Swala Energy subsidiary Swala Tanzania has reached agreement with India’s Tata Petrodyne (TPL) to farmout the Pangani and Kilosa-Kilombero Licences in the East African country
Under the terms of the agreement with TPL, on receipt of Tanzania’s governmental approvals for the transfer of interest TPL will pay Swala Tanzania a sum of US$5.7mn for a 25 per cent equity interest in both interests.
The Indian company will also carry Swala Tanzania’s costs of the initial well on the Kilosa-Kilombero Licence, up to a maximum of US$2.5mn, and the costs of the initial well on the Pangani Licence, up to a maximum of US$2.125mn.
TPL is expected to pay Swala Tanzania up to a further US$1mn towards the cost of a second well following a commercial discovery in the initial well on the Kilosa-Kilombero Licence.
Swala Energy CEO David Mestres Ridge said, “The company is delighted to announce Swala Tanzania´s agreement with TPL. This farm-out allows the company to fund its commitment obligations in a way that materially reduces the risk exposure to our shareholders without the need to raise additional share capital at this time.
I would like to thank FirstEnergy in running the farm-out process and for generating interest from such highly respected groups. FirstEnergy will now continue to focus on the possible farm out of our production sharing contract for Block 12B in Kenya. Swala Energy will now focus on securing the necessary consents and governmental approvals to allow the newly formed joint venture to progress the drilling programmes on both licences.”
Investor firm Hayaat International, which holds an equity interest of 9.2 per cent of the Swala Tanzania, has provided an interim loan facility to Swala Tanzania for an amount of US$1mn. The loan will be made available in two equal tranches and repayable from the proceeds of the farm-outs with TPL.
