Oil prices have fallen to as low $28 over the past week and forecasters say prices could go as low as $10 per barrel but the current trend does not mean the future of oil is bleak. This is why Simba Energy is raising $2.1 million from private placement to fund exploration commitments associated with the Company’s Production Sharing Contracts in Kenya, and general working capital purposes.
Simba’s move is coming at a time Australia’s Pancontinental Oil, America’s Marathon Oil and UK’s Afren have all exited the Kenyan market citing low prices of oil on the international market which they said makes local production commercially unviable for now.
“Simba Energy Inc. provides investors with well positioned exposure to oil and gas exploration in key areas of Africa with active onshore production sharing contracts (“PSCs”) in Kenya and Guinea and PSCs under continuing negotiation in Chad, Liberia and Ghana,” President & CEO Robert Dinning said in a statement released by the company after it closed its non-brokered private placement. “Simba’s mission is to focus on onshore oil and gas potential in areas that are under-developed or not previously exploited,” he added.
The Toronto Stock Exchange-listed firm owns Block 2A in northern Kenya which it is keen to develop. Last year, it sold 60 percent participating interest in the oil block to Essel Group Middle East DMCC in a definitive farmout agreement that requires the latter to fund 100 percent of exploration expenses until the completion of the drilling of two conventional wells on Block 2A.
As part of the deal, Mr. Gagan Goel, of the Essel Group Middle East was appointed Vice-Chairman of Simba’s Board of Directors.
Dinning said at the time that the deal would “provide Simba with strong financial, and technical support as the Company proceeds with its planned seismic program with the objective to drill an exploration well in 2016”. Essel has invested $100 million.