Tower Resources ("Tower"), the AIM listed oil and gas exploration company, and its wholly-owned subsidiary Neptune Petroleum (Uganda) Limited ("Neptune") have reached agreement with Orca Exploration Group Inc. ("Orca"), a Toronto TSX Venture Exchange quoted oil company. Orca will have an option to fund 83.33% of the expected cost of a commitment programme of seismic and two exploration wells to earn a 50% interest in Exploration Area 5, north western Uganda. The exploration area is currently licensed 100% to Neptune.
Under the terms of the agreement, Orca will fund 83.33% of certain back costs and a 2D seismic programme of 250-300 kilometres, expected to begin this coming September, which fulfils the commitment of Neptune Petroleum relating to the first exploration period of the EA5 licence.
On completion of the interpretation of the seismic data, Orca will have the exclusive option to be assigned a 50% working licence interest in return for continuing to fund 83.33% of two exploration wells, expected to begin in mid-2008. Orca’s financial contribution relating to the licence commitments is limited to maximum amounts of US$5 million in respect of the seismic programme and an additional $10 million in respect of drilling and, if successful, $5 million in respect of testing the two wells.
In the event that Orca exercises its option to become a 50% partner, Neptune will continue to remain operator under the licence for a period of three years. However, Orca will assume management responsibility for all drilling activities. Orca operates the Songo Songo gasfield in Tanzania. Its principal corporate office and operating base is in Dar-es-Salaam.
Tower’s Executive Chairman, Peter Kingston, has welcomed the future involvement of Orca as a potential 50% partner in EA5. He said:
"Orca has the same cultural philosophy as Tower in the approach to conducting business in a community-friendly manner. Its significant experience of managing operations successfully in Tanzania and its belief in combining the strengths of both parties in the management of business activities will be very positive for both sets of shareholders. Uganda is entering a very exciting phase in its development as a new oil province and both Tower and Orca are looking forward to being a significant part of its future."