Canadian oil explorer Simba Energy has a signed letter of intent for a new farm-out of Block 2A, onshore Kenya.
The deal with a private Calgary-based company will see Simba selling up to 40 percent asset and is worth US$8.6mln.
As cost recovery Simba will receive US$2mln in cash,in turn giving the new partner a 10% stake in the project.
Work commitments for exploration, including 421 kilometres of 2D seismic which will be carried out this year is worth a further US$6.6mln comprises .
Once the seismic is analysed both parties will mutually agree whether or not to drill an exploration well and whether they will then share the costs, or either party would be free to farm-out to additional partners.
“This LOI provides a fully funded and accelerated exploration programme through to selecting drill targets and allows Simba to recover US$2.0 million in costs upon completion of the definitive agreement and host Government approval,” said chief executive Robert Dinning.
“The company and its shareholders retain significant interest in Block 2A. This block is highly prospective given the exploration work completed to date by the company and exploration activities underway by neighbouring energy companies, including: Tullow, Africa Oil, Marathon, Afren and Taipan on the adjacent blocks to 2A in the Anza basin.
“The Anza basin is one of the largest Tertiary-age rift basins in East Africa. We expect the definitive agreement to be signed in Q1 2014 – and for the 2014 work programme to begin thereafter.”
In December a prior arrangement with Dutch firm Ajax Exploration was cancelled despite there being a memorandum of understanding between the two companies.
No formal deal was however signed between Simba Energy and Ajax Exploration.