Simba Energy Inc. (Simba or the Company), an independent Canadian-based oil and gas exploration company, reported Wednesday 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 percent of Simba’s interest in the Production Sharing Contract (PSC) for Block 2A, onshore Kenya, for a total commitment of $8.6 million.
The principal commercial terms of the farmout are highlighted as follows:
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 $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 neighboring 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 1Q 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.
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