Swala Oil & Gas Tanzania Plc will push ahead with drilling plans in the East African Rift system this year, undeterred by the recent collapse in oil prices.
The operator with 50% stakes in the Kilosa-Kilombero and Pangani licenses is analyzing technical data before starting drilling for oil by February 2016 at the latest, CEO David Mestres Ridge said by email.
“The results in Kilombero are particularly interesting, with a string of structures extending northeast and southwest of our Kito structure,” Ridge said.
The drop in crude to below $50/bbl has forced many drillers to reconsider the high costs of exploration in Africa after a dash for resources that saw billions of dollars in investment to tap promising fields from Ghana to Tanzania. Swala is moving ahead with plans after raising $3.6 million in an oversubscribed IPO last year.
“We have a commitment to drill two wells and that remains our plan,” Ridge said. “You have to bear in mind that oil prices are cyclical, and have been lower recently—in the $30s in 2008 and below $10 per barrel in 1999.”
Swala, a unit of Swala Energy Ltd., is looking at options including issuing new shares to finance drilling, Ridge said.
Tanzania, which produces small amounts of natural gas for domestic use, has the potential to become a gas exporter, according to the U.S. Energy Information Administration. The country doesn’t produce oil, and there haven’t been any commercial discoveries recently.
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