Swala Energy Completes farm-out of Tanzanian Licenses to Tata Petrodyne

Swala Energy Limited has announced that Swala Oil and Gas (Tanzania) Plc has reached agreement with Tata Petrodyne Limited a subsidiary of the multinational Tata Sons Limited, under which TPL shall farm into the Pangani and Kilosa-Kilombero licences in Tanzania.

Tata Sons Limited is the holding company of the Tata Group and holds the bulk of the shareholdings in the companies within the Group. The Tata Group has a market capitalisation of approximately US$110 billion and represents over 8% of the total market capitalisation of the Bombay Stock Exchange.

The terms of the agreement with TPL:

  • On receipt of governmental approvals for the transfer of interest TPL will pay Swala Tanzania the sum of US$5.7 million for a 25% equity interest in the Kilosa-Kilombero licence and a 25% equity interest in the Pangani licence as consideration towards the past costs incurred on the licences;
  • TPL will free carry Swala Tanzania through the costs of the initial well on the Kilosa-Kilombero licence, up to a maximum of US$2.5 million (Swala estimates the gross cost of the well to be US$10.0 million);
  • TPL will free carry Swala Tanzania through the costs of the initial well on the Pangani licence, up to a maximum of US$2.125 million (Swala estimates the gross cost of the well to be US$8.5 million); and
  • TPL will pay Swala Tanzania up to a further US$1.0 million towards the cost of a second well following a commercial discovery in the initial well on the Kilosa-Kilombero licence. Costs incurred above this sum shall be shared by the partners in proportion to their equity.

On completion of the farm-out, the equity interest in the two licences will be: Swala Tanzania 25% TPL 25% Otto 50%.

Swala Energy EARS


Swala Energy estimates that it will be fully carried for the costs of the remainder of its commitment obligations on both licences and is therefore well positioned to move quickly towards the drilling campaign(s) in what it believes is a highly prospective region, as highlighted by the successful seismic campaigns previously reported.


Swala was advised by FirstEnergy Capital and TPL was advised by Rand Merchant Bank.

According to Swala Energy CEO Dr. David Mestres Ridge the farm-out allows the company to fund its license commitment.

“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 for their professional approach in running the farm-out process and for generating interest from such highly respected groups,” says  David.

With the farm-out in two Tanzanian licenses complete focus shifts to the possible farm out of our Production Sharing Contract for Block 12B in Kenya, also spearheaded by FirstEnergy Capital.

“Swala 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 and we look forward to updating the market with guidance on when these will begin,” he adds.

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