Solo Oil enters deal to sell Ausable Reef assets
Solo Oil updated the market on the disposal of its 28.56% interest in the Ausable Reef gas assets in Ontario, Canada, to Levant Exploration and Production on Wednesday.
The AIM-traded firm said the assets comprise 23,500 acres of petroleum leases in the southern parts of the province, that have been shut-in for a number of years.
It said it has now entered into a conditional asset purchase agreement with Reef Resources and Levant for the sale of Reef’s 71.44% interest in the assets, as well as Solo’s 28.56% interest, to Levant.
Subject to the satisfaction of certain conditions, including confirmatory due diligence by Levant, Solo said it was expecting to complete the sale “in the near future”.
As consideration for Solo’s interest, Levant would issue the equivalent of a 1% gross overriding royalty on any future production revenues.
In addition, Levant would assume responsibility for future spending associated with the assets, the board confirmed.
The company fully impaired the value of its holding in the assets to zero in 2017, and incurred “only nominal costs” related to its holding in 2019.
“The disposal of the Ausable Reef interest is another milestone as we transition the company away from legacy assets and progress along our stated strategic path,” said chief executive officer Tom Reynolds.
“Over the last year we have made considerable progress in rationalising the portfolio to align it with our strategic objectives and provide a line of sight to value realisation on behalf of our shareholders.
“Completion of our ongoing Tanzanian assets sales process would mark a further major milestone in achievement of this strategy.”
At 1606 BST, shares in Solo Oil were up 10.55% at 1.3p.