In this latest London South East interview, we spoke with Tom Reynolds, CEO at Solo Energy, soon to become Scirocco Energy. He spoke about the new focus for the business and gave us a lengthy update on what's happening with the non-core assets Revuma and Helium One.
Tom has been with Solo since 2018 during which time the board has changed. He inherited a diversified range of interesting 'early stage' assets each of which had ongoing funding requirements. "The board was keen to rebalance the portfolio and introduce elements of cashflow to fund the early stage assets. We do believe there is an opportunity within the European energy market to provide that source of cashflow."
"It has been a very volatile market in many respects. As you may know, we encountered a very significant drop in gas wholesale prices which underpinned the value of the assets." It subsequently proved difficult to renegotiate the Netherlands gas deal in parallel with getting capital to fund the deal, and indeed deal making remains difficult because of abnormally low demand for both gas and oil.
"I'm delighted for our colleagues at Aminex, and that's been a fantastic result. The approval now means the project is funded and the joint venture going forward is very clear. You will have ARA as operator with 50%, Aminex with 25% and Solo with 25% with a carry from ARA. It clarifies the future of the asset and how it will move forward. If you look at the value readacross from the deal, which now has Tanzanian Government approval, it really demonstrates the tangible value within Solo of the Revuma asset.
"We have identified a list of companies who would be a good fit for the asset and earlier in the year they carried out initial technical and commercial due diligence. There has been a hiatus whilst we have been waiting to see what happened with the Government approvals for the Aminex-ARA deal, and we are just at the point of re-engaging with that community of prospective buyers over the coming weeks.
"Despite how busy everything has been we have remained close to the market and have been testing potential opportunities and we continue to be active in that process. What's important is we have broadened the target criteria to include assets within the wider energy complex so that Solo remains relevant as Europe goes through the energy transition. So not just gas production but assets which include power generation and infrastructure within the energy complex.
"The market seems to be open for those raising capital, and we'd be open to a combination of capital and debt, particularly if we were looking to acquire cash generative assets. The priority is always to look for sources of non-dilutive capital. Seller finance would be one such option."