British firm lands lucrative deal in Tanzania's virgin basin

UK FIRM SOLO Oil will spend US$10.7mn to fund a buyout agreed upon with Aminex for a 12.5 per cent interest in the Likonde-1 well in Southern Tanzania.
The transaction will see Tullow Oil owning 50 per cent of Likonde-1, Aminex 37.5 per cent and Solo Oil 12.5 per cent.
Likonde-1 is the first well scheduled to be drilled under the Ruvuma Production Sharing Agreement in southeastern Tanzania, with spudding likely in about two months.
Under the terms of the farm-out agreement, Solo Oil will reimburse Aminex for 12.5 per cent of pre-drilling costs amounting to US$1.25mn and pay 18.75 per cent of the drilling cost of Likonde-1 (US$3.4mn).  
David Lenigas, chairman of Solo Oil, said the farm-out agreement is subject to formal approval from the Government of Tanzania and the passing of the relevant resolutions at the company’s general meeting.
“If Solo exercises this right it will also become a full party to the Ruvuma joint operating agreement,” Mr Lenigas said.
According to Mr Lenigas, participation in the agreement will cost Solo Oil an estimated US$4.5mn. 
The balance, which is expected to exceed US$3mn, is expected to be used to strengthen the company’s balance sheet and for general working capital.

Exciting opportunity

“This exciting farm-in opportunity with Aminex and Tullow is the first oil and gas deal undertaken by the [Solo Oil] company since it changed its investment strategy in July this year. Likonde-1 is the first well being drilled in one of the last unexplored major onshore basins in Africa,” said Mr Lenigas.
The Ruvuma PSA covers approximately 12,000 sq km, of which 80 per cent is onshore. Within the PSA are two specific, adjoining licence areas, Lindi and Mtwara.
The Likonde prospect, an anticlinal structure associated with a strike slip fault, is thought to have the potential of producing 500 million barrels of oil.

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