Exotix Capital


Oil & Gas

Asset Class

Corporate Debt

Value of Investment

Bond denominations $100,000, with up to a total of $50 million on offer

High Yield USD Energy Bond listed in Mauritius On behalf of Swala Oil & Gas.

Exotix Capital is raising USD 110 million to finance the acquisition of up to 40% of PanAfrican Energy (PAE). PAE is managed by a Western team of oil and gas specialists and operates the Songo Songo gas field, the largest natural gas field in East Africa located off the coast of Tanzania.

In the second of three rounds of financing, Exotix Capital is raising up to USD 50 million in the form of a high yield USD energy bond to be listed in Mauritius.

The Swala transaction brings a local company into a key strategic energy resource for Tanzania, supported by strong cash flows and a growing production profile.


The Resource

The Songo Songo gas field has been producing and profitable for 14 years.  The field requires no development, exploration or major capital expenditure because the resource is proven and infrastructure is in place.  

To date, only a fraction of the resource has been developed.  The estimated field life of the Songo Songo is greater than 30 years.  The size of the gas resource is 500 billion cubic feet of gas, and there is an adjacent field of a similar size that is yet to be formally explored.

Tanzania’s Energy Reliance on Songo Songo

Tanzania relies on its energy sources via hydro, gas, oil importation and coal/wood stock.  Hydro is the greenest energy source; however, hydro is simply unable to meet the chronic energy shortages faced by Tanzania. Oil importation, coal and wood stock (deforestation) have very adverse environmental effects.

The Songo Songo gas field is Tanzania’s only major source of gas (the country imports oil), supplying about 45% of Dar es Salaam’s energy needs and is the only source of reliable energy for the growing Dar es Salaam industrial corridor. This industrial corridor produces relatively basic goods (aluminum, bottling, metal fabrication) and employs local Tanzanians, builds out the Tanzanian tax base and – critically – reduces the need for imports.

Expansion of the Songo Songo gas field will lower Tanzania’s carbon footprint by reducing the requirement for oil.

Increasing domestic energy production is also becoming increasingly relevant in light of Tanzania’s rapid population growth. By 2035, the population is projected to reach 89.2 million. Combined with rapid urbanization (urban population as a percentage of population has grown from 26.1% to 33% from 2007 to 2017), this will likely lead to rapidly increasing energy demand in Tanzania for decades to come (World Economic Outlook, IMF 2017).


  • Swala Oil & Gas (Tanzania) plc (“Swala”) is seeking up to 40% interest in PanAfrica Energy (“PAE”), the operator, producer and distributor of the Songo Songo gas field in Tanzania
  • Early bird tranche of $25m, funding 8% of the acquisition closed (via international investors in 144A format) in Jan-2018
  • Swala now offering a Senior Bond to local and international investors via listing on the Stock Exchange of Mauritius (SEM)
  • Successfully / economically producing field for +15 years; extensive midstream distribution network through Dar211.8 BCF proved reserves (1P) net to PAE
  • Significant upside from potential license extension increasing proved reserves net to PAET to 392.4 BCF, further exploration upside in adjacent block
  • 2017 production of ~90 mmcfpd scaling to +160 mmcfpd by 2022 with +30 years of reserve life



  • The natural gas from Songo Songo benefits from a captive market where they are, by far, the cheapest and most reliable source of energy
  • Gas from the field is funneled directly into the Dar es Salaam industrial corridor (and so benefits from the +7% growth story), with its offtake going to close to 40 industrial off-takers who rely on the resource
  • Natural gas in Tanzania is a prized resource as the hydro that provides the baseload to the country is insufficient and sensitive to droughts and the alternative hydrocarbon – heavy oils – being hugely expensive to import and operate
  • The result is that PAE has seen strong cash generation throughout its extensive producing history at Songo Songo and is building a sizeable pipeline of industrial clients seeking additional gas from PAE as soon as possible
  • This has helped PAE negotiate access to a government pipeline that allows it to increase production from 86mmmcfpd (the production at which the price of the acquisition for Swala was struck) to as much as 250 mmcfpd

Local Content

  • Being a locally listed company with ~50% local ownership (with western management with industry and banking experience), Swala brings local content to the operations
  • This provides PAE’s operations substantial political cover and improves the collective bargaining power to negotiate a license extension (currently to 2026), which will increase the NPV of the operations significantly



Indicative Sources & Uses





144A Senior Debt


Acquisition of 40% of Shares in PAE


SEM 5-year Senior Notes (up to)


Closing Costs & Cash to Balance Sheet


Tranche III (follow-on)




Preference Share Issuance




IFC Loan Pro Rata





Total Sources


Total Uses




Indicative Term Sheet


Swala Oil & Gas (Tanzania) PLC


5-year Senior Notes

Issue Date

28 September 2018

Listing Venue

Mauritian Stock Exchange


Up to USD 50,000,000, Greenshoe rights USD 30,000,000




28 September 2023, 5 years (non-call 2)

Use of Proceeds

Acquire additional shares in PAE, the operator of Songo Songo Gas Field (Tanzania)


14.5% USD

Coupon Frequency



English Law

May-2018                                                                            swalaoilandgas.com                        1

Use of Proceeds

  • To fund a portion of the 40% acquisition of the total outstanding shares in PanAfrican Energy Mauritius (i.e. cash flow from the operator) and working capital



CEO: Dr. David Mestres Ridge, +20 years O&G M&A, research and management experience

Chairman: The Hon. Abdullah Mwinyi has +20 years of legal experience and is a Member of Parliament and the East African Legislative assembly

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