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LONDON (Alliance News) - Solo Oil PLC and Aminex PLC both saw their shares rise early Tuesday, after they confirmed a deal under which Solo will buy a stake in the Kiliwani North Development Licence in Tanzania and said they'd additionally given Solo an option to increase its stake.
The companies agreed a binding deal last Autumn, and said Tuesday they've now signed an asset sale agreement. Under the deal Solo will but a 6.5% interest in the licence for USD3.5 million and now has an option to buy an additional 6.5% interest on the same terms within 30 days of a gas sales agreement being approved by the Tanzanian authorities.
In its statement, Aminex said the total 13% stake would be bought for USD7.0 million.
"The only conditions precedent remaining are the formal approval by the Tanzanian authorities, which both companies expect to receive shortly, and the formal signing of the asset assignment agreement by all partners," Aminex said.
The licence contains the Kiliwani North 1 well, which Aminex and Solo expect to produce at approximately 20 million cubic feet per day when onstream. Independently verified resources at Kiliwani North are estimated to be 45 billion cubic feet of gas-in-place.
Aminex said the start of production and subsequent revenues will represent a major milestone for it in Tanzania.
"As Aminex steps closer to strengthening its balance sheet and towards first gas in Tanzania, the board is pleased with progress particularly given the backdrop of a wider and challenging oil and gas sector," Chief executive Jay Bhattacherjee said, adding that the main pipeline is on schedule with pressure testing and commissioning expected to begin shortly even though the gas sales agreement needs final approval.
"The board reaffirms to all shareholders that it is doing everything within its power to progress the gas sales agreement and move towards first production in the first half of this year," the Aminex CEO added.
Aminex and Solo are already partners in the Ruvuma production sharing contract in Tanzania, with respectively 75% and 25% interests, where gas was discovered in 2012 at Ntorya-1.
"Our first gas revenue from Tanzania moves a step closer with the acquisition of the initial tranche of Kiliwani North as agreed last year. The imminent signature of the gas sales agreement and the completion of the hook-up of KN-1 to the Songo Songo gas processing plant will make this a reality in the next few months," Solo Oil Chairman Neil Ritson said.
Aminex shares were up 5.2% at 2.03 pence early Tuesday, while Solo Oil shares were up 6.6% at 0.565 pence.
By Steve McGrath; stevemcgrath@alliancenews.com; @stevemcgrath1
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