Swala Energy Limited has requested that a trading halt be implemented in respect of all Swala securities quoted on
the Australian bourse (ASX) pending an announcement from the Company in relation to an update of the farm-out agreement for a 25% working interest in Block 12B in Kenya.
The Company in its letter by company secretary Adrian Di Carlo to Sebastian Bednarczyk the Advisor, Listings Compliance says it expects the trading halt to last until an announcement is made which it expects to occur before the commencement of normal trading on Monday 23rd June 2014.
Upon completion of the transaction, Swala will retain a 25% net working interest in Block 12B, the farmee will own a 25% net working interest, and Tullow Oil will hold a 50% net working interest and will continue to act as the operator.
Under the terms of the farm-out agreement the farmee will pay Swala’s past costs and pay all of Swala’s costs associated with the ongoing 350 km 2D seismic survey up to a cap of $2.7 million. The farmee will also pay all of Swala’s costs associated with the drilling of a first exploration well up to a cap of $7.5 million, subject to positive results from the 12B seismic survey.
This will give Swala a free carry through the second well, subject to positive results from the first well.
Swala’s new partner will also pay all of its costs associated with any work program agreed to by a majority vote under the PSA in excess of the work commitment under the PSA.
“We are very pleased to welcome a company of the Farmee’s financial and technical standing to the 12B joint venture. 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,” Dr. David Mestres Ridge, CEO, said during the announcement of the farm out in March
Block 12B is located on the Nyanza Rift, a part of the East African Rift System (EARS) about 300km south of the recent oil discoveries in the Lokichar basin.