TIDMTRP
RNS Number : 6424E
Tower Resources PLC
02 March 2020
2 March 2020
Tower Resources plc
Cameroon Farm-out Update
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM-listed oil and gas company with its focus on Africa, is
pleased to announce that it has executed binding heads of terms
("HoT") in respect of a farm-out to OilLR Pty Ltd ("OilLR") of a
24.5% working interest in its Thali Production Sharing Contract
("PSC") in Cameroon, conducted through its wholly-owned subsidiary
Tower Resources Cameroon SA.
The key economic elements of the transaction set out in the HoT
are:
-- The farm-out covers US$7.5 million towards the cost of the
NJOM-3 well that Tower is planning to drill on the Thali block.
-- OilLR will receive a 24.5% working interest in the PSC,
subject to an overriding royalty of 10% for Tower on the contractor
share of production under the PSC.
-- The well cost is currently expected to be approximately
US$15-16 million, of which approximately US$3 million has already
been spent.
-- Each party will recover back costs actually funded and
recoverable under the PSC, pari passu.
-- Tower will effectively contribute its non-recoverable costs
in consideration of the 10% overriding royalty on the contractor
share of production referred to above.
-- Costs in excess of $15 million, and future costs, will be
funded pro-rata with respect to working interests.
Tower Resources Cameroon SA will remain Operator of the Thali
PSC under an industry-standard joint operating agreement ("JOA"),
and in the event the formal farm-in agreement and approvals cannot
be completed in good time then OilLR will instead receive an
appropriate share of the Operator's share capital and Tower's
intercompany loans to the Operator, subject to a shareholder
agreement, in order to reflect the intended farm-in economics and
JOA terms.
The HoT are binding even though further documentation is
required to effect the transaction, and the parties' intention is
to complete the transaction by 15(th) April 2020, subject to usual
confirmatory due diligence and OilLR having provided payments to
Tower and into escrow of $7.5 million in total at completion, and
Tower having demonstrated that it has funding from its own or other
sources for the balance of the US$15 million (such funding to
include the funds Tower has already spent on the well). In
particular, the HoT will terminate automatically on 29(th) March
2020 in the event that Tower has not received proof of funding in a
form acceptable to it from OilLR by that date.
OilLR is a private company incorporated in Brisbane, Queensland
whose principal shareholders are Art Malone and Greg Lee. Art
Malone is Managing Director and is a senior energy and resource
executive with 15 years oil and gas experience, having recently
served as Doriemus' COO. Greg Lee is Chairman of OilLR and is a
Senior Petroleum Engineer with over 30 years of experience
including most recently as technical director at Doriemus plc, and
previously as one of the founders of Grove Energy, and one of the
founding principals of Regal Petroleum Plc. In addition to its
farm-in to the Thali license, OilLR is presently in the final stage
of acquiring interests in two additional appraisal/production
assets.
Tower is still in discussion with several other parties
regarding the farm-out of up to a further 24.5% interest in the
Thali PSC on similar terms.
Jeremy Asher, Tower's Chairman and CEO, commented:
"We are delighted to have the opportunity to work with Greg Lee
and Art Malone of OilLR on this project in addition to securing
this funding for the well, and we intend to have the balance of the
funding in place by the time this transaction completes. This
agreement is also consistent with our intention to commence
drilling NJOM-3 in June, subject to finalisation of the rig
schedule and the service companies' schedules. We expect this well
to transform the Company by converting current contingent resources
into proven reserves, so putting us firmly on the path to
production in 2021."
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have
been deemed inside information for the purposes of Article 7 of
Regulation (EU) No 596/2014 until the release of this
announcement.
Contacts
Tower Resources plc info@towerresources.co.uk
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
Turner Pope Investments
(TPI) Limited
Joint Broker
Andy Thacker
Zoe Alexander + 44 20 3657 0050
Whitman Howard Limited
Joint Broker
Nick Lovering + 44 20 7659 1234
Notes:
Tower Resources Cameroon S.A, a wholly-owned subsidiary of Tower
Resources plc, holds a 100% interest in the shallow water Thali
(formerly known as "Dissoni") Production Sharing Contract (PSC), in
the Rio del Rey basin, offshore Cameroon. Tower was awarded the PSC
on 15 September 2015 for an Initial Exploration Period of 3
years.
The Thali PSC covers an area of 119.2 km(2), with water depths
ranging from 8 to 48 metres, and lies in the prolific Rio del Rey
basin, in the eastern part of the Niger Delta. The Rio del Rey
basin has, to date, produced over one billion barrels of oil and
has estimated remaining reserves of 1.2 billion barrels of oil
equivalent ("boe"), primarily within depths of less than 2,000
metres. The Rio del Rey is a sub-basin of the Niger Delta, an area
in which over 34.5 billion barrels of oil has been discovered, with
2.5 billion boe attributed to the Cameroonian section.
An independent Reserve Report conducted by Oilfield
International Limited (OIL) has highlighted the contingent and
potential resources on the Thali licence and the associated
Expected Monetary Value (EMV) as follows:
-- Gross mean contingent resources of 18 MMbbls of oil across
the proven Njonji-1 and Njonji-2 fault blocks;
-- Gross mean prospective resources of 20 MMbbls of oil across
the Njonji South and Njonji South-West fault blocks;
-- Gross mean prospective resources of 111 MMbbls of oil across
four identified prospects located in the Dissoni South and Idenao
areas in the northern part of the Thali licence;
-- Calculated EMV10s of US$118 million for the contingent
resources, and US$82 million for the prospective resources,
respectively.
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END
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