Should You Buy, Sell Or Hold Solo Oil PLC And UK Oil & Gas Investments PLC?

Solo Oil (LSE: SOLO) announced today that the company has exchanged its shareholding in Pan Minerals Oil and Gas AG for a direct holding of 15.9% in Burj Petroleum Africa Limited. 

Burj Africa offers Solo a great opportunity. The private company was created with the purpose of participating in the current field licensing round in Nigeria. Burj Africa has already announced a partnership with Phil Mulacek, the founder of InterOil Corporation. InterOil has been credited with one of the most significant natural gas discoveries in Asia in the past 20 years.

So, Burj Africa is led by a skilled management team, and the company is seeking acquire two marginal fields in the licensing round in Nigeria. The fields in question could yield 13.5m barrels of proven and possible reserves for the company. 

This is a really exciting development for Solo.

Indeed, the fields that Burj Africa is bidding on have already been drilled and explored by an international major, which to a certain extent de-risks the project. Therefore, if Burj Africa successfully acquires the fields, Solo should start to see a return on its investment relatively soon.

What’s more, Solo has also entered into an agreement to increase its investment in Burj Africa. Based on this agreement Solo’s ownership of Burj Africa will increase to 20%. 20% of Burj Africa’s resource potential is around 2.7m barrels of proven and possible reserves.

Solo’s Burj Africa investment could ignite the company’s growth. With that in mind, it could be time to buy Solo.  

Bad news

On the other hand, UK Oil & Gas Investments (LSE: UKOG) has been hit today by the accusations that the company still lacks the relevant permissions to begin flow testing the Horse Hill-1 well in the Weald Basin near Gatwick. 

Further, reports suggest that the Oil and Gas Authority has received no application from the company for the relevant permissions. UK Oil & Gas previously claimed that it had an application to the authorities for their consent to begin flow testing.

If these revelations prove to be true, it’s unlikely that UK Oil & Gas will be able to flow test the Horse Hill well this year, as originally planned.

Unfortunately, it could take months for UK Oil & Gas to receive the relevant permissions for flow-testing. Further, even after permission is granted it will take some time before the results of the test are made clear.

All in all, there’s a chance that UK Oil & Gas won’t know the viability of the Horse Hill prospect until early next year.