Solo Secures $5mn Funding Facility

London-listed Solo Oil has arranged a $5mn financing facility to fund its work at the Ntorya gas field in Tanzania while it negotiates the sale of its stake, it said on June 29.

The lender, US-based Prolific Basins, will provide the funds through a tranched investment structure that Solo said would provide it with a flexible funding option in place if it has to go ahead with a required appraisal programme at Ntorya before it has clinched a sale. The programme involves drilling the Chukumbi-1 well in the first half of 2021.

Despite the financing deal, Solo said it was still committed to divesting from the Tanzanian project and was "encouraged" by interest it had received from suitors.

The company has a 25% stake in the Ruvuma production-sharing contract area containing Ntorya. Its UK partner Aminex has 75% but plans to farm out 50% to ARA Petroleum Tanzania once it gets approval from local authorities.

"We are however cognisant of the challenges being faced by the sector presently and therefore feel it is necessary to secure this funding now as it provides significant optionality and strengthens our hand with regards to any future negotiations," Solo said.

Solo, which plans to change its name to Scirocco Energy, said it is seeking new opportunities in the European power sector, including in gas storage, gas peaking and battery storage, in addition to low-cost upstream gas. The company pulled out of a deal in March to buy stakes in 14 offshore Dutch gas fields from the Netherlands' One-Dyas, partly because of weaker European gas prices. 

Solo is on a cost-cutting drive which has seen its management go unpaid since December and directors' fees cut completely since April.

"The recalibration of the European gas market in light of the current turmoil will present the company with an increased pipeline of compelling ... revenue generating gas and power opportunities," Reynolds said.