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Solo Oil increases Kiliwani North ahead of start-up

Solo has confirmed it will purchase an additional 3.825% stake in the venture from Aminex, increasing its interest to 10%.
Solo Oil increases Kiliwani North ahead of start-up
A gas sales agreement was signed last month.

Solo Oil (LON:SOLO) has decided to further increase its stake in the soon-to-produce Kiliwani North project, onshore Tanzania.

It will purchase an additional 3.825% stake in the venture from Aminex, increasing its interest to 10% from 6.125%. In return, Solo is paying $2.16mln.

The AIM quoted oil junior had the option, under an existing agreement, to acquire up to 6% of the project.

"In order to balance various opportunities to deploy cash in the Solo business we have elected to increase our interest in Kiliwani North by just under 4 percent, slightly less than the maximum of 6 percent available to us under the option agreement signed last year,” said Neil Ritson, Solo chairman.

Ritson also highlighted that the Kiliwani North well is now expected to start production shortly.

In early January, a gas sales agreement for the project was signed off and since then commissioning operations have been underway.

Gas produced from the well will initially be used for commissioning at the new, nearby Songo Songo gas treatment plant before it is transported via pipeline to Tanzania’s capital Dar es Salaam.  The gas will be sold at the pre-agreed price of US$3.07 per cubic foot.

Some 28bn cubic feet of contingent resources are estimated at Kiliwani North, and as a result of the gas sales agreement and the start-up of production Solo Oil expects to book reserves for the field later this year.

Last week, a partnership deal that would have seen Bowleven take 25% of Kiliwani North was cancelled. Bowleven had previously agreed to purchase 25% of Kiliwani North and 50% of Aminex’s Ruvuma Basin PSA.

A failure to agree a forward work programme was given as the reason for the deal to collapse during the due diligence phase.

As well as its stake in Kiliwani North, Solo also retains 25% of the Ruvuma Basin PSA.

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