Solo Oil Plc First Gas, Kiliwani North, Tanzania (2900U)
April 06 2016 - 2:00AM
UK Regulatory
TIDMSOLO
RNS Number : 2900U
Solo Oil Plc
06 April 2016
FOR IMMEDIATE RELEASE, 7 am 6 April 2016
SOLO OIL PLC
("Solo" or the "Company")
First Gas, Kiliwani North, Tanzania
Solo today announces that it has been informed by the operator,
Aminex plc ("Aminex"), that first gas production has now been
achieved from the Kiliwani North gas field, located onshore
Tanzania, close to the large Songo Songo gas field. The Kiliwani
North Development Licence ("KNDL") containing the Kiliwani North-1
well ("KN-1") is operated by Aminex. Solo currently owns a 6.175%
working interest in the KNDL, which is set to rise in increments to
10% as announced on 4 April 2016. Gas from KNDL will provide the
Company with its first significant production revenue and its first
revenue from its extensive investments in Tanzania.
Highlights:
-- Initial gas production commenced from KN-1 on 4 April 2016
-- KN-1 will deliver gas to the newly built Songo Songo
processing plant which is tied into the main national pipeline
infrastructure to the local Tanzanian market
-- Commissioning of the plant and associated pipeline will
proceed over the next 90-100 days and production will build up to
an expected rate of 25-30 mmcfd (approximately 4,000 to 5,000
barrels of oil equivalent per day gross)
-- All commissioning gas will be paid for and Solo will receive
US$3.00 per mmbtu under the terms of its Gas Sales Agreement
("GSA") with the Tanzania Petroleum Development Corporation
("TPDC") with expected net cash generation of US$2.0-2.5 million
per annum
Neil Ritson, Solo's Chairman, commented:
"Solo is delighted to see its investment in the Kiliwani North
project move into production. This is a truly transformational step
for the Company. Resulting revenues will initially be reinvested in
growing our reserves base in Tanzania, a country which has new
national gas infrastructure and huge prospects for growth in the
local gas market. Solo also looks forward to progress on the Ntorya
appraisal in the Ruvuma PSC where a substantially larger gas
discovery has been made and where Solo already holds a 25% working
interest."
The partners in the KNDL will receive all revenue in United
States Dollars and a gas price of US$3.00 per mmbtu (approximately
US$3.07 per mcf) that will be adjusted annually by applying an
agreed United States Consumer Price Index. The gas price is not
linked to any commodity price so importantly is unaffected by
current commodity market conditions. The gas delivery point is at
the outlet flange of the Kiliwani North wellhead and by selling the
gas at the wellhead the joint venture partners are not responsible
for pipeline transportation and processing fees.
Initial production rates will be managed to allow for testing
and commissioning of the Songo Songo Island gas processing plant
and associated pipelines, while also recording critical pressure
and flow rate measurements to determine the optimal flow rate to
maximize the life of the KN-1 reservoir. KN-1 is estimated to hold
a gross contingent resources of 28 billion cubic feet ("bcf"). With
production underway Solo expects to book gas reserves for Kiliwani
North later this year. Net reserves to Solo's 6.175% interest are
independently estimated as 1.7 bcf, rising to 2.8 bcf once the full
10% interest is acquired following final declaration of
commerciality.
Current participants in the Kiliwani North Development Licence,
following TPDC back in, are: Ndovu Resources Ltd (Aminex) 55.575%
(operator), RAK Gas LLC 23.75%, Solo Oil plc 6.175%, Bounty Oil
& Gas NL 9.5% and TPDC 5%. On completion of the payments
envisaged by the SPA Aminex will hold 51.75% and Solo will hold
10%.
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 38 years of relevant experience in the energy sector.
Mr. Ritson is a member of the Society of Petroleum Engineers, an
Active Member of the American Association of Petroleum Geologists
and is a Fellow of the Geological Society of London.
For further information:
Solo Oil plc
Neil Ritson +44 (0) 20 3794 9230
Beaumont Cornish Limited
Nominated Adviser and
Joint Broker
Roland Cornish +44 (0) 20 7628 3396
Shore Capital
Joint Broker
Jerry Keen (Corporate
Broker)
Bell Pottinger
Public Relations
Henry Lerwill
Cassiopeia Services
LLP +44 (0) 20 7408 4090
Investor Relations +44 (0) 20 3772 2500
Stefania Barbaglio +44 (0) 79 4969 0338
Glossary:
bcf billion cubic feet
--------------------- -----------------------------------------------------------------------------------------------
contingent resources those quantities of petroleum estimated, as of a given date, to be potentially recoverable
from known accumulations, but the applied project(s) are not yet considered mature enough
for commercial development due to one or more contingencies
--------------------- -----------------------------------------------------------------------------------------------
GSA gas sales agreement
--------------------- -----------------------------------------------------------------------------------------------
mmbtu million British thermal units
--------------------- -----------------------------------------------------------------------------------------------
mscf thousand standard cubic feet
--------------------- -----------------------------------------------------------------------------------------------
mmscfd million standard cubic feet of gas per day
--------------------- -----------------------------------------------------------------------------------------------
PSC Petroleum Sharing Contract
--------------------- -----------------------------------------------------------------------------------------------
reserves reserves are defined by the SPE as those quantities of petroleum, here oil and gas, which
are anticipated to be commercially recovered from known accumulations from a given date
forward
--------------------- -----------------------------------------------------------------------------------------------
US$ United States of America dollars
--------------------- -----------------------------------------------------------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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