Swala continues to make significant progress on confirming the prospectivity of its huge licences located in the East African Rift System. Recent 2D seismic over three entire basins in its Kilosa-Kilombero licence (SWE 32.5%), indicates the presence of large structures. Most significantly, the Kilombero Basin has been confirmed as an analogue to the Lokichar Basin in Kenya, where 4 discoveries from 4 attempts have recently been made by Tullow and Africa Oil. Strong newsflow is expected from additional 2D seismic on the Pangani licence (SWE 32.5%) as well as likely award of additional licences. The Company has recently secured a cornerstone investment, at a premium to market, for A$4.4m. This complements the existing cash position of A$7.7m and all near-term activity is now more than funded. with a price target of $0.61.
Re-Cap – The Rift: Over 2b barrels of oil has been discovered by Tullow since 2007 in the Western Branch of the East African Rift System. The Eastern Branch, which extends from Ethiopia through Kenya and into Tanzania, was almost completely unexplored until recently; however, since 2012 there have been 4 discoveries from 4 wells in Kenya with >500mmbbl estimated to be recoverable. Swala’s blocks located on trend, to the south, are likely contain the same play types in which these discoveries were made.
Kilosa-Kilombero – Large Structures Identified: Current seismic work indicates large structuring in all three basins on the permit with results from the Kilombero Basin confirming a Lokichar Basin analogue. Kilombero has outcropping Neogene sediment, which is also seen on the seismic, of the same age to that in the Lokichar Basin. The basin is of similar depth and the seismic has identified structures in the same play types with Direct Hydrocarbon Indicators, rounding out the analogue.
12B – Partnered with Tullow, Seismic to Commence Q1: 12B is an offshoot of the main rift system and is located on the banks of Lake Victoria. Passive seismic and hydrocarbon generation modelling has provided encouragement for the Tullow-led Joint Venture to move forward with acquisition of 350km of 2D seismic, commencing in Q1 2014.
Eyasi-Wembere – 4 Basins: The Eyasi-Wembere licence is an extension of the main rift system from Kenya into Tanzania. The licence contains 4 distinct basins, each larger than the Lokichar Basin, where the discoveries have been made in Kenya. Post award, expected before year-end, the first year work program will likely include studies before seismic work, which may commence in late 2014.
SWE Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
