Swala Energy has announced that it is in farm-in conversations in Eastern Africa as the company seeks ways of raising alternative funding transactions.
This follows the withdrawal of a share purchase plan by the company’s board as the company aims at raising $5 million to finance its drilling obligations ahead of the planned in 2015.
Swala which has already suspended its shares from trading since 24th November says the voluntary suspension may continue till 23rd December as the unnamed third party investor requested a period of exclusivity during which to carry out due diligence on the Company’s assets.
“During this process a substantial third party has approached the Company to request, for consideration, a period of exclusivity during which to carry out due diligence on the Company’s assets, with a view to concluding farm-in agreements on one or more of the Company’s projects,” reads the latest update by company secretary Adrian Di Carlo.
Swala adds it believes that the farm-in has the potential to have a material effect on the quantum, structure and terms of any fundraising.
A likely target for the farm-in is the 25% share expected to be re-assigned in Kenya’s block 12B from Spain’s Compañía Española de Petróleos CEPSA after its decision to withdraw from the licence on 31st August 2014.
The funds are to be applied to fund additional near-term work on the Company’s Tanzanian and Kenyan licenses, as well as for business development and general administrative purposes.
In particular to be used for additional work (particularly in Block 12B), basin modeling work and long-lead items for drilling in Tanzania, business development and general administrative expenditure.
Among drilling set for 2015 includes a well in block 12B where the company has identified a series of ten leads and prospects from which one (‘Ahero –“A”’) has been selected as a drilling target to be drilled in the second calendar half.
In Tanzania the company is in the process of interpreting data from a 200 km 2D seismic acquired over the Moshi Basin in the Pangani licence with preliminary interpretation of these new data allowing it to identify a number of potential structural leads which, after final processing of the field data, are expected to define potential targets for a 2015 drilling programme.
Swala is however quick to say there are no guarantees of a successful outcome to these discussions although talks are ongoing to formalize its engagement with the theird party.
Swala has a 29.2% net participating interest in the Pangani license, 29.2% net participating interest in the Kilosa-Kilombero license both in Tanzania and a 25% net participating interest in Kenya’s Block 12B.