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Solo Oil strikes new terms to top-up Helium One stake

The oil and gas investor updated on its assets in Tanzania and the UK, and said it is likely to see several more opportunities in the coming months.
Oil workers on a well
Solo can pick up another 10% in Helium One for £3mln, in cash

Solo Oil PLC (LON:SOLO) has agreed new terms to acquire an additional 10% stake in Helium One which is developing a strategically significant helium project in Tanzania.

The oil and gas investment company added Helium One to its Tanzania portfolio earlier this year, acquiring a 20% interest, and agreeing an option for another 10%.

On the initially agreed terms it was required to pay £4mln for the additional stake, £2mln in cash and £2mln in shares, but, a new agreement will allow Solo to take it for £3mln, all paid in cash.

At Solo’s upcoming annual general meeting it is seeking permission from shareholders to loosen restrictions on the issue of new shares, as precursor to a new funding to support the investment in Helium One.

It also highlighted that with estimates for 99bn cubic feet of ‘most likely prospective gross in place helium’ at the project, and noted that global helium accounts for 6bn cubic feet per year.

The project is of “strategic global importance to the future helium supply”, the company said.

Helium One adds another dimension to the group’s Tanzania portfolio which includes the Ruvuma asset, host to the Ntorya discovery which is being advanced to production.

Solo owns 25% of Ntorya, though today the company highlighted that it is seeking to divest some of its interest to a new partner that would support the funding of the project’s development.

Ruvuma is the model case

"Solo's original Tanzanian gas portfolio is maturing and we are reviewing our various options with regards to monetising a portion of the Ruvuma PSC during the development of the Ntorya gas condensate discovery in order to fund future participation in the licence and in doing so, extract maximum value on behalf of our shareholders,” said Neill Ritson, Solo Oil chairman.

“Ruvuma is the model case study for Solo's investment strategy in terms of building a material position in an exciting early stage project and then leveraging our technical capabilities to progress the asset to a monetisation point.

“We are hoping to replicate this model with the exciting opportunity with Helium One and wish to accumulate a material interest now at an attractive pricing point. 

“We see very significant upside potential from the Helium One investment and are pleased to have renegotiated the call option on more favourable terms and hope shareholders share our excitement for this unique investment opportunity.”

Horse Hill decision due in summer 2017

Elsewhere, onshore UK, Solo Oil also noted that a decision is due be made by Surrey County Council planning committee in July for the proposed new drilling at the Horse Hill discovery.

Solo highlighted that it continues to anticipate that the new operations will start at Horse Hill in the second half of this year.

Neill Ritson, meanwhile, also highlighted that the company is likely to see several further investment opportunities.

He believes the traditional hydrocarbon market will stabilise, and additional international assets will become available at favourable valuations.

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