Swala Energy Limited has reported that its subsidiary company Swala Oil and Gas (Tanzania) Plc has received a no objection notice from the Tanzanian Ministry of Energy and Mines to the farm-out of 50% of its interests in the Kilosa-Kilombero and Pangani licences to Tata Petrodyne Limited (TPL).
The consent from the Tanzanian Petroleum Development Corporation, the Tanzanian Revenue Authority and now from the Ministry of Energy and Mines means that the Company is awaiting only the consent of the Fair Competition Commission.
According to Swala Energy CEO Dr. David Mestres Ridge, Swala CEO the approval is a positive step that the East African nation is yearning for investors to carry on exploration activities rapidly and without government bureaucracy related bottlenecks.
“The rapid approval by the Tanzanian regulators to the farm-out of the SOGTP licences illustrates their desire to encourage activity in this important economic sector. We are confident that the FCC consent shall be received soon, which shall allow TPL to join the licence joint venture ahead of the planned drilling campaign,” he says.
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%