Petroleum Africa
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Wednesday, September 30, 2020
Tower Resources, the AIM-listed oil and gas company with a focus on Africa, has announced its Interim Results for the six months ended 30 June 2020.
Chairman and Chief Executive Officer, Jeremy Asher, said: “The first six months of 2020 have presented enormous challenges both to our Company and to the industry as a whole. In our annual report I already discussed the events of this period up to 6 June 2020, and since that time we have continued to work on finding solutions to the challenge of executing the NJOM-3 well while accommodating the various health and travel restrictions in place, and also the natural concerns of a range of personnel across a number of different subcontractors. We are confident that this can be done, but it is not simple. We have also continued working on our well financing and the second stage financing that will be required after we have the appraisal results from the NJOM-3 well, but naturally this is also linked to finalising the well schedule itself.
“In July we had interesting news from our neighbours in Namibia, Global Petroleum Ltd, regarding their updated assessment of the Welwitschia Deep Albian carbonate prospect. As I mentioned at the time, Global’s estimates of recoverable resources in respect of this prospect, if they materialise, would imply some 224 million barrels of recoverable resources in Tower’s PEL 96 section of that structure, of which about 179 million barrels would be attributable to Tower. To see these estimates materialise would require Global to drill this prospect successfully, but the important point is that this would not require any investment on Tower’s part.
“In mid-August, we were pleased to see the spudding of Total’s Luiperd exploration well on Blocks 11B/12B offshore South Africa, following its successful 1-billion boe Brulpadda discovery on the same blocks. Africa Energy, a minority partner in the well, has said that it believes the chance of success of this well is over 80%, and we certainly hope this proves correct. The Luiperd well, if successful, will further de-risk the whole Outeniqua basin in South Africa. Tower, together with operator NewAge, hold the block immediately to the East of Total’s blocks 11B/12B, which contains a substantial prospect in the Outeniqua basin, analogous to Brulpadda.”
Highlights
Extension of the initial period of the Exploration Phase of the Thali PSC, offshore Cameroon by one year (from 15 September 2019) for the purposes of completing the NJOM-3 well, and declaration of Force Majeure with effect from 17 March 2020 due to travel and operational restrictions arising from the Covid-19 pandemic;
Thali PSC, offshore Cameroon, site survey successfully completed by the Geoquip Marine survey vessel MV Investigator with the drilling of three boreholes to a depth of 80 meters each;
Binding Heads of Terms executed with respect to a farm-out of the Thali PSC with OilLR Pty Ltd for a 24.5% working interest covering US$7.5 million of the costs of the NJOM-3 well;
March 2020 Placing of 133.33 million new ordinary shares at 0.375p to raise £0.5 million (gross), together with issuance of broker commission shares;
Release of an updated independent Reserves Report from Oilfield International Limited (“OIL”) covering the Thali PSC, confirming Gross mean contingent resources of 18 MMbbls of oil across the proven Njonji-1 and Njonji-2 fault blocks with an NPV10 of US$179 million and EMV10 of US$143 million.
Post Reporting Period Events
Further extension of the Loan Facility with Pegasus Petroleum Limited (“Pegasus”) to 15 August 2020, the terms of which included the issue of 4.5 million five-year warrants with a strike price of 0.35 pence, being a premium of 11.1% to the closing price on 30 June 2020. Jeremy Asher, as a director of the Company, and Pegasus, are considered to be “related parties” as defined under the AIM Rules and accordingly, the extension and issue of warrants constituted related party transactions for the purposes of Rule 13 of the AIM Rules.
Issue of 15,219,338 warrants to Directors in lieu of £34,000 (in aggregate) of Directors fees to Peter Taylor and David M Thomas (non-executive directors), and Jeremy Asher (as Chairman) in settlement of fees due for the period from 1 July 2020 to 30 September 2020, to conserve the Company’s working capital. The warrants are exercisable at a strike price of 0.35 pence, which is a premium of 11.1% to the closing share price on 30 June 2020, and are exercisable for a period of five years from the date of issue;
Update on Namibian licences and farm-out discussions on PEL 96 included a significant announcement of updated resource estimates by Global Petroleum Ltd on its adjoining PEL 94, which includes the Welwitschia Deep Albian Carbonate prospect, a large part of which is within the Company’s PEL 96;
Agreement of a six-month loan facility of US$500,000 with Shard Merchant Capital Ltd (“Shard”). The terms of the facility included the issue of 31,446,541 attached three-year warrants at a strike price of 0.6 pence and 5,761,198 shares to pre-pay interest;
Further six-month extension to the existing Pegasus US$750,000 Loan Facility, as part of which 47,169,811 three-year 0.6 pence warrants were issued and Pegasus agreed to subscribe for 37,854,971 shares to convert the accrued interest on the Pegasus Loan Facility into shares, and to pre-pay interest;
Subscription to raise gross proceeds of US$200,000 through the issue of approximately 38,407,989 new ordinary shares at a price of 0.393 pence per share to clients of Shard. The Subscription Price of 0.393 pence per share represented a discount of 9.7% to the midpoint price of the Company’s shares at the close of trading on 28 August 2020.
To read the full report, visit the company’s webpage at www.towerresources.co.uk.
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