Anonymous farm-out partner commits $36M to Swala’s Kenyan oil play
A 2D seismic survey is underway at Swala Energy Ltd’s (ASX: SWE) 12B Block in Kenya following the signing of a $36M farm-out agreement with a so far unnamed company.
2D seismic underway at 12B
The agreement from the mystery player will cover all past costs and free carry through seismic and two optional wells at the 12B Block. In return for its investment, the unnamed investor will be given a 25% working interest.
Because of this surprise development, SWE now has the funds to start its 2014 Kenyan exploration programme and 2D seismic is now underway at 12B. Working with its joint venture partner Tullow Oil (LSE: TLW), SWE will acquire 350km of 3D seismic in the coming weeks.
Future plans for 12B
SWE says the successful farm-out of the 12B Kenyan land shows there is an industry appetite for EARS acreage, meaning the company has opportunities to develop a pipeline to further grow the business.
Dr. David Mestres Ridge, SWE’s CEO, says: “The board believes the farm-out is the most cost-effective and least dilutive way to strengthen the company’s balance sheet in anticipation of the forthcoming activity both in Block 12B and in our other assets. This will allow the company to focus its energies and resources on existing operated assets and the continued growth of the company’s portfolio.
Thanks to its cornerstone investors, SWE is in a good cash position and will continue with its key exploration programme throughout this year, before the commencement of drilling in 2015.
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