Solo Oil arranges US$5mln facility to strengthen hand during Ntorya negotiations
Financier Prolific Basins is providing the money through a tranched investment structure that Solo said allows it to have a flexible funding option in place, should it be required, for the planned appraisal programme on Ntorya.
Tom Reynolds, chief executive, added: “We are pleased to be able to secure an appropriate funding structure that allows the company maximum flexibility to progress the activity and deliver value for shareholders.
“Particularly ahead of a major drilling campaign such as that planned for the Chukumbi-1 well in Tanzania in H1 2021.
“The company remains wholly committed to realising value from its interests in Tanzania and is encouraged by the interest received in its assets since commencing that sales process.
“We are however cognisant of the challenges being faced by the sector presently and therefore feel it is necessary to secure this funding now as it provides significant optionality and strengthens our hand with regards to any future negotiations.
Solo also said it is to switch its strategy going forward towards energy transition opportunities in the European power sector including gas storage, gas peaking and battery storage.
Earlier this year, Solo terminated a deal to acquire producing assets in the Netherlands from One-Dyas due to the fall in the gas price.
Solo said it was disappointed not to have concluded the deal,but added that events since had vindicated the decision.
European gas prices have hit a five-year low, it said, as demand has fallen due to heating demand and the impact of coronavirus.
Structurally, it added, there is a steady shift towards renewables replacing traditional hydrocarbon sources of energy.
A widespread cost-cutting programme is underway said Solo, which has seen management unpaid since December and directors’ fees cut completely from April.
Chief financial officer Romina Mele-Cornish is also to stand down from the end of June.
Reynolds added: ”The recalibration of the European gas market in light of the current turmoil will present the company with an increased pipeline of compelling opportunities a broader range of revenue-generating gas and power opportunities.”