Bloe - posters think solo will take BLOE?22 Apr 2020 08:32
Given their respective investments in Block Energy as private investors, you’d be forgiven for wondering what Alastair Ferguson (with 5.2%) and Jon Fitzpatrick (3.3%) were up to.
Because they are also Directors and shareholders in Solo Oil, AF as Executive Chairman with a 2.66% stake and JF as Non Executive Director with 4.15%.
Solo’s new strategic purpose was articulated in a March 2019 corporate presentation as being to :-
‘Assemble a balanced, full lifecycle portfolio comprised of production and development assets that provide a sustainable path for growth alongside funded G&A.’
The vision was declared to:-
‘Achieve scale through inorganic growth with a net production target of at least 5,000 boepd [per acquisition] within the next three years.’
So how’s it doing?
In his H1 2019 interim statement AF informed us Solo:-
(a) Was actively screening acquisition opportunities in Europe and North Africa with a net production target of at least 5000 boepd within three years;
(b) ‘Commence[d] a highly active period of screening opportunities (c.20) in line with strategic objectives – the Board has taken 5 identified opportunities through due diligence and carried 3 through to detailed negotiation’;
(c) Begun monetising non core assets;
(d) Been recruiting to the new strategic need;
So far so good.
On 9/10/2019 Solo announced that it had:-
‘entered into a binding sales and purchasing agreement (“SPA”) with ONE-Dyas B.V. (“ONE-Dyas”) to acquire a package of non-operated interests in natural gas fields from ONE-Dyas in the Dutch sector of the North Sea…’
The consideration was an upfront payment of 30.1m euros with a further 2m euros payable when first gas was struck post acquisition.
It had raised the cash through a combination of a debt facility with Mercuria Energy, existing resources and ‘new equity’.
But within five months the deal was sunk, scuppered by poor European gas prices, higher than estimated production and capex costs, Brexit and the U.K. elections.
Financially in H1 2019, the Company lost £800k on the back of losses of £1.7m in 2018. Notwithstanding further asset sales these losses will continue.
Nevertheless Solo appears to be in very strong financial shape.
It still has a solid balance sheet with net assets at c.£21m, backed by £2m-£3m in the bank and no material debt.
Also it values its non operating 25% interest in Ruvuma PSC (Tanzania) alone at c.£19m though this does not appear to be reflected in the unaudited accounts.
Finally the failed bid for ONE-Dyas assets proved that it can raise acquisition funding if required.
IF Block is a viable production proposition AND in need of further external finance then Solo MIGHT provide an opportunity for both Companies to benefit from each others’ predicaments…….but could that deal ever get done?
Given their exposure, I can think of two people who have every interest in seeing it happen, if viable.
IMO…DYOR.
https://www.lse.co.uk/profiles/straycat/
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