Swala Energy Limited (Swala or the Company) reported Monday that its wholly-owned subsidiary, Swala Energy (Kenya) Limited (Swala Kenya), has referred to arbitration a dispute with CEPSA Kenya Limited (CEPSA) in connection with CEPSA’s withdrawal from Block 12B in Kenya.
CEPSA farmed in to Block 12B in Kenya and acquired a 25 percent equity interest. Upon electing to withdraw from the license, CEPSA has indicated it would return its equity interest in accordance with the terms of the Joint Operating Agreement (JOA), returning 8.33 percent to Swala Kenya and 16.67 percent to Tullow Kenya B.V. (Tullow). This would result in Swala Kenya holding a 33.33 percent equity interest and Tullow holding a 66.67 percent equity interest.
Swala Kenya maintains that CEPSA is obliged to return the entire 25 percent to Swala Kenya in accordance with the terms of the Farm-Out Agreement (FOA) made between Swala Kenya and CEPSA. Accordingly, Swala Kenya maintains that CEPSA is in breach of its obligations under the FOA.
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