Solo Oil invests £2.55m in helium company

Natural resources investor Solo Oil has bought a 10% stake in Helium One for £2.55m, which was partly paid for from a share placing.

The AIM-listed company has been granted a 90-day option to increase its stake in Helium One by a further 10%, for an additional £4m to be satisfied equally in cash and shares, which would bring its total interest in the company to 20%.

Solo paid for the 10% stake in Helim one with £1.2m in cash, which was raised from a subscription of 222.22m shares of 0.01p sold at 0.54p each, and £1.35m worth of new Solo shares.

The new 459.06m shares are expected to be admitted to trade on AIM on 28 March.

The company claimed that early entry into the global helium market is estimated to be worth $6bn per year and there are positive macro drivers for helium due to depleting supply and increasing demand.

Helium One's Rukwa project in Tanzania contains unrisked likely prospective recoverable helium volumes close to 100bn cubic feet, according to Netherland, Sewell and Associates, an oil and gas consultancy.

The investment in Helim One expands Solo’s existing presence in Tanzania which includes gas production from Kiliwani North and a 25% stake in the Ntorya gas-condensate discovery.

Solo’s chairman Neil Ritson said that the company has successfully invested in bringing several gas projects to market in Tanzania which are now reaching maturity, and given the related pricing of petroleum gas and helium, which is globally in short supply, it has for some time been investigating opportunities in the helium sector.

“Helium One's portfolio of prospective helium projects in Tanzania provide Solo with a unique early stage investment into a potentially world-scale helium resource. The company believes that Rukwa, together with Helium One's additional project areas at Eyasi and Balangida, represent an attractive strategic investment, especially given the helium market's weak supply dynamics and continued demand growth."

Shares in Solo Oil were down 2.83% to 0.573p at 1024 GMT.