Solo Oil : the jackpot #investments
Many investors make an investment in a small company and hope they make it big. I have high hopes that Solo Oil will make it big with its shares in oil discoveries both in Tanzania and in the UK.
In the UK, the company owns a share in an oil discovery near Gatwick Airport that was referred to in the press as the ‘Gatwick Gusher’. That find is significant and there is now a planning application in for a second exploratory well. However, it is their share of a discovery in Tanzania that has private investors excited.
Solo Oil isn’t an oil company as such, they are an investment company with expertise in oil discovery and development. In Tanzania, they provide investment to a company called Aminex who actually do the drilling. In Tanzania, they already have a well, producing gas that is being sold at the well-head to the Tanzania Petroleum Development Corporation. Solo holds a 7.125% working interest in the Kiliwani North field and gas sales. Those gas sales are significant and flow tested at 20 million cubic feet per day of gas. The money from the gas sales is funding the drilling of another well, NT2, farther into the reservoir and that will be spudded around the middle of December. The company is so confident of success that they are preparing to drill yet another well, NT3 and are preparing the foundations for that. Solo’s share of the cost of NT2 is around 2.5 million dollars. Neil Ritson, the chairman of Solo has suggested a share price of 1p by next year which doesn’t sound much but is triple what it is now.
Solo Oil: the long term
The obvious strategy is to keep reinvesting the returns and acquiring a bigger stake in new developments. Solo has a 7.125% working interest in the Kiliwani North field and gas sales. However, they have a much larger stake at 25% in NT2 which could bring in much greater returns for both Aminex and Solo. If the share price reaches 1p, as forecast next year, what happens then? Can more wells be drilled and the oil field be exploited further? It is a huge oil field and so for a small company like Solo, there could be a massive upside to this investment. Horse Hill in the UK could come good in subsequent years too and so I won’t be in too much of a hurry to sell if they do find gas and oil at NT2. This could literally be the jackpot for small investors. We are relying on the good faith, expertise and integrity of the board of Solo Oil.
Solo Oil was the highlight of my week going up from 0.25 to 0.27 and I’m hoping that is just a sign of things to come. My shares in the AA also made some progress and I’m looking at a return on those. RSA Insurance made a little progress and I might sell those soon. Tesco has been making good progress too, as have Taylor Wimpey. Falling back this week have been the pharmaceuticals; GSK, Immupharma and Verona Pharma. I’m not quite sure why they are falling but it could be because of political changes in the US.
Remember that I don’t give advice in these investment posts. I just make observations and relate personal experience and views. If you would like to subscribe to this blog just enter your email address at the top of the sidebar or follow me on Twitter for updates. You can also find links on my Facebook page.