Solo Oil PLC (LON:SOLO) launched a £2mln share placing and revealed it will acquire an additional stake in the Horse Hill oil project in southern England.
It has agreed a deal with Primorus Investments PLC to acquire a 5% stake in the HHDL vehicle which owns 65% of Horse Hill. The transaction increases Solo’s holding in HHDL to 15%, giving the company an effective 9.75% interest in the underlying oil project.
WATCH: Solo Oil raises £2mln with plans to increase stake in Horse Hill
A share sale, 57.14 mln shares priced at 3.5p, will provide the funds for the acquisition and it will also help cover Solo’s share of upcoming costs at Horse Hill, where a new phase of testing and drilling is planned.
New production testing is expected to start during the second quarter, and it is anticipated that the oil field development could take place in 2019.
"As the HHDL group gears up for further testing of the Horse Hill oil discovery, and the anticipated declaration of commerciality, we are keen to increase our interest in this element of our portfolio,” said Neil Ritson, Solo executive chairman.
“Increasing our exposure by 50% at this time, and at a favourable valuation, provides significant upside for our shareholders.”
Solo is paying Primorus a total of £1mln for the stake, £650,000 in cash and the remainder in shares (with the price linked to the average market price prior to the placing announcement).
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The share placing sees Solo issue the equivalent of 14.6% of its share capital. It is also making shares available to retail investors, via the Primary Bid app.
Separately, Solo confirmed that the PrimaryBid platform brought in £92,000 as part of the £2mln funding.