Solo Oil PLC (LON:SOLO) Executive Chairman Neil Ritson caught up with DirectorsTalk for an exclusive interview to discuss their interim results for year-ended 30th June 2017
Q1: Neil, you’ve just released your interim statements for the first half of 2017, what should people particularly take note of from these?
A1: Obviously, the most significant development is the 9-fold increase in the gas resources at Ntorya in Tanzania and the progress that we’re making towards a development there. We now have an estimated 35 million barrels of oil equivalent net to our interest which is very substantial step forward in getting that development underway so that’s the main good news here.
Kiliwani, where we drive the revenue from gas sales in Tanzania, is still going on fine and that’s covering our GNA, we’re debt-free in this half-year, in this half-year we cleared up any historic debt so we’re debt-free.
We’ve also entered this world-class helium project in Tanzania as an early phase investment so that’s opened up some new opportunities for us in the future.
Finally, I guess the Weald Basin in the UK has continued to evolve and get successful results for others and that’s going to impact positively the value of our Horse Hill interests so generally, a pretty good half-year.
Q2: What more can you say about the Ntorya development in Tanzania and what are Solo’s plans for that investment?
A2: Following drilling the appraisal well at Ntorya-2 and this increase in the gas resource to 1.3 bcf, that’s gas in place gross number for which we’ll be inning a Competent Person’s Report following this fairly short order.
We’ve also had some development studies, scoping studies, done by IO Consulting, which is a joint venture between Baker Hughes and another big service company so good background there for this kind of work. They’re indicated positive economic for an early production scheme and for full field development so put those two things together, more resources and robust economics, we’ve applied for a 25-year development licence and that will come with the work programme probably including further appraisal well currently designated Ntorya-3.
So, once the CPR and the development licence there, we’ll look at ways we can monetise this, obviously we’re in that process now but we need those key events before we’ll get full value. Potentially, if we still can’t see our way to getting full value in a sale or a farmout, we’ll follow our investment through Ntorya-3 obviously following its Ntorya-2 has a major positive impact. If the conditions are right then we’ll continue to follow our investment and monetise it possibly through a sale but also, we’ll look at project financing, have an early production scheme and anything else that’s going to generate shareholder value.
Q3: You mentioned earlier investing into helium, it sounds very innovative and quite exciting, can you say a little bit more about the prospects there?
A3: Helium is an industrial gas that’s in relatively short supply and demand for helium is growing, there’s no real substitute for it and it’s used especially in things like medical imaging to produce these very low temperatures needed to get the right kinds of magnetic fields. So, it’s a commodity that’s in relatively short supply, there is a future supply crunch coming and the US stop selling its strategic reserve and even recently, we’ve seen these developments in Qatar where Saudi’s closed the border and Qatar is also a major supplier of helium and that’s taken that helium, about 30% of world helium, off the market.
So, we see the supply dynamics and therefore the pricing very exciting and they’re not too many projects around the world where natural helium is being sought. There are good early indications on this project in Tanzania and we’ve taken a 10% interest in the private company there, Helium One, and we have a seat on the board. We’re currently helping them with technical aspects of the project, particularly seismic which is something we know a lot about and we’re looking for strategic partners for drilling on that, maybe as early as next year.
Q4: What else is happening in the new few months in the Solo Oil portfolio?
A4: I should emphasise that the Ruvuma on the Ntorya discovery will reach the CPR so we’ll have confirmation, I think the IO Consulting study will be extended and concluded and we’ll be able to say something more about that and hopefully the 25-year development licence will be granted.
Elsewhere, we’re waiting for planning consent to do tests at Horse Hill but, as I mentioned earlier, recent results at Broadford Bridge for example have continued to de-risk their Weald Kimmeridge Limestone play. So, we’re recently excited about what that will do for the long-term value for Horse Hill and we need to get those tests done, perhaps back end of this year.
We also continue to produce at Kiliwani North, we’ve been producing for over a year now and so we’re planning some additional data gathering there to understand how the reservoir’s performing under these conditions. There is some pressure decline there but that’s to be expected and we just need to better understand that to plan our production and revenue going forward.
Elsewhere, steady but slow progress on some of our other investments but as we seek to monetise Ntorya in some way, we’ll simply follow our current investments, continue to safeguard the value in those and we’ll see where we are the end of this year.