# Solo Oil plc Truly transformative transaction with ONE-Dyas

- Link: https://www.directorstalkinterviews.com/solo-oil-plc-truly-transformative-transaction-with-one-dyas/412795030
- Published: 2019-10-09T07:08:18+01:00
- Author: Giles Arbor

**Acquisition of package of assets from ONE-Dyas, Board and Executive Management
Update, securing of Mercuria debt facility, fundraising and associated open offer,
proposed change of name, share capital re-organisation and temporary suspension 
from trading.**

**Solo Oil plc** (LON: SOLO), a natural resources investing company focused on acquiring
a balanced portfolio of production, development and exploration assets, has today
announced that its wholly owned subsidiary, Scirocco Energy B.V., has entered into
a binding sale and purchase agreement with ONE-Dyas B.V. to acquire a package of
non-operated interests in natural gas fields from ONE-Dyas in the Dutch sector of
the North Sea.

The consideration for the Proposed Transaction comprises an upfront payment of €
30.1 million, plus a future deferred payment of €2.0 million upon first production
from future development of the hydrocarbons currently designated as 2C resources
contained within one of the fields to be acquired. Solo anticipates the Proposed
Transaction will be funded through a combination of a new debt facility with Mercuria
Energy Group Ltd, new equity and existing resources.

The Proposed Transaction is classified as a reverse takeover transaction pursuant
to the AIM Rules and accordingly the Company’s shares will be temporarily suspended
from trading on AIM as of 07:30 a.m. today. Completion of the Proposed Transaction
is therefore subject to approval by Solo’s shareholders at a general meeting to 
be convened in due course and the raising of below mentioned equity & debt and regulatory,
government and partner consents. In order to convene the General Meeting, the Company
is required to publish an AIM Admission Document which details, inter alia, the 
Proposed Transaction. It is intended that the Admission Document will be published
by mid Q4 2019.

To underpin this transformational transaction for the Company and reflect on its
ongoing strategic evolution towards a European gas, infrastructure and energy player
focused on delivering investor returns in the transitional energy economy, Tom Reynolds,
an existing Non-Executive Director, will step into the role of Chief Executive Officer(
with immediate effect). Aligned to this change, the Company also proposes, subject
to shareholder approval being obtained at the General Meeting, to change its name
to Scirocco Energy plc and to undertake a share capital re-organisation.

**Key Highlights**

· Diversified portfolio of high quality, high margin producing assets

o Three core areas with 14 gas fields, producing c.99% gas / 1% condensate

o High quality operators in ONE-Dyas, Neptune Energy Limited (“Neptune”) and TOTAL
S.A. (“TOTAL”) within a stable fiscal and regulatory environment

o Mid-life assets, with relatively low abandonment expenditure

o ONE-Dyas retaining an interest in certain of the assets and remaining as operator,
demonstrating commitment to, and quality of, the assets

o Self-funding balance sheet going forward with follow on development potential 
funded by re-investment of free cash flow

· Increased reserves and stable, growing production

Solo’s pro-forma net 2P reserves at 1 January 2019 are expected to increase by 3.6mmboe
Associated net 2P NPV10 of c.€40 million (pre-tax)

o Net average production in H1 2019 from the ONE-Dyas Assets was approximately 1,750boepd
expected to increase to approximately 2,125boepd in 2020

· Significant development upside within each core area

o Incremental 2C resources of 7.5mmboe at 1 January 2019

§ Associated net 2P + 2C NPV10 of c.€99 million (pre-tax)

o Near field resources and proximity to existing infrastructure

o Well defined work programme to convert 2C to producing 2P reserves

o Potential for production increase to over 3,300boepd by 2022

· Funding of acquisition through a combination of debt and equity

o Binding commitment for a debt facility of €18 million from Mercuria Energy Group
Ltd to fund part of the Upfront Consideration

o Company intends to raise approximately £20 million in equity (“the Placing”) to
fund the balance of the Upfront Consideration, posting of decommissioning security
and for working capital purposes

o Peel Hunt LLP appointed as bookrunner to the Company, alongside Canaccord Genuity
Limited, in connection with the Placing

o Company intends to launch a simultaneous open offer with publication of the Admission
Document to allow existing shareholders the opportunity to invest on the same terms
as new institutional investors

· Creating a self-funding platform with clear path to increased scale and value

o The acquired assets immediately deliver cash flow for re-investment

o Development programme targeting 2C contingent resources is self-funded from free
cash flow

o Provides optionality to extract maximum value from wider portfolio in Tanzania

o Basis for future organic and inorganic growth

· Continued corporate evolution

o Strengthened executive management team with appointment of experienced CEO, CFO
and COO, with Alastair Ferguson transitioning to Non-Executive Chairman

o The broader executive team has the required experience in North Sea M&A, public
markets and gas value chain

o Proposed name change to Scirocco Energy plc to reflect transformational nature
of transaction

A presentation for investors will be uploaded on the website and the management 
team will be hosting a conference call at 9:00 a.m. today. Please contact solo@buchanan.
uk.com for the dial-in-details.

**Alastair Ferguson, Solo Oil Non-Executive Chairman, commented:**

> “We are delighted to have agreed this truly transformative transaction with ONE-
> Dyas to acquire working interest positions in a package of mid-life gas field 
> assets. This SPA is the culmination of 12 months of hard work by the Board in 
> re-determining the Company’s strategy. Our priority has been on ensuring the first
> deal we bring to shareholders is value accretive and reflects the ambition of 
> the Board to build a new mid-cap company backed by high quality assets and stable
> cash flow. This is a major step towards the Board’s strategic goal of evolving
> into a European gas, infrastructure and energy player focused on delivering investor
> returns in the transitional energy economy.”

**Tom Reynolds, CEO, added:**

> “I am delighted to step up to the role of CEO at this pivotal juncture in the 
> Company’s development and look forward to driving the growth agenda, building 
> on this significant transaction. The acquisition transforms Solo into a leading
> independent producer in the Netherlands and secures a portfolio of cash-generative,
> producing assets that sets us on a path to sustainable growth. We are excited 
> by the low-risk development opportunities within the portfolio and we look forward
> to pursuing the work programme to prove up the development potential which offers
> a clear route to growing net production volumes. The acquisition of this asset
> portfolio provides an enviable platform for growth in line with our stated strategy
> and in support of our longer term ambitions of producing 20,000 boepd in the next
> five years.”

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