Monday morning saw Solo Oil (LSE:SOLO) rise 1.5pc to 1.7p after announcing that its managing director Dan Maling has stepped down as part of a boardroom shake-up. Solo gave no specific reason for Maling’s departure, other than to say the management changes aim to ensure the firm has the ‘required management skills’ to deliver on its new strategic focus.
Elsewhere, incumbent non-executive chairman Alastair Ferguson has assumed the role of executive chairman at the Tanzania-focused company. Ferguson has more than 40 years of experience in the oil and gas industry, including 33 years at BP and non-exec roles at JSC KazMunaiGaz Exploration and JKX Oil & Gas.
Solo’s turnaround plan has seen it shift its focus towards monetising its existing assets, managing costs and joint ventures, and stabilising its balance sheet. Over time, it also expects to make distributions to shareholders.
As part of these efforts, the firm also appointed experienced geologist John Daniel as technical advisor and upstream oil and gas specialist Douglas Rycroft as general manager on Monday. The pair have been seconded from Gneiss Energy and will be in charge of technical and operational oversight at Solo. They have entered to provide industry-specific knowledge that will give Solo the flexibility needed to manage its G&A expenditure effectively.
The management shake-up follows the appointment of Jon Fitzpatrick and Tom Reynolds as non-executive directors last year. On Monday, Solo said it plans to operate a three-member board consisting of Fitzpatrick, Reynolds, and Ferguson over the near-term. It believes this is currently appropriate for a business of its ‘size and scale’ – Solo’s market cap now sits at £10.7m. However, it added that it intends to bolster its board with additional appointments as its growth strategy progresses.
Elsewhere in Monday’s bumper update, Solo provided a breakdown on progress across its portfolio. The business said it has received numerous approaches by industry counterparties regarding its 25pc stake in Tanzania’s Ruvuma gas development project. It said these early-stage proposals have included farm-outs, general strategic partnerships and even an outright sale of its interest.
The offers follow the successful farmout of fellow AIM player and majority Ruvuma holder Aminex’s interest in the asset to the Zubair Corporation. The deal provided critical third-party validation of the project’s prospectivity.
Elsewhere, Solo said it is fully funded for its share of the Chikumbi-1 well at Ruvuma, which is due for drilling this year. The well will test the Ntorya Gas Field, where it hopes to encounter a reservoir 120 meters up-dip of another well called Ntorya-2 and a potential play opening test in a deeper exploration target.
Solo also said that progress is continuing at its 8pc owned Kiliwani North asset in Tanzania and Helium One, where it holds a 13.8pc position. Finally, it added that it has a healthy cash position following the sale of its Horse Hill and Isle of White assets and the repayments of its Riverfort debt facility.
On the update, Ferguson said: ‘During H2 2018 the new board has made good progress on implementing our turnaround plan and I am satisfied that we have already made good progress on delivering on our stated objectives in terms of monetising mature investments, strengthening the balance sheet and our JV Management. We have now established an ambitious strategic vision of where we want to get to and are setting in place the foundations to achieve those objectives. Our current focus is two-pronged; maximise value from our existing portfolio, whilst simultaneously assessing opportunities that meet with our newly formed long-term growth strategy. We aim to articulate this strategy in a detailed update in the coming months to ensure our shareholders have a full insight into our proposed direction of travel.
‘We have a strong Board in place with an excellent track record of M&A success and the team is well capable of delivering long-term growth. Furthermore, following recent divestments, we are well funded with a more appropriate level of general and administrative expenses and access to deal flow. Solo is committed to minimising the overheads and administrative costs of running the assets, using a small executive team and purchasing other services as required. The board is confident that it has the right team in place to release value from the existing portfolio whilst simultaneously assessing new opportunities to materially enhance the value of the company for the benefit of all of our shareholders.’