25 April 2018

Tanzania: Swala Shares Remain Unchanged On Termination Note

SWALA Oil and Gas share prices at the Dar es Salaam Stock Exchange (DSE) yesterday remained unchanged despite the termination of the Kilosa- Kilombero production Sharing Agreement (PSA).

The company's share price has for the past one year traded at 500/- each at the Dar bourse. Thus Swala Force Majeure on Monday sends no changes to investors' decision on hold-buy or sells share status.

Orbit Securities General Manager, Juventus Simon, said the company move to suspend the project will not impact the share trading as investors are expecting the project to resume soon or later.

The move came after the last minute requirement of an in-house assessment of impact of the Kito-1 drilling programme on the Stiegler's Gorge Hydroelectric Project by the Ministry of Natural Resources and Tourism.

Swala Oil and Gas Chief Executive Officer, Dr David Mestres Ridge said in a statement that the Joint Venture has no alternative but to declare Force Majeure under the PSA.

"We are disappointed and frustrated by this last-minute requirement from ministry but fully expecting the Force Majeure shall be lifted once all permits are in place to allow the safe drilling of Kito-1 in 2019," he said.

He added, "Over the past six years the Joint Venture has invested total of 20.7 million US dollars in exploring the Kilosa-Kilombero area and has been trying for three years to drill a prospect that could have a value of nearly (21.9tri/-) to Tanzania as well as flowthrough benefits to the local communities.

" The assessment had not been completed, and the TAWA permit not been received, by the 20th April 2018 and the Joint Venture had no alternative but to declare Force Majeure under the PSA.

The Kito Prospect has been assessed by an independent third party as potentially containing up to 185 million barrels of oil (contingent resources).

Of this, and if successful, the equivalent of nearly 80 per cent would go to the government of Tanzania through a combination of royalties, profit-sharing and various taxes, a sum of nearly 9.9 billion US dollars (21.9tri/-) at current oil prices.

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