Oil explorer seeks to sell its interest in Kenya
What you need to know:
- The firm, which is Tullow Oil partner in block 12B located in Kisumu, said this in its annual report released to shareholders on Thursday.
- Mr Russell did not disclose the specific licences that will be affected in Swala’s undertaking. Apart from the Kenyan licence, Swala holds two exploration permits in Tanzania and one in Zambia.
Swala Energy, an Australian oil and gas company with exploration interest in Kenya, is seeking to sell part of its business to tame operating costs.
The firm, which is Tullow Oil partner in block 12B located in Kisumu, said this in its annual report released to shareholders on Thursday.
“We now have an active process underway at the moment where we are working to once again farm-down our percentage ownership of some of our assets as this is a viable way of reducing cost exposure for the company,” Swala chairman Ken Russell said.
Farm-down is a practice in the oil and gas industry where companies sell part of their stake in exploration blocks to other firms either to raise funds to finance their activities or spread risks involved.
PREPARATION FOR MERGER
Mr Russell did not disclose the specific licences that will be affected in Swala’s undertaking. Apart from the Kenyan licence, Swala holds two exploration permits in Tanzania and one in Zambia.
In January, the company announced that it had appointed UK’s FirstEnergy as a financial adviser in preparation for a merger or complete sale of the firm as low crude oil prices continued to take toll on its operations.
The firm acquired a 25 per cent stake from Cepsa, a Spanish oil and gas company owned by Abu Dhabi’s sovereign wealth fund last year, raising its ownership of block 12B to 50 per cent.
In February, Swala’s partner Tullow Oil released estimates showing that the block could be having as much as 22 million barrels of crude oil deposits.
Both companies have set the second half of this year as the target date for drilling of Ahero-A well. During the year to December 2014, Swala reported a net operating loss of $11.5 million compared to a similar loss of $8.6 million reported for the 2013 trading period.
