SOLO.L Regulatory News (SOLO)

FOR IMMEDIATE RELEASE, Embargoed until 7 am 21 June 2018

SOLO OIL PLC

("Solo" or the "Company")

Update on Helium One Investment

Solo Oil plc (AIM: SOLO), the natural resources investment company focused on acquiring and developing a diverse global non-operated portfolio of strategic oil and gas assets, is pleased to announce continued progress being reported by its investee company Helium One Limited ("He1"), the pure play helium explorer in Tanzania.

Highlights

· Pre-IPO round raised US$2.0 million from Australian, Asian and African investors;

· He1 now funded through to drilling which is expected to commence in Q42018;

· Discussions underway with drilling operations partner; and

· IPO planning underway to coincide with key drilling milestones later this year.

Neil Ritson, Solo's Chairman, commented:

"Helium One is now moving rapidly towards drilling of the exciting Rukwa Basin natural helium play and is fully funded to prepare for that work, which could be underway in late 2018. Through our technical service agreement, and close engagement with the Helium One Board, Solo has played a key role in helping to progress to this point. The helium prospects of the Rukwa Basin are some of the largest and best defined natural helium prospects so far identified globally and we l look forward to significant further progress in the next few months."

Seismic Reinterpretation

He1 has completed the seismic re-interpretation with over 900-line kilometres of newly reprocessed 2D seismic originally shot in the 1980s. Reprocessing was carried out by EarthSignal in Calgary and the resulting data is a step change in quality compared to the vintage data. This has enabled He1 to significantly refine the interpretation compared to the previous mapping.

The Airborne Gravity Gradiometry (AGG) and magnetic survey acquired by He1 has provided critical structural insights, assisting the seismic reinterpretation by providing significant guidance on the orientation of faults. The new mapping has reaffirmed the previous prospectivity with a greatly improved sub-surface resolution. 

As a consequence He1 has identified new prospects and leads, and gained an enhanced image of the previous high priority targets that were the basis of the 2017 Competent Persons Report by Netherland, Sewell & Associates Inc. ("NSAI") previously announced with the acquisition of Solo's interest on 22 March 2017. Some of the high priority targets in the central area at the Karoo Sandstone level have associated seismic amplitude anomalies and overlying soil helium anomalies. Other identified prospects present risk independent plays that may, with limited further work, merit drilling.

The reinterpretation is still ongoing and volumetric analysis has yet to be finalised; however, it is now possible to indicate that there are a number of commercially significant independent traps that could be drilled as early as 4Q18. The estimated helium volumes based on the reinterpretation fully support the previous NSAI certified volumes of best estimate prospective helium resources; previously reported at approximately 100 bcf within the Rukwa licences.

Drilling Preparations

He1 also reports that negotiations are at an advanced stage with an experienced oil and gas group from the USA who wish to drill the Rukwa Basin project, commencing in Q4 2018. A draft Memorandum of Understanding has been prepared for the initial drilling which would be conducted on an earn-in to equity basis. The group has the relevant onshore and Tanzanian experience required to successfully deliver a program of wells ranging in depth from 500 to 2,000 metres. 

The objective of the first phase of drilling would be to convert the presently mapped prospective resources to contingent resources, at which point work on a definitive commercial and engineering feasibility can commence, and an application for a Mining Licence can be progressed and subsequently the contingent helium resources can moved to reserves.

Helium Market Update

Based on market intelligence monitored by He1 it is clear that constraints on global helium supply continue to intensify with continued increasing demand and reduced output from established producers. Demand has been increasing at an annual growth rate of approximately 3% due to increased requirements from a wide range of technology applications, including medical imaging, and industrial leak detection. Meanwhile supplies from Qatar continue to be constrained (reported to be only at 70% output). In the USA, the Federal Reserve (managed by the Bureau of Land Management) is still set to close on or before September 2021. Industry sources report spot prices for pure liquid helium is being offered between US$260-300 per mcf and that long-term contract prices are shortly expected to start to increase significantly.

The positive fundamentals for new helium sources are compelling and the Rukwa Project remains the largest known primary helium resource, with the highest known helium concentrations, associated with just nitrogen. 

Tanzania

In April, the government of Tanzania established a new Mining Commission to regulate and implement the provisions of the Mining Act. The Commission is required to approve the grant of new licences and approve contracts. The establishment of the Commission and publishing of the new Mining Regulations is timely for He1 with drilling expected to commence this year, and an application for a Mining Licence following drilling success. The industrial gas royalty remains at 3%, however, a 16% carry for the government and a 1% inspection fee are both now set in law. These new fees are accepted by the company and have been incorporated in He1's financial modelling, which still indicates positive post-tax revenue, which will be supported by the current and future predicted helium price, low cost of processing and relatively low capex requirements. 

Pre-IPO Funding

Following the pre-IPO funding round Solo now holds 18.7 million shares in Helium One Limited equivalent to a 13.8% interest. On the basis of the pre-IPO funding round pricing of US$0.20 per share Solo's interest is now valued at £2.84 million; in excess of the £2.55 million acquisition cost paid in March 2017.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information:

Qualified Person's Statement:

The information contained in this announcement has been reviewed and approved by Neil Ritson, Chairman and Director for Solo Oil plc, who has over 40 years of relevant experience in geology, resource estimation and the oil and gas industry. Mr. Ritson is a member of the Society of Petroleum Engineers (SPE), an Active Member of the American Association of Petroleum Geologists (AAPG) and is a Fellow of the Geological Society of London (BGS).

Notes to Editors

Helium is used in hi-tech applications such as MRI scanners (currently the largest application for helium), semiconductor and optical fibre manufacturing, computer hard-drives, in the nuclear and space industries, and for lifting, such as Lockheed Martin's LMH1 hybrid airship. With around 57% market share, the US is the dominant supplier. However, the US Bureau of Land Management ("BLM"), which manages the world's largest helium reserve, is auctioning off an increasing percentage of the reserve annually until it falls to 3.0 bcf or until 30 September 2021, when commercial sales will cease. After that point the BLM will only supply US government users, creating a supply shortage which will force industrial consumers to look for other sources of helium. This transformation of the industry has resulted in recent bulk helium prices over US$200 per thousand cubic feet ("mcf").

Further information on helium and the Rukwa project can be found at Helium One's website at www.helium-one.com and at Solo's website www.solooil.co.uk.

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