Simba Signs Farmout Letter of Intent for Guinea Blocks 1 & 2
January 28, 2014 (Source: Marketwired) — Simba Energy Inc. (TSX VENTURE:SMB)(FRANKFURT:GDA)(OTCQX:SMBZF) (“Simba”) is pleased to announce that it has signed an exclusive Letter of Intent (LOI) to farmout its Production Sharing Contract (PSC) for Blocs 1 & 2 in onshore Guinea with a private investor group (the Investor Group) based in Calgary, Alberta. The Investor Group can earn up to a 45% interest in Simba’s Guinea PSC with a total investment of US$6,500,000.
Simba is an onshore pan-African oil and gas explorer with assets in Kenya Guinea and Chad. The Investor Group includes some participants from a group that recently signed the Kenya farmout LOI with Simba (see January 8, 2014 news release).
The principal commercial terms of the farmout LOI are highlighted as follows:
- After execution of the LOI, Simba will receive US$700,000 for cost recovery.
- Upon completion of the Definitive Agreement(s), the Investor Group will spend US$3,800,000 for an airborne FTG (Full Tensor Gravity Gradiometry) survey that will cover a minimum of 9,000 kms2. This total initial expenditure of US$4,500,000 will earn the Investor Group a 25% interest in Simba’s Guinea PSC.
- The Investor Group has the option to earn an additional 20% interest by carrying out a 2D seismic program with a minimum expenditure of US$2,000,000 to bring the blocks to drill ready status.
- 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 farmout the project to other third parties on mutually acceptable terms.
Robert Dinning, President & CEO of Simba, stated, “This LOI provides immediate recovery of expenses to Simba and accelerates the completion of an FTG airborne survey. The LOI also provides the Investor Group with an option to carry out additional seismic surveys to support the selection of specific drill targets in Guinea. The US$700,000 payment allows Simba to recover a portion of its costs incurred in Guinea to date. This LOI and the pending Definitive Agreement allows the Guinea project to advance while Simba and its shareholders retain significant interests in Blocks 1 & 2. These blocks are highly prospective given the exploration work completed to date by the Company and should provide Simba with drill ready targets later this year. It is expected that the Definitive Agreement(s) will replace the LOI before the end of Q1 2014.”
Simba is off to a very positive start in 2014. Simba has now signed farmout LOIs for its Kenya and Guinea PSCs worth an estimated US$15.1 million in total, and Simba’s management team is working to sign further LOI’s to farm out additional PSC’s in the first half of 2014.
Completion of the farmout is subject to normal Government approvals and any required receipt of acceptance for filing by the TSX Venture Exchange.
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About Simba Energy:
Simba Energy Inc. is a Pan-African oil and gas exploration company with active onshore PSCs in Kenya and Guinea and PSC’s under continuing negotiation in Chad, Liberia and Ghana. Simba focuses on onshore oil and gas exploration in areas that are under developed or not previously exploited.
Simba’s objective is to establish itself as a diversified international explorer and developer with a growing oil and gas acreage position that deliver significant upside potential for shareholders.
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>