Solo Oil lays out ‘hands on’ and acquisitive new strategy for growth
Ruvuma and Kiliwani North are still seen as ‘core’ nonetheless Solo aims to build a portfolio of new assets capable of producing some 5,000 boepd within three years.
Solo Oil Plc’s management has set out its stall, revealing plans to acquire its way to 5,000 barrels of production per day.
Gas assets in Tanzania – stakes in Ruvuma and Kiliwani North – are still deemed ‘core’ to the business but the intention is to acquire new projects and become an operator, not just an investor in other company’s projects.
This fundamental change in approach will give the company greater control over the outcome of its investment decisions, Solo said.
It noted that its approach to acquisitions will be disciplined and future transactions will be “delivered by capital efficient transactions”. Specifically, Solo said it is targeting acquisitions that can attract a wide audience of non-equity funding partners, through transaction structures that limit or negate the need to raise equity.
The focus will be on building cash flow and a self-sustaining business, it added.
Solo highlighted that it has already screened fifteen potential acquisitions across a number of geographies and this remains active in more than one ongoing processes.
Geographically, the initial screening process has been focused on European gas assets and certain territories in North Africa – those with “benign jurisdictions and attractive pricing dynamics”.
The goal is to have put together a portfolio producing 5,000 barrels of oil equivalent per day within three years.
“This strategic update sets out the ambitious growth vision for the company and reflects the significant efforts of the board through the second half of 2018 and beyond,” said executive chairman Alastair Ferguson.
“We believe that the market dynamics have created compelling and realistic opportunities which will enable the board to transform the operational and financial profile of the business in the near-medium term.”
Mr Ferguson added: “We see improving liquidity in the market for assets but there is often a lack of realism when it comes to value and few transactions are actually closing.
“Solo is excellently positioned to capitalise on this dynamic by leveraging a strong board with an excellent track record in the execution of M&A deals and, following recent divestments, the funding to support our efforts.
“The company is involved in a number of processes which, if successful, would be expected to derive significant value for our shareholders and be the platform for long-term sustainable growth.”
Source: Proactive Investors