Solo Oil has concluded a deal with Aminex plc to acquire a further 3.825 percent interest in Tanzania’s Kiliwani North Development License for a total cash consideration of $2.16 million.
As part of the agreement, Solo's interest will increase through three payment tranches to Aminex, linked to project milestones, for the total agreed cash consideration. An initial investment of $566,802 for an additional one percent interest was made upon the signature of the Sale and Purchase Agreement, increasing Solo's total interest from 6.175 percent to 7.175 percent.
A second investment of $708,502 for a further 1.25 percent interest will be made within 15 days of the first US dollar payment being received for gas from Kiliwani North-1. Solo's total interest will increase to 8.425 following this transaction and a third payment of $892,712 will be made for the final 1.575 percent interest within 15 days of the commercial operations date being declared, taking Solo's total and final interest to 10 percent.
If any payment is missed then that payment option, and only that option, will be automatically cancelled. Payment of the second and third investments will require further funding from cash flow or otherwise to be arranged by Solo.
The KN-1 well, which is ready to begin production, has been ascribed gross contingent resources (2C) of gross 28 billion cubic feet by LR Senergy and Solo expects to book reserves from the well by year-end.
Solo Oil Chairman Neil Ritson commented in a company statement:
"Solo is delighted to increase its exposure to the KNDL project with commencement of production imminent. The project offers a revenue stream that will increase through the commissioning process and into commercial production under the GSA which has take-or-pay provisions and is paid in US dollars guaranteed by a consortium of banks. By linking the acquisition of our additional interest to project milestones we have been able to further de-risk the investment."
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