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Cepsa takes control of 25 per cent of Kenya’s Block 12B

23rd June 2014

Swala has completed a farm out agreement for a 25 per cent working interest in Block 12B in Kenya with Spanish integrated oil and gas company, CEPSA

Cepsa takes control of 25 per cent of Kenya’s Block 12B
Prior to the announcement of this deal, Swala had ascribed a valuation of USD 3,894 per square kilometre for Block 12B based on historical acquisitions and farm-in deals in the region

Under the terms of the farm out, Swala will retain a 25 per cent net working interest in Block 12B, CEPSA will also hold a 25 per cent net working interest and Tullow Oil will retain the remaining 50 per cent interest and operatorship of the joint venture.

Under the terms of the deal, CEPSA will reimburse the company for its past costs and carry Swala through two exploration wells up to a maximum of USD 7.5m for each one if CEPSA decides to participate. As announced on 23 April 2014, a 2D seismic programme over parts of Block 12B has already began and CEPSA has agreed to pay all of Swala’s costs associated the survey up to a cap of USD 2.7m net to Swala’s working interest.

Prior to the announcement of this deal, Swala had ascribed a valuation of USD 3,894 per square kilometre for Block 12B based on historical acquisitions and farm-in deals in the region.

CEPSA gained entry to Kenya with the acquisition of 55 per cent of Block 11A in February and this farm in agreement for Block 12B with Swala demonstrates CEPSA’s escalation of activities in the region. This deal will conserve Swala’s cash and enable the company to focus its attention on its operated assets in Tanzania in addition to growing its wider portfolio in East Africa.

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