queen of ears

Hi Friends,

2013 has been a very good year for Swala & its shareholders and 2014 promises to be even better. What we have achieved in 2013 and what 2014 brings us ?

##### 2013 Milestones #####

1. Successful listing of IPO on the ASX. Yes, we are less than a year old entity :-)

2. Successful completion of 2-D seismic programme in all 5 basins of K-K/Pangani within scheduled time and budget

3. Strengthened cash register by raising 4.4 million at 18% premium in Nov'2013. This was a very wise move which IMO was the trigger point of positive surge in SP by giving more confidence to Market that Swala shares are worth more than what was traded prior to this placement

4. Reduced seismic work programme in 12B to 350km from initially planned 700km thereby reducing time & budget and concentrate more on the area, where Swala and Tullow believe they will strike OIL

5. Continued efforts to grow the assets base and reduce the risk.
(a) Exclusive negotiations with TPDC for Eyasi
(b) Though failed to secure Block 42 in Zambia, block 31 and 44 are still open

6. Extended efforts for SOGTL listing in Dar Es Salaam Exchange. Though delayed, will be completed by Q1 2014 and this would be a very huge plus for Swala to grow in Tanzania

##### Assets Highlights #####

<<< Kilosa-Kilombero & Pangani >>>

Kilosa Basin:

130km of 2-D seismic was acquired & initial results indicate possible presence of large-scale structures along the edges of the basin and rotated fault blocks in the middle of the basin which can act as hydrocarbon traps.

Kidatu Basin:

143km of 2-D seismic was acquired & initial results based on preliminary processed data indicate the presence of large-scale structures along the edges of the basin together with a major intra-basin high identified on dip and strike lines. The structure may be as large as 30 to 60 square kilometres.

Kilombero Basin:

20km long 2-D seismic was covered & the results show a large structural high adjacent to the basin bounding fault that extends over a distance of 9 km and is about 4km wide. Initial results also suggest the presence of a thick, Neogene-age basin with a maximum depth to basement in excess of 3,000m. The age of the sediments recorded (based on low seismic velocities) appears to be similar to that of sediments observed in the now proven oil basins of Lokichar (Kenya), and Lake Albert (Uganda), where Africa Oil and Tullow Oil have had significant success. Dip lines across the basin suggest the presence of both structural traps and traps against the main basin-bounding fault with possible Direct Hydrocarbon Indicators (DHIs or ‘Flat Spots’) observed at several levels at the crest.

Mvungwe Basin:

Initial results suggest that the basin is shallower at less than 1,000m deep and contains sediments of probable Neogene age. Shallow basins may be quite productive with the right heat flows (the Pakwach basin in Uganda’s Lake Albert, where six discoveries have been made to date, has a depth of some 900m) and the Company will now continue with its planned basin modelling programme to determine whether the regional high heat flows would allow hydrocarbon generation in Mvungwe at these relatively shallow depths of burial.

Moshi Basin:

Initial results suggests to have a deep basin with sedimentary fill of probable Neogene age. Further evidence from the seismic survey suggests that the basin is fault-bounded, some 25km wide, and with basin fill to between 2,000 and 3,000m depth.

Seismic Overview:

Though 2-D seismic of K-K/Pangani programme are initial results, personally I have never read better seismic results that has more potential than these (may be till 2-D of 12B is released). Sheer size of potential hydrocarbon traps are beyond my wildest dreams (30-60 sq.km hydrocarbon structure in Kidatu, 9km long and 4km wide fault structure in Kilombero, Neogene fill in excess of 3000m in Kilombero, 1000m deep Neogene fill in Mvungwe, 2000-3000m Neogene fill in Moshi). Out of 5 basins, 3 are Neogene plays and 2 are Karoo fills with potential of commercial OIL success in all 5 basins though Swala see 4 basins as viable. An interesting note from Investor presentation is, based on Corporate Sale value based on historical transactions, Kito net 2C volumes alone is worth AUD 98.5 million

<<< 12B >>>

Hydrocarbon modelling studies done in 12B suggests that 22.4bn OIL & 10.7 Tcf gas could be expelled and with mean recovery of 10%, this could prove to be ONE HELL OF OIL & GAS REVENUE,if drilling matches modelling results. I was under impression that 12B is only OIL play but it is even more exciting to know that we have both OIL and GAS.

##### 2014 Targets #####

1. 2-D seismic programme in 12-B by Q1 2014
2. Completion of FTG in Kilosa-Kilombero license
3. SOGTL listing in Dar Es Salaam Exchange
4. Zambian license procurement (Block 31 and 44)
5. Secure Eyasi license
6. 3-D seismic in Mvungwe and Moshi basins
7. Interpretation and Evaluation of results from seismic programme
8. Secure additional licenses in EARS region and advance in new country entry
9. Secure funding for drilling in a prudent & non-dilutionary Cash Management
10. Kito prospect drilling by Q4 2014

Sorry for being too long but it is too exciting to even think about road map of Swala and what future holds for us, if Swala story turns out to be a fairy-tale. Investing with any Oil & Gas company is a very huge risk because of many factors but I believe, Swala would be very good LT investment and with every passing day, risk of failure is reduced. We have an exciting 12 months ahead of us with lots and lots of news expected in CY2014, it could turn out to be a Company Making year for us.

These are my opinions only, DYOR.!