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LONDON (Alliance News) - Solo Oil PLC and Aminex PLC Wednesday said they are both awaiting formal approval from the Tanzanian authorities for a deal that will see Solo buy a stake in the Kiliwani North Development license from Aminex, and they expect the deal to close shortly.
Solo shares were up 7.2% to 0.573 pence per share on Wednesday morning. Aminex shares were up 4.6% to 1.83 pence per share.
In October, Solo said it was to buy a 13% interest in the project from Aminex, initially purchasing a 6.5% interest from Aminex-owned Ndovu Resources Ltd for USD3.5 million.
Both companies are now awaiting formal approval from the relevant authorities for Solo to buy the initial 6.5% stake, which will be followed by a Deed of Assignment, expected to be completed shortly, said Solo in a statement.
"This agreement, which we now expect to close shortly, will be a major landmark for Solo as it will lead to the company's first gas production and revenue from Tanzania. We have recently reviewed the draft gas sales agreement and are confident that it can be signed shortly and supports our belief in the commerciality of gas from our various interests in Tanzania," said Solo Chairman Neil Ritson.
Following the purchase, Solo has the option to take its interest in the project to a 13% entitlement. If Solo elects to increase its interest, Aminex, through Ndovu, will hold a 52% stake and be the operator of the license, with RAK gas holding 25% and Bounty Oil owning a 10% interest.
The Kiliwani North gas field is due to commence production in the first quarter of 2015, with Aminex due to complete a pipeline from the Songo Songo gas processing plant to the Kiliwani North 1 well before the end of the year, said Solo in a statement.
The Kiliwani North 1 well is expected to produce at a rate of 20 million cubic feet of gas per day, equivalent to more than 3,000 barrels of oil per day during 2015, with a total estimated resource of 45 billion cubic feet of gas.
The project is already connected to a gas pipe allowing it to instantly provide the capital Dar es Salaam, and Aminex have finalised a gas sales agreement with the Tanzanian authorities and is awaiting final approval from the Ministry of Energy, it said in a statement.
"This part disposal of Kiliwani North, once completed, will enable Aminex substantially to repay outstanding corporate debt and will provide further opportunities for Aminex to expand in Tanzania and across the continent," said Aminex Chief Executive Jay Bhattacherjee.
Solo and Aminex are already joint venture partners in the Ruvuma Production Sharing contract in Tanzania, where gas was discovered in 2012. Ndovu is also the operator of the project.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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