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Simba Essel Energy settles EGME debt by issuing shares

Last updated: 23:21 25 May 2017 AEST, First published: 18:21 25 May 2017 AEST

oilOnshore
Simba Essel has active onshore production-sharing contracts in Kenya, is in final negotiations for a new production-sharing contract in Guinea, a new hydrocarbon reconnaissance permit in Liberia

Simba Essel Energy Inc has struck a shares for debt agreement with Essel Group Middle East DMCC (EGME), which owns 60% of the former's  African exploration assets.

Simba Essel will issue over 10.56mln shares at seven cents a pop to settle its debt to EGME for advances or direct payments it made to creditors -  $739,845.

Simba chairman Gagan Goel controls EGME, where he serves as the managing director, and Punkaj Gupta, chief executive officer and a director of Simba, is the chief executive at EGME.

The debt share issue will not result in the creation of any new control persons, the firm said. It added that the debt shares would be subject to a four-month hold period.

Simba Essel has active onshore production-sharing contracts in Kenya, is in final negotiations for a new production-sharing contract in Guinea, a new hydrocarbon reconnaissance permit in Liberia, and production-sharing contracts under negotiations in Chad and Ghana.

Last month, it changed its name to Simba Essel Energy Inc after it received approval at the AGM for two agreements struck with  Indian conglomerate Essel in 2015.

Essel Group Middle East DMCC (EGME) - the Dubai based subsidiary, will take a 60% stake in Simba’s African exploration projects as a result.

Two years ago, EGME was granted the right to earn a 60-per-cent interest in Simba's production-sharing contracts (the PSCs) in Kenya, Chad and Guinea by contributing 100 % of the financing to carry out an exploration program on the PSCs.

In November, 2015, Simba entered a definitive farm out agreement with EGME for its block 2A in Kenya, wherein EGME may earn a 60% interest by financing 100 per cent of exploration expenses until the completion of two conventional wells on block 2A.

Also in April, Simba revealed it had struck a deal with the national oil company in Liberia, which had doubled the junior's acreage.

The agreement with NOCAL saw Simba issued with a new  reconnaissance licence, NR-002 which expands the latter's acreage to 2,961.7 sq km.

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