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Tower Resources Down on Barren Well

Source: Reuters 2/24/2010, Location: Africa

Shares in Tower Resources' plunge 61.6 percent after the company says it has not found oil at its Avivi-1 well in Uganda after reaching a total depth of 764 metres, prompting Fox-Davies Capital to cuts its rating to "sell".

"This is a huge blow, first of all to the prospectivity of the license, but also to the credibility of the team as a whole," says analyst Lionel Therond of Fox-Davies Capital.

Therond says the company does not have funds to continue exploration in Uganda and expects it will be very difficult to raise money from the market.

"It's kind of dead on its feet now. What I would expect is that they won't abandon the well altogether. They'll get a partner and give away a huge chunk of the interest," adds Therond.

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