Aminex farms out stake in Ruvuma basin in Tanzania to Solo Oil
16 November 2009
Oil and gas group Aminex has farmed out a 12.5% interest in the Likonde-1 well in Tanzania to Solo Oil.
Likonde-1 is the first well scheduled to be drilled on Aminex's Ruvuma Production Agreement (PSA) in southern Tanzania with spudding likely to occur in about two months.
Under the terms of the deal, Solo will reimburse Aminex for 12.5% of pre-drilling costs amounting to US$1.25 million and pay 18.75% of the drilling cost of Likonde-1 amounting to $3.4 million.
After the drilling of Likonde-1 Solo will have earned the right to participate in any further drilling on the licences covered by the Ruvuma PSA through contributing 12.5% of ongoing costs. If Solo exercises this right it will also then become a full party to the Ruvuma joint operating agreement.
The farm-out agreement still needs Tanzania Government approval and the go-ahead from Solo’s shareholders.
Aminex currently has a 50% interest in the Ruvuma PSA and the remaining 50% is held by Tullow Oil which is the operator.
Aminex chairman Brian Hall said: “Reducing our exposure to drilling in the Ruvuma PSA has been a stated objective of Aminex for some time and represents sensible management of assets and risk. We warmly welcome Solo's participation in Likonde-1.”
Solo is funding the move by raising £6.4 million in a two-stage 0.5p per share placing. After paying the farm-in costs, the company intends to use the balance of the fundraising, expected to be more than £3 million, to strengthen its balance sheet and for general working capital purposes.
David Lenigas, the chairman of Solo, said: “This exciting farm-in opportunity with Aminex and Tullow is the first oil and gas deal undertaken by the company since it changed its investment strategy in July of this year. Likonde -1 is the first hole being drilled in one of the last unexplored major onshore basins in Africa.”
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