From the time we went IPO, we had many good news but there were also bad news and some questionable stand by our Management in explaining the Shareholders. I have gone through profile of all our Management board members and everyone's resume is exceptional in their own terms and have created shareholder value in the past. I believe Management will deliver over Long Term but it would be nice if they are more proactive in key issues that should not have come up in the first place.
Some of the questions I have till now,
* Why did PVD walk away from Eyasi license ? Just few days before TPDC announced the cancellation of Eyasi discussions with Swala and its JV partner, there was ASX release from PVD stating they never had any interest in Eyasi and it is just Market speculation. From TPDC statement it was very clear, PVD and SWE bid for the license jointly. Then why PVD made such an announcement and Swala Management did not take any action ? We would not have been in a situation like this (SP in 20 cents) if we had secure Eyasi and our SP would be well north of what we are today. JV agreement should have been more stringent when we are bidding for a KEY license. License bid and allocation terms are more tough with TPDC as per PSA revisions and we would have to shell out more money if we are to bid and win the license. All this situation would not have arise if our JV partner was strong and have not left us in the FINAL stages of securing the most sought after license in EARS.
* CEPSA pull out from 12B FO was a major set back and if that was not enough, recent ANN stating CEPSA wants to allocate 16.67% interest to Tullow and return only 8.33% interest to Swala was nothing short of a night mare. Reading the announcement hurts and not very sure what happened in the back-end that CEPSA decided to take such a stand. More disturbing factor is why Tullow is silent ? IF Tullow and Swala are in sync, even if CEPSA allocates 16.67% interest to Tullow, they can simply re-allocate it to Swala which it rightly should. Did they come across anything significant in Seismic that Tullow and CEPSA wants to play BIG BOYS GAME with a Junior explorer ? If Tullow are in good terms with Swala why not intervene and bring the issue to a closure rather than going for arbitration ? To be true, it is very difficult to stand against OIL MAJORS especially in Africa and not sure what would be the outcome and how long it is going to take.
Though, I believe both these issues are mainly because of JV partners, Swala Management could have been more proactive when choosing the partners and defining the terms and conditions. I hope they learn their lessons and do not repeat such blunders in future. PVD and CEPSA might kick themselves in future for their decisions to walk way from what could be FUTURE OIL PRODUCING BASINS. Only God knows, why PVD opted to walk away from Eyasi when they could have secured 50% interest for cheap, do seismic and farm-out with very favorable terms for a free carry and recouped past costs. Not sure, what made CEPSA to choose to enter 12B farm-in and what was the reason and motive behind pulling out from 12B. When Tullow, most successful Operator in EARS region for years were happy with seismic results and believe there are more than couple of basins that could be FUTURE targets for drilling, why CEPSA needs to pull out seeking less time to study seismic results. Agreed, they are going to spend 35+ million and might want time to go through seismic results and they have all the right to pull out from Farm-in if they think so. But what gives them the right to handover 16.67% interest to Tullow and GO AGAINST Swala. When they do not want to be part of 12B, why CREATE A MESS when it matters nothing to them. Arrogance of an Oil Major is the only term that I could think of.
Couple of bad outcome does not diminish the success Swala Management have delivered till now. For a Company that is only 18 months into IPO, we have achieved many things and our defining year is going to be 2015. I hope, LUCK turns into our direction in 2015 and we would need LOADS of it when we are drilling. Market is a crazy place and we would have our home run soon when we near our drilling in 2015. 3 drills could change our lives for better and I believe Swala Management would deliver when it matters the most. Fingers crossed with HEAPS of DREAMS and HOPE. These are my opinions only, please DYOR.!
SWE Price at posting:
20.5¢ Sentiment: Buy Disclosure: Held
