Australian oil and gas company Swala Energy Limited has announced the signing of a binding\u00a0farm-out agreement for a 25% working interest in Block 12B (Kenya) with an international integrated\u00a0oil and gas company, that will see Swala free carried through two exploration wells.<\/p>\n
The principal terms of the farm-out agreement are that the Farmee will:
\n\u2022 Pay Swala\u2019s past costs;
\n\u2022 Pay all of Swala\u2019s costs associated with the planned 350-km 2D seismic survey up to a cap of\u00a0US$2.7 million
\n\u2022 Pay all of Swala\u2019s costs associated with the drilling of a first exploration well up to a cap of\u00a0US$7.5 million subject to positive results from the 12B\u00a0seismic survey;
\n\u2022 Pay all of Swala\u2019s costs associated with the drilling of a second exploration well up to a cap of\u00a0US$7.5 million subject to positive results from the first\u00a0exploration well;
\n\u2022 Pay all of Swala\u2019s costs associated with any work programme agreed to by a majority vote\u00a0under the Production Sharing Agreement \u00a0in excess of the work commitment under\u00a0the PSA.<\/p>\n
Completion of the farm-out is subject to certain conditions including the consent of the Kenyan\u00a0Government and the Competition Authority of Kenya, until which point the Farmee has requested\u00a0confidentiality.<\/p>\n
Upon completion of the transaction Swala will retain a 25% net working interest in\u00a0Block 12B, the Farmee will own a 25% net working interest and Tullow Oil will hold a 50%\u00a0net working interest and continue to act as the Operator.
\n\u201cWe are very pleased to welcome a company of the Farmee\u2019s\u00a0financial and technical standing to the 12B joint venture. The Board believes the farm-out is the\u00a0most cost-effective and least dilutive way to strengthen the Company\u2019s balance sheet in anticipation\u00a0of the forthcoming activity both in Block 12B and in our other assets,\u201d said swala energy CEO Dr. David Mestres Ridge.<\/p>\n
\u201cThis will allow the Company to\u00a0focus its energies and resources on existing operated assets and the continued growth of the\u00a0Company\u2019s portfolio\u201d.<\/p>\n","protected":false},"excerpt":{"rendered":"