RE: Marcys blog2 Apr 2019 09:29
Solo Oil
Last week I was able to have an extensive discussion with members of the new Solo Oil board and senior management. I met with Executive Chairman Alastair Ferguson, NED Tom Reynolds and Doug Rycroft, General Manager Operations and John Daniel Technical Advisor. What became immediately clear was how hard the team is working to deliver deals already and quite how wide a set of skills that between them they hold. The fact that as many as 15-20 different potential deals have already been screened is testament to how quickly they have come out of the blocks and that shareholders can be confident about transaction pace.
Given that they have started to look at so many possible deals it would not surprise me, as I wrote in the blog before I met with them, if one or maybe two are not getting close to closing and thus starting to add value for shareholders. Indeed, whilst they were giving nothing away, I got the distinct impression that they were being quite bold and one might expect to see a relatively substantial deal at some stage. The level of experience of the team is such that there would be no qualms about making a move on an asset that would be designated as an RTO and lead to a suspension of the shares to return as a much bigger player.
The team has clearly looked at late life/mature assets and seen how successful this can be, and over a limited period with creative funding can be highly rewarding. Nowadays decommissioning is not so much the worry it has been in the past and with abandonment costs falling opportunities can contain some ‘pleasant surprises’ that offer excellent value. The board appears to have particular experience in this regard in my view.
We talked at some length about Tanzania and the way to unlock value as it remains without doubt a core asset and one which has significant potential in its own right. In this regard it is obvious that general discussions have taken place with Aminex and given that both ‘new’ Chairmen have a BP background some discussions may well have taken place which seems an eminently wise thing to do. The team is not being idle on this asset and are working hard with its partners to create value, ‘certainly not taking their eye off the ball’ so to speak. My feeling with regard to this is that the management want to make a success of it but would be equally as happy if the work on the rest of the portfolio on its own merit downsized the scale of Tanzania as a proportion of the whole.
There is clearly a lot going on already from the management team at Solo and the key phrase in their mission statement is probably ‘achieving near-term commercial outcomes to generate value for our shareholders’. They have an strong view that they want shareholders to have confidence in the board and they will reward that confidence. For what its worth I think that this management team is pound for pound one of the most experienced and smart technically and operationally in the sector and it would be a consi
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