which meet the following criteria:
cash generative, with the potential to re-invest operational cash flow in further growth;
situated within the broader energy space, a market which the Board knows well;
primary targets within the natural gas space, augmented by opportunities which may benefit from low carbon and electrification dynamics;
assets which can attract the necessary investment capital, taking appropriate account of growing investor sentiment towards ESG and SRI indicators; and
assets which deliver stable returns, with lower exposure to global commodity prices; and
- Group cash at 30 June 2020 £0.7m
Post Period Highlights:
- Company continued to make progress on its portfolio rationalization and has entered into a conditional asset purchase agreement ("Agreement") with Reef Resources Limited ("Reef") and Levant for the sale ("Sale") of interests in the Ausable Reef gas assets (the "Assets") held by Reef (71.44% interest) and Solo (28.56% interest) to Levant. Subject to satisfaction of certain conditions set out in the Agreement, including confirmatory due diligence by Levant on the Assets, Solo expects to complete the Sale in the near future
- Near term priorities for the Board and Executive Management:
Deliver a satisfactory outcome with the Tanzanian sales process
Crystalise a route to value realisation for our investment in Helium One
Manage our balance sheet effectively with cost discipline and utilisation of the investment facility;
Progress an acquisition that meets our screening criteria
Complete the transition into Scirocco Energy
Broadening the scope of the company's investment activity beyond natural resources and into the wider possibilities of the energy market
Commenting on the Interim Results, Alastair Ferguson, Non-Executive Chairman said:
"While the world and industry have faced turbulent times, the Board has taken the opportunity to augment its strategic plan to focus our search for our initial asset acquisition on European energy assets that generate cash and are supportive of the overall markets move to a de-carbonized energy market in Europe.
Whilst it was disappointing not have concluded the deal with ONE Dyas back in late February this year - it was absolutely the right decision of the Board to make in the volatile commodity price environment.
During the period, the Company has secured an appropriate funding structure through the investment facility it put in place with Prolific Basins LLC, a U.S. based specialist energy investor. The Board felt that this was the right decision to ensure the Company has both the access to capital but also the flexibility in accessing that capital particularly in the current macroeconomic environment where circumstances require sufficient financial flexibility, particularly ahead of the major seismic and drilling campaign planned on the Ntorya discovery within the Ruvuma asset in Tanzania. "