Swala Energy Limited (Swala or the
Company) disclosed 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 percent of its
interests in the Kilosa-Kilombero and Pangani licenses in central and
northern Tanzania, respectively to India’s Tata Petrodyne Limited (TPL).
With the receipt of consents from the
Tanzanian Petroleum Development Corporation (TPDC), the Tanzanian
Revenue Authority (TRA) and now from the Ministry of Energy and Mines,
the company is awaiting only the consent of the Fair Competition
Commission (FCC), the firm said in a statement.
“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 license joint
venture ahead of the planned drilling campaign.” said Swala Chief
Executive Officer, Dr David Mestres Ridge.
In June, this year, Swala Oil and Gas
announced it reached an agreement with Tata Petrodyne Limited (TPL), a
subsidiary of the multinational Tata Sons Limited, under which TPL shall
farm into the Pangani and Kilosa-Kilombero licences in Tanzania.
The agreement allows Swala to remain
committed to these licences and to secure funding for future exploration
activities in a way that minimises the risk to its current
shareholders.
“This farm-out allows the company to
fund its commitment obligations in a way that materially reduces the
risk exposure to our shareholders without the need to raise additional
share capital at this time,” Dr Ridge said.
In the oil and gas industry, a farm-out
agreement is an agreement entered into by the owner of one or more
licences (who ‘farms out’) and another company that wishes to acquire a
percentage of ownership of that licence in exchange for providing
services (and ‘farms in’).
A farm-out agreement differs from a
conventional transaction between two oil and gas lessees, because the
primary consideration is the rendering of services, rather than the
simple exchange of money.
Dr Ridge said Swala will now focus on
securing the necessary consents and governmental approvals to allow the
newly formed joint venture to progress the drilling programmes on both
licences and they look forward to updating the market with guidance on
when these will begin.
Source: Daily News, reported by Masambe Tambwe, from Dar es Salaam, Tanzania
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