(Alliance News) - Solo Oil PLC on Wednesday said its subsidiary Scirocco Netherlands Energy BV has agreed to acquire a package of non-operated interests in natural gas fields from ONE-Dyas BV in the Dutch sector of the North Sea.
The package consists of three core areas with 14 gas fields. Net average production in the first half of 2019 from the ONE-Dyas assets was 1,750 barrels of oil equivalent a day, expected to increase to 2,125 barrels of oil equivalent daily in 2020.
The natural resources investment company said the acquisition consideration comprises an upfront payment of EUR30.1 million, plus a future deferred payment of EUR2.0 million upon first production from future development of the hydrocarbons.
Solo said it anticipates to fund the transaction through a combination of a new EUR18 million debt facility with Mercuria Energy Group Ltd, alongside new equity and existing resources.
The company said it intends to raise GBP20 million through a share placing to fund the balance of the upfront consideration, posting of decommissioning security and for working capital purposes. Peel Hunt LLP was appointed as bookrunner to Solo Oil, alongside Canaccord Genuity Ltd, in connection with the placing.
In addition, Solo Oil said it intends to launch an open offer, upon completion of the transaction, to allow existing shareholders the opportunity to invest on the same terms as new institutional investors.
Solo Oil said its shares have been temporarily suspended of AIM on Wednesday as the proposed acquisition is classified as a reverse takeover pursuant to the rules. It is intended that the admission document will be published by mid-fourth quarter of 2019. The shares were last trading at 2.42 pence each.
A deposit of EUR1 million is due to be paid to ONE-Dyas within one working day of signing of the sales & purchase agreement, Solo Oil said. If the proposed acquisition does not proceed, the deposit is repayable to Scirocco, unless an insolvency or breach of fundamental warranties will occur, in which ONE-Dyas will retain the entire deposit.
Furthermore, the company said Non-Executive Director Tom Reynolds will step into the role of chief executive officer, with immediate effect, to underpin this "transformational" transaction.
Meanwhile, Executive Chair Alastair Ferguson will become a non-executive chair.
"I am delighted to step up to the role of CEO at this pivotal juncture in the company's development and look forward to driving the growth agenda, building on this significant transaction," said Reynolds.
He added: "The acquisition transforms Solo into a leading independent producer in the Netherlands and secures a portfolio of cash-generative, producing assets that sets us on a path to sustainable growth."
By Evelina Grecenko; evelinagrecenko@alliancenews.com
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