Simba Energy Inc. Signs Memorandum of Understanding to Farmout in Kenya
Simba Energy Inc. (TSXV: SMB, Frankfurt: GDA, OTCQX: SMBZF)
('Simba?), the onshore pan-African oil and gas explorer with assets in
Kenya, Guinea and Chad, is pleased to announce that it has signed a
memorandum of understanding (the 'MOU?) with Ajax Exploration Ltd.
('Ajax?), a privately-owned oil and gas company, to farmout a 66%
interest and operatorship of Block 2A, onshore Kenya ('Block 2A?).
The MOU, which is to be superseded by definitive farmout agreement (the
'Farmout Agreement?) that Simba expects to be finalized and executed
shortly, is intended to set out the principal commercial terms of the
farmout only, which are as follows:
Highlights of MOU:
The transaction provides a significant investment in Simba′s Kenya
asset, delivering a fully carried pre-drill exploration program and a
commitment to drill and carry Simba for one exploration well
Ajax is to commit to a work program including drilling one well for
Simba representing a gross investment of up to US$36.5 million
(assuming a well cost of US$25 million in Kenya)
Ajax will pay Simba up to US$3.1 million in back costs. In addition,
Ajax will provide a net carry of up to US$12.4 million (assuming a
well cost of US$25 million)
The MOU provides that upon execution of the Farmout Agreement, Ajax is
to advance to Simba a loan of the sum of US$1,300,000 (the 'Loan?) to
cover some back costs incurred by Simba prior to the effective date of
the Farmout Agreement and to concurrently issue a 2 year convertible
loan note (the 'Loan Note?) to evidence the Loan. The Loan is to be
extinguished and the Loan Note cancelled if and when the Farmout
Agreement receives Kenyan government approval and Simba transfers the
66% interest in Block 2A to Ajax. Simba anticipates receiving government
approval later this year after executing the Farmout Agreement and
transferring the 66% interest to Ajax shortly thereafter, said Agreement
and transfer subject to Kenya government approval; however, if such
approval and transfer has not occurred within 365 days after signing of
such Farmout Agreement, or in the event of default under the Loan Note,
then Ajax may elect to convert the Loan into Simba common shares at a
conversion price of C$0.075 per share during the first year, or C$0.10
per share thereafter. The Loan is to bear interest at a rate of 3% and
permit Simba to prepay a minimum of US$250,000 at any time without
penalty. In addition, the Loan Note will restrict Simba from creating,
incurring or permitting the subsistence of any security interest over
the Kenya production sharing contract or related assets, or from
creating any indebtedness or securities or entering into any other
obligation that ranks in priority to the Loan Note.
Hassan Hassan, Managing Director of Operations stated, 'The MOU with
Ajax provides Simba and its stakeholders with the opportunity to
accelerate its exploration program in Kenya. Simba′s first farmout
agreement provides an attractive valuation marker for part of its asset
portfolio and delivers the required funding for our upcoming exploration
campaign.?
Andrew Shrager, Chairman of Ajax said, 'This MOU represents a second
step in our relationship with Simba for its Kenya exploration block. In
2012, our associate, GeoDynamics Worldwide srl conducted a broad based
grid Passive Seismic survey which identified potential areas for further
exploration efforts. We now intend to apply our suite of technologies
with the aim of speeding up the exploration phase, and drill our first
well in late 2014.?
The Farmout Agreement will be subject to governmental approval, and the
terms of the Farmout Agreement and the Loan will also be subject to
receipt of acceptance for filing by the TSX Venture Exchange.
About Simba Energy:
Simba Energy Inc. is a Pan-African oil
and gas exploration company with onshore PSCs in Kenya, Guinea and Chad.
Simba focuses on onshore oil and gas exploration in areas that are under
developed or not previously exploited.
Simba′s objective is to establish itself as a diversified international
explorer and developer with a growing oil and gas acreage position with
significant upside potential for shareholders.
About Ajax:
Ajax Exploration Limited is a newly formed oil
and gas exploration company with a particular focus on key technical
aspects of G&G analysis. Ajax utilizes a combination of emergent
technologies which have been proven in prior exploration work that
include passive seismic, ultra low frequency active seismic, and a
variety of remote sensing tools which it believes significantly enhances
the probability of drilling success.
The company is privately owned, with principal backing from private
equity sources that have established businesses in oil and gas trading,
terminal construction and logistics, as well other worldwide investments
including satellite technology, media, agriculture and real estate
holdings.
ON BEHALF OF THE BOARD
'Robert Dinning', President & CEO
For further information, please contact: Mark Sommer, mark@simbaenergy.ca
, Toll Free: 1-855-777-4622, or Paul Vonk, pvonk@simba-energy.com,
+44 (0) 20 7930 8678; ; or visit: www.simbaenergy.ca;
or
Financial Public Relations (UK), Lionsgate Communications, Jonathan
Charles, jcharles@lionsgatecomms.com,
+ 44 (0)779 189 2509.
Neither the TSX Venture Exchange nor its Regulation Services Provider
(as that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
Forward-looking Information
Certain statements made and information contained herein may constitute
'forward-looking information? within the meaning of applicable Canadian
securities legislation. These statements relate to future events or the
Company′s future performance, business prospects or opportunties.
Forward-looking information includes, but are not limited to, statements
with respect to the receipt of the Loan, the entering into and the
receipt of Kenyan governmental approval of the Farmout Agreement and the
additional financing to be received from, and the amount and timing of
work to be conducted by, Ajax under the Farmout Agreement. Often, but
not always, forward-looking information can be identified by the use of
words such as 'plans?, 'expects? or 'does not expect?, 'is expected?,
'budget?, 'scheduled?, 'estimates?, 'forecasts?, 'intends?,
'anticipates? or 'does not anticipate?, or 'believes? or variations of
such words and phrases or words and phrases that state or indicate that
certain actions, events or results 'may?, 'may have?, 'could?, 'would?,
'might? or 'will? be taken, occur or be achieved. Although management
believes that the assumptions made and the expectations represented by
such forward-looking information are reasonable, there can be no
assurance that forward-looking information herein will prove to be
accurate. Forward-looking information by its nature is based on
assumptions and involve known and unknown risks, uncertainties and other
factors which may cause Simba′s actual results, events or achievements
to be materially different from those anticipated by such
forward-looking information. Simba believes that the expectations
reflected in the forward-looking information is reasonable, but no
assurance can be given that these expectations will prove to be correct
and such forward-looking information should not be unduly relied upon.
Simba does not intend, and does not assume any obligation, to update the
forward-looking information, except as required by applicable laws. The
forward-looking information involves risks and uncertainties relating
to, among other things, changes in oil prices, results of exploration
and development activities, uninsured risks, regulatory changes, defects
in title, availability of materials and equipment, timeliness of
government or other regulatory approvals, actual performance of
facilities, availability of financing on reasonable terms, availability
of third party service providers, equipment and processes relative to
specifications and expectations and unanticipated environmental impacts
on operations. Actual results may differ materially from those expressed
or implied by such forward-looking information.
Simba Energy Inc.
Mark Sommer, 1-855-777-4622
mark@simbaenergy.ca
or
Paul
Vonk, +44 (0) 20 7930 8678
pvonk@simba-energy.com
or
Financial
Public Relations (UK)
Lionsgate Communications
Jonathan
Charles, + 44 (0)779 189 2509
jcharles@lionsgatecomms.com
