Swala Energy has said it has dropped its arbitration proceedings against CEPSA in respect to Block 12B pursuant to its announcement of the 10th November 2014.
According to Swala the company, block operator Tullow Oil Kenya B.V and CEPSA Kenya Limited, an affiliate of Compañía Española de Petróleos, S.A.U., have agreed on an equity distribution under the JOA for Block 12B, effective from the 31st August 2014.
Under the new disclosed agreement both Tullow and Swala Energy will hold 50 percent meaning that the latter will acquire the entire equity held by CEPSA which withdrew from the block.
“We are pleased at the amicable resolution of the issues that arose in respect of Block 12B, which allows us to focus on the operational development of 12B ahead of a planned drilling campaign in 2015,”said Swala’s CEO Dr. David Mestres Ridge.
Compañía Española de Petróleos (CEPSA) withdrew from the PSC after it was uncomfortable with the scheduled drilling by Swala Energy by Swala Energy for its first exploratory well in Kenya’s block 12B in 2015.
According to Swala Energy CEPSA had prefered more time to review the 2D seismic data come to a decision on whether to drill or drop.
Under the PSC the spanish explorer had committed to carrying Swala’s seismic costs up to a maximum of $2.6 million as well as carry through the first exploration well should they have elected to enter this first additional exploration period of the PSC.
CEPSA had in September indicated it would return its equity interest in accordance with the terms of the Joint Operating Agreement, returning 8.33% to Swala Kenya and 16.67% to Tullow Kenya B.V leading to the arbitral claim by Swala which maintained that CEPSA was obliged to return the entire 25% to Swala Kenya in accordance with the terms of the Farm-Out Agreement (“FOA”) made with CEPSA.
The transfer of equity back to Swala Kenya is conditional on Ministerial consent, which the parties shall now solicit.
Earlier this month Swala Energy announced that it is in farm-in conversations in Eastern Africa as the company seeks ways of raising alternative funding transactions to finance its drilling obligations ahead of the planned in 2015.