Dublin-listed oil and gas firm Aminex has reached a binding agreement to sell up to a 13 per cent interest in the Kiliwani North Development Licence in Tanzania to Solo Oil for $7 million.

Initially Solo will acquire a 6.5 per cent interest in the licence from Aminex's wholly-owned subsidiary Ndovu Resources for $3.5 million and will have a further 45-day option to purchase an additional 6.5 per cent interest for a further $3.5 million.

Aminex said it will use the net proceeds to reduce outstanding debt and strengthen its balance sheet.

Aminex and Solo are already partners in the Ruvuma Production Sharing contract in Tanzania, with respectively 75 per cent and 25 per cent interests, where gas was discovered in 2012 at Ntorya-1. Ndovu is the operator of both the Ruvuma Production Sharing Agreement and the Kiliwani North licence.

The Kiliwani North licence contains the Kiliwani North 1 well which the partnership expects to produce 20 million cubic feet per day (mmcfd) in early 2015.

Advanced negotiations for a gas sales agreement are expected to be concluded in the near future and Aminex said Tanzanian authorities had recently finalised a similar agreement with another operator in the region.

The gross value of Aminex’s share in the licence was $13.4 million at the end of June, of which up to 20 per cent (or $2.7 million) will be sold. Prior to first production from the well, there are no profits or losses attributable to the asset.

"This disposal of a minority interest in Kiliwani North to Solo, which expands on the existing close partnership between Solo and Aminex in the Ruvuma basin, is an important step towards the company's objective of paying down all outstanding corporate debt. Once this objective has been achieved, Aminex will be in a strong position to expand its operations in Tanzania and elsewhere," said chief executive Jay Bhattacherjee.