Solo Oil Invests Additional Equity in Kiliwani North, Tanzania
Solo Oil has announced that it has acquired a further interest in the Kiliwani North Development Licence from concession operator Aminex to reach 10% from the current 6.175% interest in the KNDL where the Kiliwani North-1 well is located and will pay Aminex US$2.16 million.
The increase in ownership follows the signing of the Gas Sales Agreement (GSA) with the Tanzanian Petroleum development Corporation (TDPC) which was signed in early January and commissioning of the Kiliwani North-1 well.
Kiliwani North-1 well (KN-1) has been underway over the last few weeks with gas production expected to commence shortly. KN-1 gas will initially be used to commission the new Songo Songo gas treatment plant before being transported by pipeline to Dar es Salaam where it will be sold into the local Tanzanian market at an agreed price of approximately US$3.07 per mscf.
According to Solo Oil chairman Neil Ritson the decision to invest in Kiliwani North was to further in order to balance various opportunities.
“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. Solo will receive 10% of the KNDL revenue once the purchase is completed. Gas production at KN-1 is expected to commence shortly, ” says Ritson.
The key terms of the proposed KNDL acquisition are set out below:
- Solo has agreed to reduce its option to acquire a further 6.175% in the KNDL in the Second Tranche Acquisition as originally announced 14 October 2014 and modified by TPDC Back-in announced on 5 October 2015.
- The Second Tranche Acquisition will now consist of Solo acquiring a further 3.825% of the KNDL from Aminex for a consideration of US$2,168,000.
- The parties have agreed to enter into a formal sale and purchase agreement (“SPA”) within 30 days.
- Solo will pay US$500,000 on signature of the SPA and the balance on or before 30 April 2016, unless otherwise agreed between the parties.
Current participants in the Kiliwani North Development Licence, following TPDC back in, are: Ndovu Resources Ltd (Aminex) 55.575% (operator), RAK Gas LLC 23.75%, Solo Oil plc 6.175%, Bounty Oil & Gas NL 9.05% and TPDC 5%. On completion of the SPA Aminex will hold 51.75% and Solo will hold 10%.
Aminex obtained approvals, including those from the Tanzanian authorities, for a disposal of up to 13% in KNDL to Solo in early 2015. No further approvals are expected in relation to this transaction.
In 2015 LR Senergy ascribed gross 28 billion cubic feet best estimate contingent resources to Kiliwani North-1, which was contingent on completion of the GSA, which has now occurred. It is therefore Solo’s expectation that reserves at Kiliwani North will be booked later this year.