Page 10 - Euroil Week 09 2020

EurOil PROJECTS & COMPANIES EurOil
Solo scraps Dutch foray, citing low gas prices
NETHERLANDS
Solo pointed to a fall in European gas prices as a reason for its decision.
LONDON-LISTED junior Solo Oil has dropped its bid to buy shares in over a dozen Dutch gas fields, citing poor market conditions and higher costs.
Solo announced in October it had signed a binding sales and purchase agreement (SPA) for stakes in 14 Dutch North Sea gas fields from local producer One-Dyas. It agreed to pay €30.1mn ($32mn) upfront for the assets, plus a further €2.0mn once one of the fields yielded its first gas. According to Solo, the fields flowed 1,750 bar- rels of oil equivalent per day in the first half of 2019, and are expected to produce 2,125 boepd on average in 2020.
Solo later sought to reopen transaction talks with One-Dyas, however, citing “changes of circumstances”.
“The company has unfortunately been una- ble to agree revised commercial terms with One- Dyas that would deliver appropriate value for Solo’s shareholders,” Solo explained on March 2. Its deal with the Dutch firm expired on February 28 and discussions have ended, it said.
Solo gave several reasons for abandoning the acquisition. European gas prices have fallen sharply, it said, with the 2020 futures contract now trading at €10.2 per MWh, versus €17.2 per MWh in October 2019. Europe was flooded with cheap LNG last year, causing prices to plummet and prompting many local suppliers to cut back production.
The company noted that forecasts for oper- ational and capital expenditure at the fields had also increased since the deal’s signing. It also blamed “political uncertainty during the fund- raising period, including the UK General Elec- tion and Brexit, and, more generally, uncertain macro-economic conditions which negatively
affected equity market sentiment.”
Still, Solo stressed it was not giving up on the
European market. The company will continue to work with advisors to identify other opportuni- ties with producing reserves and future develop- ment potential, taking advantage of low prices, which have made assets cheaper.
“To that end, the company is in discussions with several separate vendors in respect of com- plementary acquisitions portfolios,” the firm said. “Further updates will be provided if and when appropriate.”
Investors were disappointed with Solo’s news, with its shares in London dropping to GBP0.929 after morning trading on March 2, from GBP2.42 at the end of the previous session.
Solo also has projects in Canada and Tanzania.
Another deal arises
Market volatility can upend deals but also lead to new ones being struck.
London-based Spirit Energy announced on March 2 it had agreed to divest two non-core Danish assets to UK petrochemicals group Ineos. The sale of 40% of the Hejre and 27.7% of the Solsort oil discoveries is expected to be closed later this year.
“In line with our strategy of managing our portfolio, we evaluated these opportunities and concluded that they are no longer core to Spirit Energy,” the firm’s vice-president for Norway and Denmark, Dag Omre, said in a statement. “We look forward to working closely with Ineos in the coming months to conclude the transaction, as well as focusing on our portfolio of assets, devel- opments and exploration opportunities across North-West Europe.” ™
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w w w . N E W S B A S E . c o m Week 09 05•March•2020