Simba Energy Signs Exclusive Letter of Intent for Farmout of Block 2A in Kenya
January 8, 2014 (Source: FSC Wire) — Simba Energy Inc. (SMB – TSX Venture, SMBZF – OTCQX, GDA – Frankfurt), is pleased to announce that it has signed an exclusive letter of intent (the “LOI”) with a private group (the “Group”) based in Calgary, Alberta to farmout up to 40% of Simba’s interest in the Production Sharing Contract (PSC) for Block 2A, onshore Kenya, for a total commitment of US$8.6 million.
The principal commercial terms of the farmout are highlighted as follows:
* US$2.0 million for cost recovery will be placed in trust immediately upon signing of the definitive agreement. These funds will be released to Simba once the farmout agreement is approved by the Kenya Government. This payment for cost recovery will entitle the Group to a 10% interest in the PSC.
* Simba will be carried through the funding and completion of US$6.6 million in exploration work to include a minimum of 421 line kilometers of 2D seismic that is to be carried out in 2014.
* In total, the Group will earn a 40% interest in Simba’s Kenya PSC upon payment of the US$2.0 million and completion of the US$6.6 million work program.
* Upon completion and interpretation of seismic results both parties mutually agree to either drill a first exploration well with each party responsible for its own share of costs, or; to farm out to other third parties on mutually acceptable terms.
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Robert Dinning, CEO of Simba, stated, “This LOI provides a fully funded and accelerated exploration program through to selecting drill targets and allows Simba to recover US$2.0 million in costs upon completion of the definitive agreement and host Government approval. The Company and its shareholders retain significant interest in Block 2A. This block is highly prospective given the exploration work completed to date by the Company and exploration activities underway by neighbouring energy companies, including: Tullow, Africa Oil, Marathon, Afren and Taipan on the adjacent blocks to 2A in the Anza basin. The Anza basin is one of the largest Tertiary-age rift basins in East Africa. We expect the definitive agreement to be signed in Q1 2014 – and for the 2014 work program to begin thereafter.”
Completion of the farmout is subject to normal host Government approvals and receipt of acceptance for filing by the TSX Venture Exchange.
The Company and the Group have exchanged drafts of a second letter of intent in reference to the Company’s concessions in Guinea. This second letter of intent defines the intention of the parties to enter into a second farmout agreement that will define the Group’s participation in Simba’s concessions in Guinea. This second letter is expected to be signed before month end January 2014.
About Simba Energy:
Simba Energy Inc. is an independent Canadian-based oil and gas exploration company with active onshore PSCs in Kenya, Guinea and Chad. Simba is exploring and developing onshore oil and gas prospects in under explored regions across Africa.
ON BEHALF OF THE BOARD
“Robert Dinning”, President & CEO.
We seek safe harbor.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
This News Release may contain forward-looking statements based on assumptions and judgments of management regarding future events or results that may prove to be inaccurate as a result of exploration and other risk factors beyond its control, and actual results may differ materially from the expected results.
Raj Shah has professional experience working for over a half a dozen years at financial firms such as Merrill Lynch and First Allied Securities Inc., ... <Read more about Raj Shah>