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Cepsa jumps ship but Swala-Tullow proceed with Kenya Block12B onshore drilling

21st July 2014

Swala Energy has announced that its joint venture partner and the operator in Block 12B in Kenya, Tullow Oil, has informed the government of Kenya of their intention to proceed into the first additional exploration period (contract years three and four) of the production sharing contract (PSC) for Block 12B onshore Kenya

Cepsa jumps ship but Swala-Tullow proceed with Kenya Block12B onshore drilling
The third Joint venture partner, Cepsa, has opted to withdraw from the PSC saying they would have preferred more time to review the data before having to commit to a drill-or-drop decision

Under the terms of the PSC, the joint venture is obliged to acquire 300 square kilometres of 3D seismic data or drill one exploratory well during years three and four.

The interpreted data received so far from the recently completed seismic survey over Block 12B has given Swala and Tullow firm confidence to continue the work programme and to commit to drill an exploratory well in 2015.

The third Joint venture partner, Cepsa, has opted to withdraw from the PSC saying they would have preferred more time to review the data before having to commit to a drill-or-drop decision.

"The recent seismic results have provided the technical comfort to both Tullow and Swala to make an informed decision to proceed into Years three and four of the PSC and we are excited at the prospect of drilling the first exploration well in this frontier basin,” said David Mestres Ridge, Swala CEO. “We do however regret that Cepsa has felt it necessary to withdraw from the licence after such a short period of time as a joint venture participant. All parties are working together to reduce the impact of this premature withdrawal constructively and we are confident that this will lead to a satisfactory outcome to the matter. With seismic campaigns due to commence over the Pangani and Kilosa-Kilombero licences in Tanzania in the coming months and the high likelihood of our maiden drilling project taking place in 2015, the company is looking to the future with confidence."

As the company announced on the 10 March 2014, Cepsa farmed into Block 12B, with a commitment to carrying the seismic costs up to a maximum of USD 2.6m and had also agreed to carry Swala through the first exploration well (should they have elected to enter this first additional exploration period of the PSC).

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