Swala Oil and Gas (Tanzania) plc ("Swala") is a Tanzanian oil and gas exploration company that is actively exploring the East African Rift System.
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Swala, which has been operating in the EARS since 2012, has defined a number of key prospects, with three wells planned for early 2016. The prospects are located over undrilled segments of the EARS; however work carried out to date indicates strong similarities to recent discoveries, including those in the Albertine Rift of Uganda and South Lokichar Basin of Kenya.
The wells are planned over three licences – two in Tanzania where Swala is operator and one in Kenya where Tullow Oil is operator. Dependent upon the successful closure of a farm-out deal on the Tanzanian licences, Swala will be fully carried on the cost of the Tanzanian drilling, with the deal also providing working capital for the Company.
The falling oil price and tough capital markets have made it hard for junior explorers; however Swala has adopted a commercially prudent farm-out strategy, whilst still retaining interests that provide good leverage to any drilling success.
We rate Swala as a SPECULATIVE BUY, with the key price mover being success in the upcoming drilling programs, to which value is highly leveraged. Investor interest in Swala will inevitably rise as the drilling schedule firms up.
Swala is an ASX-listed junior oil exploration company concentrating activities on the highly prospective East African Rift System in Tanzania and Kenya. The Company has held its key licences since 2012, and has progressed them to the stage where drill prospects have been defined, with drilling now due in 2016.
Swala is continually looking at new opportunities to expand its land bank in the region, and recently accepted an offer of a block in Zambia, located over the older Karoo system, and is participating in the current Ugandan licencing round.
Swala Energy (ASX: SWE, “Swala” or “the Company”) has both operating and nonoperating interests in frontier licences in Tanzania and Kenya within the highly prospective EARS. In addition to its JV partner, Otto Energy (ASX: OEL), Swala is the only other ASX-listed explorer operating onshore in the region.
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Official website: www.swala-energy.co.tz
ASX on Hotcooper: http://hotcopper.com.au/asx/SWE