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Simba Essel Energy completes shares for debt agreement with EGME

Last updated: 06:03 04 Jul 2017 AEST, First published: 01:03 04 Jul 2017 AEST

oilOnshore
Simba Essel has active onshore production-sharing contracts in Kenya and is in final negotiations for a new production-sharing contract in Guinea

Simba Essel Energy Inc (CVE:SMB) told investors it had completed the shares for debt agreement announced in May with Essel Group Middle East DMCC (EGME), which owns 60% of the former's  African exploration assets, after receiving approval from the TSX venture exchange.

It issued over 10.5mln shares at seven cents to Essel to settle debt for advances and direct payments made by EGME to the firm's 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 shares are subject to a statutory hold period until October 28, 2017.

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.

In April, 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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