Swala Oil & Gas (Tanzania) has engaged Exotix Partners to raise $120 million in corporate bonds for funding expansion in East Africa.

The Dar es Salaam Stock Exchange-listed firm recently acquired oil exploration interests in Burundi from Surestream Petroleum Ltd of Britain and intends to venture into other parts of Africa.

Surestream through a subsidiary, Surestream Petroleum (Burundi), owns block D around Lake Tanganyika; along Burundi’s western border with the Democratic Republic of Congo.

Surestream will acquire a 6.25 per cent stake in Swala in consideration.

“Swala will invite interested Tanzanian institutions, along with other investors to participate in this Exotix placement,” Swala’s chief executive David Ridge said.

Swala owns 50 per cent of block 12B in western Kenya and 25 per cent of Kilosa-Kilombero and Pangani licences in Tanzania.

The block is on the same vein as Uganda’s multibillion barrel Lake Albert oil discoveries along the western branch of the East African Rift Valley.

Dr Ridge said Swala would seek an extension to next year for drilling the onshore Kito-1 exploration well in Kilosa-Kilombero this year following delay in obtaining permits.

"Events caused us to miss the weather window within which we could have drilled Kito. Health and safety considerations were paramount in deciding to postpone the well to 2017,” said Dr Ridge.

Otto Energy Ltd early this year wanted its Australian counterpart to cease being an operator of the Pangani and Kilosa-Kilombero licenses in Tanzania after defaulting on cash calls for hydrocarbons exploration.

Otto in regulatory filing to Australia Securities Exchange (ASX) wants Swala Oil and Gas (Tanzania) relieved of its current role as operator of the two Tanzania acreages for exploring oil with gas.

The notices relate to Swala failing to pay cash calls with interest accrued of $360,000 to Otto which claims Swala is insolvent.