Horse Hill-1 Flow Test

Updating on the Horse Hill discovery, Solo Oil has been informed that water-free 40° API light sweet oil has flowed naturally to surface at an average rate of 838 barrels per day (bopd) within the Upper Kimmeridge limestone interval. The results are clearly positive as they bring the project a step closer to commercial viability. Our relative and sum-of-the-parts valuation of £20.40m is based purely on Solo’s Ruvuma PSA and Kiliwani North Development Licence only and we therefore note the potential upside to our valuation from the Horse Hill discovery.

Horse Hill-1 Flow Test

The production comes from an 88-foot zone at a depth of c.840 metres below ground and through a 1-inch choke. Testing has so far been carried out over two days. As a reminder, light sweet oil is the most sought-after version of crude oil, and oil with an API gravity between 40° and 45° commands the highest prices. Also, oil wells that are naturally flowing are more likely to be commercially viable than non-naturally flowing wells, as they require less stimulation to get the oil out the ground. On completion of the Upper Kimmeridge test, operations will move to the shallower Portland sandstone oil reservoir at c. 615 metres below ground level. Solo owns a 6.5% interest in PEDL137, which is located on the north side of the UK Weald Basin.

Valuation

In arriving at the above company valuation, we have estimated a value for Solo Oil’s two key projects (Ruvuma PSA and Kiliwani North Development Licence) by taking the estimated NPV to total proven reserves for other, similar projects (Mnazi Bay Concession Area and Orca Exploration’s PSA, respectively) and applying them to Solo’s projects.