Tower Resources plc, the AIM-listed oil and gas company with its focus on Africa , is pleased to provide an update regarding the financing process in respect of its Thali production-sharing contract (the "PSC") in Cameroon conducted through its wholly-owned subsidiary Tower Resources Cameroon SA (the "Operator").
In recent weeks the Company has been engaged in detailed discussions regarding a loan facility for the Njonji development at Thali. The proposed facility would provide up to US$10 million to the Operator for the NJOM-3 well currently in progress, and, subject to the results of that NJOM-3 well, the facility might then be expanded to support the next three production wells and platform planned for Njonji. The proposed facility would be secured by the proceeds from the PSC.
As previously announced, the Company has an agreement with OilLR Pty Ltd ("OilLR") for OilLR to farm in to the PSC to provide up to US$7.5 million for the NJOM-3 well. OilLR has not yet made the payment into escrow contemplated by that agreement, which means that the Company has the option either to reduce OilLR's investment to US$5 million or to terminate the agreement. The Company also remains in discussions with another potential farm-in partner. The Company is considering its options with regard to the OilLR agreement in light of other discussions, notably regarding the proposed US$10 million loan facility, and the terms of the agreement do not set any deadline for the Company to declare its options, apart from a planned completion date of 15 September 2020.
The Company also notes that its current Loan Facility, held by Pegasus Petroleum Ltd, a company beneficially owned by the Company's Chairman and CEO, Jeremy Asher, is due for repayment, and it is currently in discussions regarding a further extension to that Loan Facility, which it expects to conclude within the grace period as announced on 1 July 2020.
Change of Joint Broker
Following the merger of the Company's joint broker, Whitman Howard Limited, with Panmure Gordon, the Company is also pleased to announce that it has novated its agreement with Whitman Howard in favour of the new entity, Panmure Gordon ( UK ) Limited.
Jeremy Asher, Tower's Chairman and CEO, commented:
"We are very pleased that these discussions regarding a loan facility for Thali have gained traction, because debt financing has remained our preference since we first explored the idea last year. The possibility of a facility that can be extended to cover the next stage of work following NJOM-3 is especially attractive as it would significantly reduce the work and time required between drilling NJOM-3 and drilling the next three wells and achieving first oil.
We must stress that these discussions are not yet concluded, but they are material enough that they affect our other decisions regarding farm-out investment, not least the amount of additional funds we may need, and they also naturally affect the decision-making for our potential farm-out partners. We hope to bring these discussions to a conclusion as quickly as possible, but I hope that shareholders will also understand that it is very difficult to predict timeframes at the moment. Nevertheless, this is an exciting time for Tower."