Simba Energy Inc. (TSXV: SMB, Frankfurt: GDA, OTCQX: SMBZF) has signed an exclusive letter of intent (LOI) with a private group based in Calgary, Alberta, Canada, to farm out up to 40% of Simba’s interest in the production sharing contract (PSC) for Block 2A, onshore Kenya, for US$8.6 million.
Simba CEO Robert Dinning said, “This LOI provides a funded and accelerated exploration program through to selecting drill targets, and allows Simba to recover US$2 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 adjacent blocks to 2A in the Anza Basin, which is one of the largest Tertiary-age rift basins in East Africa."
Simba expects the definitive agreement to be signed in the first quarter of 2014, and for the 2014 work program to begin thereafter. Upon completion and interpretation of seismic results, both parties mutually agree to either drill a first exploration well, with each party responsible for its own share of costs, or to farm out to other third parties on mutually acceptable terms.