Saturday, February 2, 2013

Company plans to raise oil exploration funds in IPO


An Australian oil company, Swala Energy, which is licensed to explore for oil in the Lake Victoria basin is planning to raise money through an Initial Public Offering.

Sources familiar with the plans to sell the firm’s shares to the public say the company intends to use the funds to expand its oil exploration business in Kenya and Tanzania where it is also operating.

The offer which will see the company’s shares listed at the Australian Securities Exchange next month will be managed by Australian Foster Stockbroking and Argonaut Securities.

Swala Energy could not immediately confirm details of the IPO. The company was registered in 2010 and holds a joint exploration licence on an equal interest basis with British company, Tullow Oil Plc, for Kenya’s Block 12B located on the eastern edge of Lake Victoria.

The block covers a 7,000 square kilometre area. Swala Energy also has 50 per cent equity and operatorship interest of the Pangani Block in Tanzania through its subsidiary, Swala Oil and Gas Tanzania Limited.

Increased interest

Since the oil find in Block 10BB in Turkana by Tullow Oil Plc, Kenyan oil blocks have attracted increased interest from international oil explorers.

The interest has further been heightened by discoveries of commercially-viable quantities of oil and natural gas in neighbouring Uganda and Tanzania respectively, making East Africa a new frontier in the lucrative energy market.

Increased interest in local exploration blocks has seen the ministry of Energy come up with new regulations regarding allocation of exploration areas which will see companies hoping to prospect for oil and gas locally quote high prices to secure acreage.

The new rules, which are expected to be applied when allocating exploration areas for the eight new blocks that have been created out of acreages surrendered by some of the exploration firms in March this year require the Energy ministry to award exploration acreage to the highest bidder in a public auction, contrary to the first-come-first-served basis that has been used before.