Tower Resources plc, an AIM listed oil and gas exploration company and its wholly-owned subsidiary Neptune Petroleum (Uganda) Limited ("Neptune") announced on 22 December 2008 that they had reached agreement ("Farm Out Agreement") to farm out an interest in Neptune’s Uganda acreage to Global Petroleum Limited ("Global"), an Australian based oil company quoted on ASX and AIM. Full details of the Farm Out Agreement were included in the announcement dated 22 December 2008.
The Farm Out Agreement was subject to the consent of the Minister of Energy and Mineral Development of the Government of the Republic of Uganda. This consent has now been received, and the Farm Out Agreement is unconditional in all respects.
Global has the right to earn a 50% interest in Exploration Area 5 ("EA5"), north-western Uganda, by meeting the cost of two exploration commitment wells.
Under the terms of the Farm Out Agreement, Global will earn a 50% interest in the EA5 Licence and Production Sharing Agreement by funding the cost of drilling Iti-1 (subject to a cap), the first well of a two well programme, and a second well at their discretion, currently expected to be Sambia-1, when the results of Iti-1 have been interpreted.
The Ministerial Consent allows Tower Resources and Global Petroleum to finalise the contractual and logistical negotiations for a drilling rig to begin drilling operations within the next two months. The first well is expected to be completed within two weeks of commencement of drilling.