Farmout Simba management have made it clear that they do not intend to raise further capital in the near term.Their intention is pretty clear according to Hassan that they want to negotiate 2-3 free carries add to that cash for the acerage in Kenya. ( oil barrell presentation last week)
The business model is to find blocks that would attract majors, do the work ie Passive seismics 2d/3d, cpr and then derive the value from each property by farming out to a major or majors.
Todays acquisition in Chad further demonstrates the ability of management that they can acquire acerage fit for majors and Simba has further demonstrated it's ability to carry through it's work commitment by fulfilling 2 years worth of work commitment in 12 months in Kenya.
Chad oil ministry would have seen Simba as a low cash operator thus they still let Simba have the blocks. 1.5 billion boe in place in Chad with infrastructure and producing fields. Why give the block to Simba?? Surely Chad oil ministry would be the 1st to raise the question that Simba needs the money but they must have also seen and BELIEVED in Simbas Business plan.
Last week the Chad ministry ratified a transaction which involved Glencore on the blocks next to Simba so there was no shortage of confidence that the neighbpuring block could have gone to a company on par with Glencore.
Why choose Simba??
Because these guys mean business and they must have every confidence in mangements ability to execute what it believes is near term exploration and maybe production. The model worked with Griffiths and Glencore and it can and will work for Simba.
No doubt Simba would have got favourable terms knowing Hassans ability to negotiate with respected ministries. If Simba can get half the deal Griffiths did with Glencore no doubt Simba will try and better that deal then that would make me and the majority of shareholders ecstatic to say the least.
;-)
ATB
BR