Tower Resources Pressing Ahead in Uganda

Tower Resources (LON:TRP) the AIM listed oil and gas exploration company with acreage interests predominately in Uganda and Namibia has announced that it is pressing ahead with its Uganda work programme through its wholly owned subsidiary Neptune Petroleum (Uganda) Ltd. 

Tower Resources, who own and operate 100% of the onshore Uganda Block EA5 situated in the Rhino Camp Basin have commissioned ARKeX, a geophysical company to carry out a hi-tech airborne survey which will enable Tower to gain a better understanding of the subsurface geology over its large 2,941Km2 licence. [ref] New aerial survey for oil begins, By Frank Mugabi, 17th June 2010, http://www.newvision.co.ug/D/8/220/723040 [/ref]  The aero gravity gradiometry survey outcome data, is due within the month and will aid in identifying targets and provide basement level structure detail as used successfully in the blocks to the South of EA5 where Tullow Oil Plc (LON:TLW) and Heritage Oil (LON:HOIL) have enjoyed much documented success to date proving P50 reserves of over 700mm barrels. [ref] Edison investment Research Note, January 2010, http://www.towerresources.co.uk/investor/files/analystresearch_EIR_130110.pdf [/ref]

Planning is now underway for the follow up seismic study to start in Q3, which will cover an area up to 500km and will also include infill areas where no data is currently present, namely the Balala swamp and the Nial flood plain.  Having already invested around £23 million in its Uganda project, Tower is looking for a partner to join them and earn a negotiable working interest in the licence based on their contribution to the seismic study and the 2011 commitment well, with Tower noting that; [ref] Tower Resources PLC RNS, UGANDA UPDATE, 25 June 2010, http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10547259 [/ref]

“A number of third parties are reviewing the data with a view to proposing funding of the future seismic programme and the commitment well”

Global Petroleum (LON:GBP) look set to maintain their relationship with Tower in Uganda through the agreement which allows Global the option to convert its investment to date on reimbursement of proportional costs, into a 25% legal and beneficial interest for the remainder of the licence period which runs to March 2012.  The current costs Global will be expected to contribute towards should they decide to maintain their share will include the hi-tech air bourn gradiometry survey currently being undertaken at an estimated cost of around £1 million, Peter Kingston, the Tower Resources Executive Chairman commented: [ref] Tower Resources PLC RNS, UGANDA UPDATE, 25 June 2010, http://www.londonstockexchange.com/exchange/prices-and-news/news/market-news/market-news-detail.html?announcementId=10547259 [/ref]

"This agreement with Global recognises the considerable value of Global's past investment and a shared view that there remains future potential in the EA5 Licence. I welcome their continued involvement in future activities."

To date 2 exploration drills have been conducted on this vast acreage by Tower, the Iti-1 in mid 2009 and the Avivi-1 which replaced the Sambia-1 in February 2010.  Although neither well appeared to have logged hydrocarbon shows whilst drilling, they have provided valuable data for the company that significantly de-risked the area in terms of generation and migration of oil and have encouraged Tower to enter into a third two year exploration period. [ref] Tower Resources RNS, 23 March 2010, http://www.towerresources.co.uk/news/2010/news_230310.html [/ref]   Along with surface seeps within EA5, the lti-1 was appraised to have the potential to contain oil in a 15-20m interval within a 35m gross basal sandstone reservoir located on the basement, and the Avivi-1, was believed to contain a composition of thick sequences of organic rich sediments similar to that previously encountered within the area. [ref] Tower Resources revises Iti-1 conclusions, RNS 2009,http://www.towerresources.co.uk/news/2009/news_210909.html [/ref]

With Tower pressing ahead in Uganda all eyes will now be focused on Namibia and the imminent 3D seismic start in the Walvis Bay and the Oilfield International Consultant report.  With Chariot Oil & Gas (LON:CHAR) due to announce its latest seismic results form its Namibia prospect, interest in this new frontier is sure to mount as Q4 2011/Q1 2012 well drilling becomes closer for a few of the Namibian frontier players. [ref] Silver lining for oil explorers, 2 June 2010, Martin Li, http://www.investorschronicle.co.uk/MarketsAndSectors/Sectors/article/20100602/bb7e85c2-6e29-11df-a0ed-00144f2af8e8/Silver-lining-for-oil-explorers.jsp [/ref]

Disclosure of Interest: The Author holds shares in Tower Resources (LON:TRP)