Swala Energy Limited says that Swala Oil and Gas (Tanzania) Plc has reached agreement with Tata Petrodyne Limited, a subsidiary of the multinational Tata Sons Limited, under which TPL shall farm into the Pangani and Kilosa-Kilombero licences in Tanzania. Swala owns 58.5% of Swala Tanzania. Tata Sons Limited is the holding company of the Tata Group and holds the bulk of the shareholdings in the companies within the Group. The Tata Group has a market capitalisation of approximately US$110 billion and represents over 8% of the total market capitalisation of the Bombay Stock Exchange.
The terms of the agreement with TPL:
•On receipt of governmental approvals for the transfer of interest TPL will pay Swala Tanzania the sum of US$5.7 million for a 25% equity interest in the Kilosa-Kilombero licence and a 25% equity interest in the Pangani licence as consideration towards the past costs incurred on the licences;
•TPL will free carry Swala Tanzania through the costs of the initial well on the Kilosa-Kilombero licence, up to a maximum of US$2.5 million (Swala estimates the gross cost of the well to be US$10.0 million);
•TPL will free carry Swala Tanzania through the costs of the initial well on the Pangani licence, up to a maximum of US$2.125 million (Swala estimates the gross cost of the well to be US$8.5 million); and
•TPL will pay Swala Tanzania up to a further US$1.0 million towards the cost of a second well following a commercial discovery in the initial well on the Kilosa-Kilombero licence. Costs incurred above this sum shall be shared by the partners in proportion to their equity.