Solo Oil enters North Sea after ‘transformational’ deal with ONE-Dyas

UK-based Solo Oil has made an agreement with ONE-Dyas to acquire a package of its non-operated interests in natural gas fields located in the Dutch sector of the North Sea. 

Illustration; Source: Pixabay

Solo said on Wednesday that its subsidiary, Scirocco (Netherlands) Energy B.V., had entered into a binding sale and purchase agreement with ONE-Dyas to acquire the package of non-operated working interest positions in 14 gas fields across three core areas.

The acquisition signals a transformational move for the company from an investing company into an operating company. Following this transaction, Solo will have a self-funding balance sheet with assets in the Netherlands and Tanzania.

The ONE-Dyas assets produced approximately 1,750 boepd in 1H 2019 and are expected to produce approximately 2,125 boepd in 2020. The effective date of transaction is January 1, 2019. The assets have 3.6mmboe of net 2P reserves with an associated 2P NPV10 of c.€40 million (pre-tax) net to Solo.

The consideration for the proposed transaction comprises an upfront payment of €30.1 million ($33.07M), plus a future deferred payment of €2 million ($2.2M) upon first production from future development of the hydrocarbons currently designated as 2C resources contained within one of the fields to be acquired.

Solo said the proposed transaction would be funded through a combination of a new debt facility with Mercuria Energy Group, new equity, and existing resources. Solo has entered into a binding commitment letter for an acquisition financing facility with Mercuria of up to €18 million.

The transaction is classified as a reverse takeover transaction pursuant to the AIM Rules. Therefore, the company’s shares were temporarily suspended from trading on AIM as of 07:30 a.m. Wednesday.

Completion of the transaction is subject to approval by Solo’s shareholders at a general meeting to be convened in due course and the raising of equity & debt and regulatory, government and partner consents.


New name & CEO


To underpin this transformational transaction for the company, Tom Reynolds, an existing Non-Executive Director, will step into the role of Chief Executive Officer, effective immediately, Solo Oil stated.

Reynolds is a Chartered Engineer and has over 30 years’ experience in the energy sector, including senior business roles with BP, Total, and British Nuclear Fuels, as well as a number of private equity and publicly-listed, independent oil and gas firms.

Aligned to this change, the company also proposed, subject to shareholder approval being obtained at the general meeting, to change its name to Scirocco Energy and to undertake a share capital re-organization.

Alastair Ferguson, 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.”

He added: “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 program 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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