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w w w . s w a l a - e n e r g y . c o . t z
June 2014
Huge Exposure to Tanzanian O&G Plays
Initial Public Offering
This presentation has been prepared by Swala Oil & Gas (Tanzania) Plc (“Swala”) for sophisticated and professional investors in relation to the offer of ordinary shares in Swala (‘Swala Shares’) under the Tanzania Companies Act of 2002. The information contained in this presentation is not investment or financial product advice (nor tax, accounting or legal advice) and is not intended to be used as the basis for making an investment decision. In this regard, this presentation has been prepared without taking into account the investment objectives, financial situation or particular needs of any person. Investors should obtain their own professional, legal, tax, business and/or financial advice before making any investment decision. This presentation is not a prospectus, disclosure documents or offering document under Tanzanian law (and will not be lodged with the Capital Markets and Securities Authority (“CMSA”)) or any other law. It is for information purposes only and is not an invitation or offer of securities for subscription, purchase or sale in any jurisdiction. This presentation and the information contained in it does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in jurisdiction in which such offer is unlawful.
Important Notice and Disclaimer
Slide 1
17,400km2 (net) in East African Rift System – a highly-
desirable hydrocarbon trend.
Three Neogene basins identifie d in the two licences
under management.
Near-term activity to prove up prospectivity through
seismic surveys.
Active business development programme.
Experienced management and directors. Strong
emphasis on technical and corporate governance
aspects.
First natural resources listing in East Africa. USD link
gives investment hedge.
Local company to international standards
Slide 2
Board and Management
Mr. Ernest Massawe Non-Executive Chairman
Dr. David Mestres Ridge Chief Executive Officer
Mr. Selemani Pongolani Finance Director
Ms. Elizabeth Obiero Non-Executive Director
Prof. Simon Mbilinyi Non-Executive Director
Hon. Abdullah Mwinyi Non-Executive Director
Mr. Neil Taylor Non-Executive Director
Capital Structure
DSE Ticker SWALA
Shares on issue 80,000,000 shares
Convertible Notes 6.666.667 shares
IPO Shares (maximum) 9,600,000 shares
Options 2,000,000 options
Share price TSh 500
Corporate Snapshot
Slide 3
Kilosa-Kilombero Operator: Swala Swala interest: 50.0% net Net acreage: 8,800 km2
In the 3rd Contract Year.
Pangani Operator: Swala Swala interest: 50.0% net Net acreage: 8,600km2 In the 3rd Contract Year.
Tanzania: Uncovering prospectivity
Slide 4
Pangani – focus on Moshi Basin
Slide 5
Bouguer
Mvungwe Basin
Moshi Basin
• Bouguer Gravity Map. • Blue areas are interpreted basins
• Pangani survey completed in late November 2013
• 200 line Kms in two
separate basins – Mvungwe and Moshi
• These were always
technically challenging basins
• Mvungwe basin appears to be smaller than Moshi. Initial results are promising and suggest a shallow Neogene basin (ca. 1,000m deep).
• Results also indicate that the Moshi basin is also Neogene and some 2,000-3,000m deep.
• FOCUS ON MOSHI: 200 line kms in 2014
Moshi Basin
Kilombero Basin
Kidatu Basin
Kilosa Basin
Mvungwe Basin
Recovery factor range used is 20% (P90) - 30% (P50) – 40% (P10) for the Yellow Horizon, and 10% (P90) – 20% (P50) – 30% (P10) for the Blue Horizon. (Refer RISC ITSR on www.swala-energy.co.tz).
Kilosa-Kilombero – focus on Kilombero
Slide 6
Two horizons identified in Kilombero
Yellow Horizon – possible top shallow reservoir, with P50 and P10 closures.
Blue Horizon – possible top deep reservoir, with P50 and P10 closures.
Slide 7
Kito prospect – our first prospect
Slide 8
Recovery factor range used is 20% (P90) - 30% (P50) – 40% (P10) for the Yellow Horizon, and 10% (P90) – 20% (P50) – 30% (P10) for the Blue Horizon. (2) TPDC retains a 20% back-in right to any successful development in the Kilosa-Kilombero licence.
Yellow Horizon (mmstb) Low estimate
(P90) Best estimate
(P50) High estimate
(P10)
Gross undiscovered unrisked oil in place 153 387 862
Gross prospective unrisked oil resources(1) 42 112 269
Net of Government back-in rights(2) 33.6 89.6 215.2
SOGTL (50%) 16.8 44.8 107.6
Blue Horizon (mmstb) Low estimate
(P90) Best estimate
(P50) High estimate
(P10)
Gross undiscovered unrisked oil in place 40 209 740
Gross prospective unrisked oil resources(1) 6 39 155
Net of Government back-in rights(2) 4.8 31.2 124
SOGTL (50%) 2.4 15.6 62
Combined (Yellow & Blue) (mmstb) Low estimate
(P90) Best estimate
(P50) High estimate
(P10)
Gross undiscovered unrisked oil in place 193 596 1,602
Gross prospective unrisked oil resources(1) 48 151 424
Net of Government back-in rights(2) 38.4 120.8 339.2
SOGTL (50%) 19.2 60.4 169.6
Comparable Dimensions: the Kilombero Basin is approximately 100km long and about 20km wide; the Lokichar Basin in Kenya is approximately 150km long and 25-30km wide.
Discoveries: Seven discoveries to date in the Lokichar, and an active exploration and appraisal drilling programme planned by Tullow for 2014-2015.
Potential: We see the potential for additional leads along the Kito trend, which will be the focus of activity in 2014.
Schematic of the Lokichar Basin
Kilombero – Kenya analogies
Slide 9
BLOCK 12B
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC
PANGANI
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC
KILOSA-KILOMBERO
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC
BLOCK 44
JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC
350 km Seismic acquisition & processing
Interpretation & evaluation
Evaluation of 2013 Seismic
Seismic planning & EIA
200km seismic acquisition
Interpretation & evaluation
Seismic planning & EIA
500km seismic acquisition
Review of legacy data
2014: building the prospect inventory
Slide 10
Cove Energy (LSE)
Early does not mean risky
Slide 11
CAD $0.00
CAD $2.00
CAD $4.00
CAD $6.00
CAD $8.00
CAD $10.00
CAD $12.00
January-2011 July-2011 January-2012 July-2012 January-2013 July-2013
26 March:
Oil Discovery at Ngamia-1 Well in Kenya
23 July :
acquires 50% Block 9 &15% Block 12A in Kenya
25 Jan:Ngamia-1 Well spuds in Kenya & Drilling commences in Puntland, Somalia
7 May:
Ngamia-1 well discovers additional oil in Kenya
5th June:Shabeel North Well spuds in Puntland
Aug 21: Twiga South-1,
onshore Kenya well spuds
1 Oct:
Paipai-1 Well
Spuds in onshore Kenya
14 Jan:
Sabisa well spuds in
SouthOmo permit, Ethiopia
13 May:
Etuko-1 well
spuds in Kenya
24 July: Ekales-1 Well Spuds
in Kenya
Africa Oil (TSX)
Potential for high exploration returns
Slide 12
YEAR COUNTRY BUYER SELLER TRANSACTION PRICE
2009 Kenya Africa Oil Corp. Turkana Resources Corporate sale $11.8 million
2010 Kenya Africa Oil Corp. Platform Resources Corporate sale $2.7 million
2010 Kenya Africa Oil Corp. Centric Energy Corporate sale $58.8 million
2010 Kenya, Ethiopia, Seychelles,
Madagascar Afren Resources Black Marlin Energy Corporate sale $110 million
2010 Uganda Tullow Oil Heritage Petroleum Asset sale $1.45 billion
2011 Kenya Africa Oil Corp. Lion Energy Corporate sale $35.8 million
2011 Kenya FAR Resources Flow Energy Corporate sale $25 million
2011 Tanzania, Uganda, DRC Ophir Energy Dominion Petroleum Corporate sale $186 million
2012 Kenya Taipan Resources Lion Petroleum Corporate sale $5.7 million
2011 Uganda CNOOC and Total Tullow Oil Asset sale $2.9 billion
2012 Mozambique, Kenya PTT Exploration Cove Energy Corporate sale $2 billion
2010 Tanzania M&P, Wentworth Resources Cove Energy Asset sale $31.5 million
2012 Ethiopia Marathon Agriterra Asset sale $40 million (+$10 MM)
TOTAL VALUE OF THE TRANSACTIONS $6.9 billion
Transactions – exploration value
Slide 13
Cash
Swala Oil & Gas (Tanzania) plc – 65.13% held by Swala Energy Limited;
Listing on the DSE to raise between US$1 million and US$3 million (up to TSh 4.8bn through the issuance of up to 9.6 million shares at TSh 500/ each)
Long process but very able local advisors;
Offer to open on the 9th June and close on the 4th July.
On completion, Swala Energy should hold between 58% and 60% of the shares with 9.5% in trust and the
remainder held by private investors.
The proceeds of the Offer will predominantly be used to fund a proportion of Swala’s share of the 12 month work program in its Tanzania licences as well as for new business development.
It is anticipated that Swala will list on the DSE in late July 2014 with a pro-forma market cap of approximately TSh42.6bn and cash of approximately Tsh4.8bn.
Swala – value accruing locally
Slide 14
Summary – investment highlights
Slide 15
17,400km2 (net) in East African Rift System – a highly-
desirable hydrocarbon trend.
Three Neogene basins identifie d in the two licences
under management.
Near-term activity to prove up prospectivity through
seismic surveys.
Active business development programme.
Experienced management and directors. Strong
emphasis on technical and corporate governance
aspects.
First natural resources listing in East Africa. USD link
gives investment hedge.
C o n t a c t
Dr. David Mestres Ridge | CEO
w w w . s w a l a - e n e r g y . c o . t z
Email | [email protected]
Mr. Ernest Massawe (Non-Exec Chairman)
Mr. Massawe is Certified Accountant (ACCA, UK) and holds a Bachelors of Commerce from the then University of East Africa - Nairobi. He is the founder as well as the former Chairmain and Managing Partner of what is now the Ernst and Young Tanzania practice after having led the firm for the past 30 years until his retirement on 31st December 2010. Mr. Massawe is widely respected within the professional and business community in Tanzania which is evidenced by his many high profile appointments in the Accountancy profession, Financial services, Mining and Capital Markets sectors. Mr. Massawe was the founder and chairman of the Tanzania Association of Accountants/Board Member of the National Board of Accountants and Auditors and the first chairman of the Dar es Salaam Stock Exchange and the Tanzania Chamber of Mines. He has also served on the Banking and Financial Sector Reform Committee, The Value Added Consultative Board, the USAID sponsored Tanzania Business Centre Advisory Board and the Ministry of Finance’s Think Tank on Tax Reform and Fiscal Policy. As an entrepreneur, Mr. Massawe has interests in micro-finance, banking, insurance brokerage, real estate development, medium scale gemstone mining and stock brokerage. He is also a director in a number of leading companies in Tanzania.
Dr. David Mestres Ridge
(CEO and Director)
Dr. Mestres Ridge worked first for Total Oil Marine (1998-2000) and then worked as an independent M&A and business development advisor to oil companies active in the North Sea and North Africa (2000-2006). From 2006-2008 he was a Vice-President at the Royal Bank of Canada, first in the Global Investment Banking Oil and Gas team and then in the Equity Research team. In 2008-2009 he briefly managed Petrodel Resources, a company active in Tanzania. In 2009-2010 he worked with Black Marlin Energy during its IPO on the Toronto Stock Exchange. Dr. Mestres Ridge has a BSc in Applied Geology, an MSc in Mining Geology, a PhD in Chemical Engineering and an LLM in Law.
Mr. Selemani Pongolani
(Finance Director)
Mr. Pongolani is a Fellow Chartered and Certified Accountant (FCCA, UK), he is also registered by National Board of Accountants and Auditors of Tanzania as Associate Certified Public Accountant (ACPA). He has Master's degree in Business Administration (MBA Finance and Banking) and Bsc in Electronics & Communication. He has vast work experience of over 10 years in finance, accounting, management, audit and taxation. He started his career with audit firm PricewaterhouseCoopers (PWC) Tanzania where he worked for five years (2003 – 2008), before joining Celtel Tanzania Limited as Tax Manager (2008 – 2009). From 2009 to 2011 he was Finance Manager at Gapco Tanzania Limited, a subsidiary of Reliance Industries Limited dealing with importation, marketing and distribution of petroleum products. He then worked as Senior Finance Manager at PanAfrican Energy Tanzania limited, a subsidiary of Orca Exploration Group engaged in hydrocarbon exploration, development and supply of natural gas in Tanzania (2011-2013).
Board and Management
Slide 17
Mr. Neil C. Taylor (Non-
Executive Director)
Mr. Taylor is the former Exploration Manager of East African Exploration Limited ("EAX"), Black Marlin Energy's E&P subsidiary. A geologist by background, Mr. Taylor has over 30 years of experience in the oil and gas business with internationally renowned E&P companies including British Petroleum (1981-1992) and Woodside Energy (1992-2007). Through his time with those companies Mr. Taylor has been involved with or led exploration and production activities world-wide, including significant work with the giant gas fields of the northwest shelf of Australia and exploration in Europe, North Sea, South East Asia, Australia and the Middle East. Mr. Taylor joined EAX in 2008 with the remit of growing the company's asset base, and added six new licences to BMEL's portfolio during his tenure. Mr. Taylor represent the interests of Swala Energy Limited on the board.
Professor Simon Mbilinyi (Non-
Executive Director)
Professor Mbilinyi was Chief Economic Adviser to President Nyerere (1975-1983); Principal Secretary to the Ministry of Agriculture and Livestock Development (1982-1985); and Ambassador to the European Community, Belgium and Luxembourg (1985-1989) before becoming Principal Secretary of the Ministry of Finance (1989-1991). From 1991 to 1995 he was Managing Director of the National Development Corporation and, from 1995 to 1996 was Minister of Finance for President Mkapa. From 1995 he was Member of Parliament for Peramiho Constituency (1995-2005) and Chairman of the Tanzania Investment Centre (1998-2010); the Open University of Tanzania (2000-2010); the Tanzania Chamber of Mines (2003-2005); and the National Development Corporation (2002-2010). Professor Mbilinyi has a BA in Agricultural Economics (Ithaca University), an MA in Economics (Stanford University) and a PhD in Economics (University of Dar es Salaam).
The Hon. Abdullah Mwinyi
(Non-Executive Director)
The Hon. Mwinyi worked firstly as State Attorney for the Ministry of Legal Affairs (1996-1997) before joining BP as Supply and Trade Coordinator (1999-2002), Project Manager (2002-2004) and Company Secretary (2004-2005). From 2005 to 2007 he was an Associate with Mkono and Company. From 2007 he has been a Member of Parliament and a Member of the East African Legislative Assembly, where he is the Chairperson of the Legal, Privileges and Rules Committee. In 2007 the Hon. Mwinyi established Asyla Attorneys, where he specialises in corporate, commercial, labour and employment law. The Hon. Mwinyi has an LLB in Law and an LLM in Commercial Law (both from the University of Cardiff).
Ms. Elizabeth Obiero (Non-
Executve Director)
Ms. Obiero is a qualified CPA with a Bachelor of Commerce from the University of Nairobi. She has more than 10 years' experience in various accounting sections and industries. From 2002 to 2006 she worked as accountant and Senior Accountant at Kenya Airways and its subsidiary, Kenya Airfreight Handling Limited. From 2006 to 2008 she was accountant at Woodside Kenya (Nairobi) and responsible for the accounting of the subsidiary; she then moved to Woodside's Head Office in Perth until 2011, where she has been involved in all aspects of oil and gas industry accounting. Ms. Obiero represent the interests of Swala Energy Limited on the board.
Board and Management
Slide 18
