TIDMTRP
RNS Number : 7147Q
Tower Resources PLC
29 June 2022
29 June 2022
Tower Resources plc
Cameroon Financing and Resource Update
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN),
the AIM-listed oil and gas company with a focus on Africa, is
pleased to provide an update on activity in respect of its Thali
Production Sharing Contract (PSC), in the Rio Del Rey sedimentary
basin offshore Cameroon.
Cameroon Financing:
Tower is pleased to announce that its subsidiary, Tower
Resources Cameroon SA ("TRCSA"), has executed a term sheet with
BGFI Bank Group ("BGFI"), the largest bank group in Central Africa,
for a medium term loan of CAF 4.42 billion (equivalent to
approximately US $7.1 million at the current exchange rate of 620
Central African Francs ("CAF") to the US dollar) as partial
financing of the NJOM-3 well on the Thali block in Cameroon (the
"Loan").
The Loan should cover around 40% of the roughly US$18 million
cost of the well, with a further amount in excess of 25% already
having been paid for by TRCSA, and the balance of 35% of the cost
of the well also to be funded by TRCSA. The term of the loan is
five years and it will be secured by a modest restricted cash
balance (or bank guarantee) and a partial parent company guarantee,
as well as a pledge of revenues from Njonji production in due
course.
Interest on the Loan is to be 8% per annum, with a moratorium on
interest payments during the first year of the facility, and
commissions and fees for BGFI for arrangement, participation and
acting as agent for the facility are as customary.
The term sheet is not yet binding, and the Loan will be subject
to, inter alia, the execution of definitive documents and the
availability of the remaining funding required for the NJOM-3
well.
Cameroon Resource Update:
The NJOM-3 well will appraise the reservoirs already discovered
and connected to the NJOM-1 well, and will also test additional
reservoirs which are visible on the 3D seismic data which we
reprocessed in 2018 but which are not present at the edge of the
Njonji structure where NJOM-1 was drilled.
The Company has prepared updated resource estimates for the
reservoirs connected to the NJOM-1 discovery well, which are set
out in detail in the linked presentation at page 8. These estimates
are a little higher than the estimates contained in the OIL Reserve
Report (24.9 million barrels pMean recoverable compared with 17.9
million barrels per OIL).
The main purpose of the updated resource estimate is not the
slightly higher resource estimate per se, but the evaluation of
additional potential reservoirs on a consistent basis in the
Northern section of the Njonji structure, which have been
identified on the reprocessed seismic and which were not evaluated
in the OIL report. These could amount to up to 20 million bbls of
further resource, with a pMean estimate of 10.8 million bbls,
albeit subject to chances of success in the range 23-32%.
The Company has also updated its estimate of the NPV10 of the
base volumes in the 24.9 million barrel pMean recoverable case, to
$305 million, as set out in the linked presentation at page 11.
The Company will update its CPR to SPE/PRMS standards in due
course to reflect the updated estimate.
Presentation:
A copy of the investor presentation will be available this
evening following the conference at
www.towerresources.co.uk and can also be accessed here: http://www.rns-pdf.londonstockexchange.com/rns/7147Q_1-2022-6-29.pdf
Jeremy Asher, Tower's Chairman and CEO, commented:
"We are delighted to announce this step forward in the financing
of the NJOM-3 well, and also in our relationship with BGFI Bank
Group. As we announced last month, the expected cost of the well
has increased to approximately US$18 million, and so this facility
and the US$4 million or so we have already invested, will still
leave us with a balance - but a much smaller and more manageable
balance - of the NJOM-3 well to finance. We are continuing to look
at financing options at the asset level within TRCSA, including
with Beluga Energy and its investors, though obviously for smaller
amounts than discussed previously. We are also keeping an open mind
on other financing alternatives, but whichever path we follow, as
we explained in May, we expect the result to be considerably more
favourable for shareholders than the farmout structure previously
contemplated. We plan to conclude financing discussions in the
third quarter of this year, as previously intimated, and then to
press on with the well.
"As previously announced, long lead items for the well are
already purchased, and the environmental and social impact
assessment, site survey and site debris survey are already
completed; and the initial exploration period of our Thali PSC has
been extended expressly to accommodate this well.
"We are as excited as ever about the Thali PSC, as I plan to
explain at the upcoming Proactive Investors conference in London
this evening, 29 June 2022."
Market Abuse Regulation (MAR) Disclosure
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK domestic law by virtue of the European Union (Withdrawal) Act
2018 ('MAR'). Upon the publication of this announcement via
Regulatory Information Service ('RIS'), this inside information is
now considered to be in the public domain.
Contacts:
Tower Resources plc +44 20 7157 9625
Jeremy Asher
Chairman and CEO
Andrew Matharu
VP - Corporate Affairs
SP Angel Corporate Finance
LLP
Nominated Adviser and Joint
Broker
Stuart Gledhill
Caroline Rowe +44 20 3470 0470
Novum Securities Limited
Joint Broker
Jon Beliss
Colin Rowbury +44 20 7399 9400
Panmure Gordon (UK) Limited
Joint Broker
John Prior
Hugh Rich +44 20 7886 2500
Notes:
BGFI Bank Group is a large financial services conglomerate in
Central, West and East Africa, with subsidiaries in ten countries,
including Gabon, where the Group was founded, and Cameroon. The
member institutions serve both individuals and businesses, with
emphasis on small-to-medium enterprises (SMEs). As of December
2020, the Group's assets were in excess of EUR5 billion, and BGFI
Bank Group is described as the largest bank group in Central Africa
(the CEMAC zone).
In accordance with the guidelines for the AIM market of the
London Stock Exchange, Dr Mark Enfield, BSc, PhD, and a member of
the Board of Tower Resources plc, who has over 30 years' experience
in the oil & gas industry, is the qualified person that has
reviewed and approved the technical content of this
announcement.
Glossary:
Best Estimate: At least a 50% probability (P50) that the
quantities actually recovered will equal or exceed the Best
Estimate (in statistical terms, a median).
Brent Forward Curve: the prices on a given day for Brent Crude
Oil for forward delivery, month by month, ranging from the first
traded month forward for ten years or more.
Chance of Development: The chance of discovery multiplied by the chance of commercial success.
Contingent Resources: Those quantities of Petroleum estimated,
as of a given date, to be potentially recoverable from known
accumulations, by the application of development Project(s) not
currently considered to be Commercial due to one or more
contingencies.
DST: Drill Stem Test.
EMV10: Expected Monetary Value derived from a discount rate of
10%.
EWT: Extended Well Test.
High Estimate: At least a 10% probability (P10) that the
quantities actually recovered will equal or exceed the High
Estimate.
Low Estimate: At least a 90% probability (P90) that the
quantities actually recovered will equal or exceed the Low
Estimate.
MDT: Modular Dynamic Formation Test.
Mean Estimate: The expected value of the full probability
distribution of resource volumes.
MMbbls : Millions of barrels.
NPV10: Net Present Value at a discount rate of 10%.
Prospective Resources : Those quantities of petroleum estimated,
as of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
Recoverable : Those quantities of hydrocarbons which are
estimated to be producible from accumulations, either discovered or
undiscovered. Note that Contingent and Prospective Resources as
estimated herein are all estimates of recoverable quantities.
Risked : Quantities that have been adjusted for the probability
of success or loss/failure.
Swanson Rule: A methodology for calculating the EMV of an oil or
gas prospect.
Unrisked : Quantities which have not been adjusted for the
probability of success or loss/failure.
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END
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