Swala Energy Limited announce the signing of a binding farm-out agreement for a 25% working interest in Block 12B (Kenya) with an international integrated oil and gas company (the 'Farmee'), that will see Swala free carried through two exploration wells. The principal terms of the farm-out agreement are that the Farmee will:

◾ Pay Swala's past costs; ◾ Pay all of Swala's costs associated with the planned 350-km 2D seismic survey up to a cap of US$2.7 million (net to Swala's working interest); ◾ Pay all of Swala's costs associated with the drilling of a first exploration well up to a cap of US$7.5 million (net to Swala's working interest), subject to positive results from the 12B seismic survey; ◾ Pay all of Swala's costs associated with the drilling of a second exploration well up to a cap of US$7.5 million (net to Swala's working interest), subject to positive results from the first exploration well; ◾ Pay all of Swala's costs associated with any work programme agreed to by a majority vote under the Production Sharing Agreement ('PSA') in excess of the work commitment under the PSA.

Tags: Swala Energy Limited