Tower Resources Announces Interim Results to 30 June 2022

Source: 9/30/2022, Location: Africa

Tower Resources plc, the AIM-listed oil and gas company with its focus on Africa , announces its Interim Results for the six months ended 30 June 2022.

January 2022 - Placing of 576,923,077 new ordinary shares at 0.26p to raise 1.5 million (gross), with the Company's Chairman and CEO, Jeremy Asher, subscribing for 9,615,384 new Ordinary Shares in the Placing for 25,000;
February 2022 - Announcements by the National Petroleum Corporation of Namibia , Shell Namibia Upstream B.V. and QatarEnergy, regarding the drilling success of the Graff-1 well on PEL 39 with discoveries in both its primary and secondary targets, proving a working petroleum system for light oil in the Orange Basin, offshore Namibia , and analysis by the Company of the implications for its own Namibian blocks;
May 2022 - The Cameroon Minister of Mines, Industry and Technological Development (MINMIDT) granted a further extension of the First Exploration Period of the Thali PSC to 11 May 2023.
June 2022 - Tower Resources Cameroon SA executed a term sheet with BGFI Bank Group, the largest bank group in Central Africa , for a medium term loan of CAF 4.42 billion (equivalent to approximately US$7.1 million ) as partial financing of the NJOM-3 well on the Thali block in Cameroon . The loan would cover around 40% of the US$18 million well cost, with a further amount in excess of 25% already having been paid for by TRCSA, and the balance of 35% of the cost of the well also to be funded by TRCSA.

August 2022 - Placing of 857,142,286 new ordinary shares at 0.175p to raise 1.5 million (gross) with the Company's Chairman and CEO, Jeremy Asher, subscribing for 142,857,143 new Ordinary Shares in the Placing for 250,000 ;
August 2022 - Issue of 11,200,000 Ordinary shares in the Company to Bedrock Drilling Ltd in lieu of fees to the value of 25,200 .

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.

The first six months of 2022 have seen our Company making significant progress in a volatile environment, and against a backdrop of encouraging drilling results in Namibia . The more active market for rigs and services has presented both benefits and challenges: a number of stacked rigs have been put back into service, but several of these have been pulled into other markets and others are still finalising work sequences, while lead times for services have increased. This means that we have yet to finalise our rig selection and timing for the NJOM-3 well, as we need to fit our single-well requirement in with other companies' multi-well plans. This may still result in a spud before year-end, but is more likely to be in the New Year; however there are a number of options available to us, and therefore we still expect to get the well underway in good time.

We have also made progress with the financing of the NJOM-3 well. We received and agreed a non-binding term sheet for around US$7 million of debt financing from BGFI, the largest bank in Cameroon , in June, and BGFI tell us that they are still expecting to have their board's binding approval and draft documentation in September (today) or shortly after. In the meantime, we also received a non-binding term sheet for around US$10 million of debt financing from another bank, the Cameroon branch of one of the largest and oldest banks on the African continent, which we are presently reviewing. However we proceed, the final agreement will of course be subject to, inter alia, the execution of definitive documents.

In South Africa , we have watched closely the litigation in respect of Shell's proposed seismic survey. Our understanding is that the South African court found what appear to be deficiencies in the process by which Shell and their partners had conducted Environmental Impact Assessments ("EIA") prior to the survey. Our current view is that this should not prevent conducting of the intended survey over the deepwater lead in our Algoa-Gamtoos block, that we and operator NewAge have identified on trend with TotalEnergies' Brulpadda and Luiperd discoveries in the Outeniqua basin. However, it does emphasise how critical the correct EIA process is. We believe that our deepwater area is less environmentally sensitive than the area that was subject to the recent controversy, and shareholders will recall that we have already conducted seismic data acquisition in this block closer to shore. Nevertheless, it is now even clearer than before that the EIA and planning process cannot be rushed, which we believe the Petroleum Authority of South Africa also understands.

Given the scale of the potential prize in the Shallow and Deep sections of the Deepwater Slope and the Deepwater Basin Floor fan in our Algoa-Gamtoos block, comprising some 1.4 billion boe of pMean unrisked recoverable resources, we certainly plan to push ahead with the acquisition and processing of 3D seismic data over these leads, to firm up a drillable prospect, before entering the final exploration period of the Algoa-Gamtoos license.

In Namibia , we are in the process of completing the initial phase of basin modelling work on our PEL96 license, and will be sharing publicly what we can of that work in the coming weeks. The focus of this preliminary phase has been on analysing the spatial distribution of the source rocks, hydrocarbon generative kitchens and migration pathways in the southern and central area of the license, serving the numerous leads we had already identified in the Dolphin Graben. We turned to this area first because in the past less work had been done there, due to the interest that we and our previous partners understandably showed in the giant geological structures in the more western portion of the license area. However, we now feel that the Dolphin Graben warrants more detailed charge modelling work to understand the hydrocarbon generation and migration history in this area, because of the recent drilling success in the southern Namibian offshore, and also the Wingat-1 and Murombe-1 wells having encountered well-developed source rocks in the Walvis Basin as well.

Shareholders may recall that the source rocks encountered in the Wingat-1 and Murombe-1 wells were rich in organic carbon, and in the oil window, and both wells recovered 38- 42 oil to surface; and that the well 1911/15-1 on our own block also encountered source rocks and oil shows. It now appears that the Lower Cretaceous source rocks extend all the way from the Orange Basin, where TotalEnergies and Shell have had their recent successes, up to the Walvis Basin, as we discussed in our announcement in February. Therefore, the current phase of work identifies the potential of these source rocks to provide oil to the various structural closures and potential stratigraphic traps, of similar geometry to those encountered in the recent Orange basin discoveries, identified in the Dolphin Graben area. Our previous analysis identified several structural closures with individual examples ranging up to 686 million boe in potential recoverable resources, and this is the analysis that we are updating now.

However, we still need to continue basin modelling work on the other potential source rocks and potential generative kitchens where significant volumes of oil could have potentially been generated and expelled in the license area. These have the potential to feed the giant structural closures on the license area, to the West and North. Therefore the basin modelling over the rest of the license area will remain a work in progress for a few more months.

We are working on a multi-client program to acquire the 3D seismic data required for our final prospect evaluation and prioritisation on PEL96, which is tentatively scheduled to begin in Q4 2023. To this end, we have authorised initial expenditure on an EIA in respect of this proposed program.

In summary, we are continuing to make progress in Cameroon and Namibia ; and despite the legal issues Shell has faced in South Africa we are confident that we can still move forward there, albeit with caution. We want to drill as soon as we can in Cameroon in particular, and this continues to be our immediate priority.

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