REG - Tower Resources PLC - Cameroon Update

Tower ResourcesAnnouncement

09/05/2022 12:00

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RNS Number : 7929K  Tower Resources PLC  09 May 2022

9 May 2022

Tower Resources plc

Cameroon 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.

 

Tower is pleased to announce that the Minister of Mines, Industry and
Technological Development (MINMIDT) has, with the support of the President of
the Republic, agreed to grant a further extension of the First Exploration
Period of the Thali PSC to 11 May 2023.

 

Tower is also pleased to announce that it expects to complete shortly a letter
of intent (LOI) with Shelf Drilling to cover the drilling and testing of the
NJOM-3 well in the fourth quarter of 2022, using the Shelf Drilling Trident
VIII jack-up drilling unit. The terms of the draft LOI are confidential, but
in line with market levels and the Company's current budget for the well. With
rig day-rates, fuel and other costs all having risen during the past year, the
overall budget for the well is around 20% higher than the original figure of
around US$15 million, but with some US$4 million of the cost already incurred
and all long lead items already purchased, Tower currently estimates the
remaining cost at around US$14 million. It should be stressed that among the
budget uncertainties is the number of separate zones that the Company will
wish to test, however it should also be understood that if we choose to test
more productive zones separately, then this will be because the well prognosis
is closer to the upper end of expectations.

 

During the last six months the Company has also continued to work on both the
subsurface dataset and also the plans for additional wells and early
production from the Njonji structure, following the drilling of the NJOM-3
well. The updated dataset has allowed to further clarify the NJOM-3 well
objectives, and Tower has also had the opportunity to discuss alternative
platform and Mobile Offshore Production Unit (MOPU) designs with potential
contractors and partners, which it is  hoped will accelerate the next steps
following a successful NJOM-3 well test.

 

The Company has still not received an approval of the Beluga Energy (Beluga)
farmout as presented to MINMIDT in September 2021. However, the Company has
now informed the Minister that, upon receiving the extension of the First
License Period, it will no longer be seeking approval of the farmout in its
current form. There are a number of reasons for this, but the most important
is that during the last six months while the Government of Cameroon was
conducting due diligence on the proposed transaction, the market environment
has changed considerably. In particular, the Company has been in discussion
with local banks in Cameroon (including the bank with which it previously
discussed this transaction in 2019) and the Company now believes that debt
financing may be available to cover a significant portion of the well cost.
This should allow a restructured transaction which would require less of the
equity in the project to be given up in return for the well funding, to the
advantage of all parties. It should also be noted that a restructured
transaction (as contemplated in the original farmout documents) does not
require government approval.

 

The Company intends to work with the banks with whom it presently has
discussions, and with Beluga and other interested parties, to restructure the
well financing over the next few months, with the objective of concluding a
revised transaction in the third quarter of 2022, that is less dilutive to
Tower shareholders than the present farmout structure. The Company does not
intend to comment further on these discussions until they are completed.

 

Next steps will include the finalisation of the well financing and the rig
contract and other service contracts in the third quarter of 2022, by which
time a narrower range for the planned mobilisation of the rig will also be
announced.

 

Jeremy Asher, Tower's Chairman and CEO, commented:

 

"We are pleased that we can finally share concrete news regarding the progress
on the NJOM-3 well on the Thali PSC area, and we are grateful as always to
MINMIDT, and to the President and Prime Minister of the Republic of Cameroon,
as well as our partners at SNH, for their continued support. We realise that
it has taken longer than any of us would have liked to reach this point, but
we also feel that we have been able to make good use of the extra time both to
enhance our understanding of the subsurface and our plans for the next steps
on Thali, and also (we hope) to improve the terms of the well financing. We
continue to believe that Thali has the potential to produce millions of
barrels of oil over the next few years, which will provide great benefit to
both the Republic of Cameroon and to our shareholders."

 

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       +44 20 3470 0470

Nominated Adviser and Joint Broker

 Stuart Gledhill

 Caroline Rowe

 Novum Securities Limited             +44 20 7399 9400

Joint Broker

 Jon Beliss

 Colin Rowbury

 Panmure Gordon (UK) Limited          +44 20 7886 2500

Joint Broker

 Nick Lovering

 Hugh Rich

 

Notes:

 

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.

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