Simba Energy Inc. (TSXV: SMB) shares surged 18% to 6.5 cents
on Wednesday, January 8, 2014, on volume of more than 600,000 shares, after
the independent oil and gas exploration company said it has signed an exclusive
letter of intent with a private group based in Calgary, Alberta, to farm-out
up to 40% of Simba’s interest in the Production Sharing Contract (PSC)
for Block 2A, onshore Kenya, for a total commitment of US$8.6 million.
Simba will receive an up-front payment upon signing the agreement of US$2
million in cash for cost recovery, which will give its new partner a 10%
stake in the project. As well, the partner will spend US$6.6 million in
exploration work to include a minimum of 421 line kilometers of 2D seismic
that is to be carried out in 2014.
“This letter of intent provides a fully funded and accelerated exploration
program through to selecting drill targets and allows Simba to recover
US$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 neighbouring 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 Q1 2014 – and for the 2014
work program to begin thereafter,” said Simba CEO Robert Dinning.
Dinning told SmallCapPower.com that Simba Energy is currently in negotiations
to complete a farm-in agreement on its Guinea property, which will involve
conducting a FTG (Full Tensor Gravity Gradiometry) aerial survey program.
He is hopeful that the farm-innegotiations will be completed within the
next week or so, and at that point the company will announce the specifics
of the deal. Dinning added that FTG results are the criteria larger energy
companies and drillers use to determine actual drill targets.
Companies such as Simba Energy are turning increasingly to Production
Sharing Contracts (PSC) as institutional financings are becoming more and
more difficult in this economic environment.
“What an (energy junior) has to do is focus on the assets it has and find
out what types of arrangements can be made with other companies, which
might be interested in getting a certain percentage of the PSC in return
for carrying out a work program,” says Dinning, adding that these work
programs are all part of what companies have to commit to anyways with
the local governments in order to advance a particular project.
Nonetheless, it wasan eventful 2013 for Simba Energy. On October 15, 2013,
Premier Oil announced a farm-in with Taipan Resources for Block 2B onshore
in Kenya, which is adjacent to Simba’s Block 2A.
Edison Research analysts, in a report dated October 16, 2013, said the entry
by a respected company such as Premier should give investors further confidence
in the ‘prospectivity’ of the region and, more specifically, the Anza basin.
Companies such as Tullow, Africa Oil, Marathon, and Afren are already active
in the area. Edison had a valuation of 16 cents a shareon Simba Energy’s
stock.
To learn more about Simba Energy, you can view their initiation research
report, research bulletins, analyst commentaries and CEO video interview
on their SmallCapPower.com Investor Hub:
HERE
.
About Simba Energy:
Simba Energy Inc. (TSXV: SMB) (OTCQX: SMBZF) is an independent Canadian-based
oil and gas exploration company with active onshore PSCs in Kenya, Guinea
and Chad. Simba is exploring and developing onshore oil and gas prospects
in under explored regions across Africa.
About Ubika Research
Ubika is an investment research and capital market services firm based
in Toronto and Vancouver with a proven track record of identifying and
launching coverage of high potential small cap stocks at an early stage,
thus offering timely market insights. Its specialty is small-cap companies
with a market capitalization of <$5 billion.
For additional information contact:
VikasRanjan, Managing Director
Email:
vikas@ubikacorp.com
Ubika Research has received compensation from Simba Energy to provide
analyst research coverage.
