Solo told the London Stock Exchange on Thursday it had signed a binding memorandum of understanding for a 15% shareholding in Pan Minerals & Oil, which has already negotiated existing production agreements for onshore oilfields in the region.
Consideration for the acquisition is GBP 500,000 ($779,000), comprising a GBP 200,000 cash payment and 60 million new ordinary Solo shares.
Pan Minerals has invested almost $3 million on pursuing farm-ins onshore West Africa, focusing on proven oilfields that have the potential to be brought onto production at more than 2000 barrels per day within a 12-month period. Solo’s investment is expected to help complete these agreements.
Solo chief executive Neil Ritson said for commercial reasons, the details of the proven onshore oilfields needed to remain confidential at this stage.
Solo said the MoU was expected to be converted into a full sale and purchase agreement within a week.
Under the deal, Pan Minerals has also granted Solo a 90-day option for a first right of refusal to participate in any future equity financing for the development of the West African assets.
This first right of refusal option also enables Solo to increase its stake in Pan Minerals from 15% to 49.9%, subject to certain approvals.