Simba Essel Energy Inc SMBZF

RE:Definitive Agreement. Essel investing $ 100 Million in v.SMB

[PapaFritz]

Robert Dinning's Simba Energy Inc. (SMB) added half a cent to five cents on 2.03 million shares, by far its heaviest volume in over three months, after finally signing a definitive farm-out agreement for its block 2A in Kenya. 

The company has held this block for over four years and has been trying to close farm-outs for nearly three years. That is a quite a wait for investors who expected to enjoy a "very significant boost in near-term upside exploration potential," as president and CEO Robert Dinning said when Simba acquired the block in August, 2011. 

To be fair, Simba's stock did rise over the next several months. It was eight cents at the time of the acquisition, but rose to a high of 26.5 cents in mid-2012 as the company worked on and then released a resource estimate. 

About a year later, in May, 2013, Simba struck a deal to farm out two-thirds of the block to Ajax Exploration and expressed hopes of drilling the first well in late 2014 167413. Instead, the deal collapsed in late 2013. In 2014, Simba tried again with a different potential farmee, but that deal also fell apart within months. 

Simba went on the hunt again. In June, 2015 (by which point its battered stock was just three cents), it persuaded the Mumbai-based Essel Group to agree to earn a 60-per-cent interest in all of Simba's assets -- not just block 2A in Kenya, but also the (less glamorous) assets in Chad and Guinea. 

This time, the fish did not slip off the hook. Essel has officially signed a definitive agreement covering block 2A, and expects to begin seismic work and exploration drilling next year. Investors seem pleased. They are probably also trying to recover from the shock.