Tower Resources plc (AIM:TRP), the oil and gas exploration company with interests in sub-Saharan Africa, principally in Uganda and Namibia, is pleased to provide details of the outcome of a second detailed technical and economic evaluation of the 0010 Licence, located offshore Namibia. Tower has a 15% working interest in the Licence and is fully carried financially by Arcadia Expro Namibia (PTY) Ltd (“Arcadia”) through an initial exploration well and a contingent second well.

The Tower Board has now received an updated Competent Persons Report, compiled by Oilfield International Limited (OIL), over Licence 0010. The CPR update follows the interpretation of the high quality 3D seismic data acquired in 2010 over the primary drilling target “Delta”. OIL conducted a detailed review of the “Delta” structure and calculated the

Expected Monetary Values (EMV’s) of the prospects and leads identified. OIL also updated the EMV of two other structures, “Alpha” and “Gamma” which were the subject of the previously reported June 2010 CPR on Licence 0010.

The main conclusions of the CPR are summarised below.

  • The Delta Maastrichtian prospect remains the principal target for an exploration well. Best estimate prospective resources (50% probability) have been estimated as follows:
    • In the event of volatile oil, gross recoverable resources amount to 2.2 billion barrels and 3.4 trillion scft of natural gas. Net figures for Tower are 317 million barrels and 484 billion scft of natural gas.
    • In the event of gas condensate, gross recoverable resources amount to 267 million barrels and 8.1 trillion scft of natural gas. Net figures for Tower are 38 million barrels and 1.15 trillion scft natural gas.
    • In the event of dry gas, gross recoverable resources amount to 20 million barrels and 8.2 trillion scft natural gas. Net figures for Tower are 3 million barrels and 1.17 trillion scft natural gas.
  • Gross un-risked prospective recoverable resources from the Delta Palaeocene supplementary prospect and the other Licence wide supplementary leads at the 50% probability level amounts to about 10 billion barrels and 15 trillion scft of gas for the volatile oil cases and 35 trillion scft in the case of predominantly gas.
  • OIL has calculated for the Licence net risked prospective resources to Tower as 150 million barrels oil and 719 billion scft natural gas (together ca 270 million barrels oil equivalent). More importantly, the corresponding numbers for the target Delta Maastrichtian prospect alone are 55 million barrels oil and 257 billion scft of natural gas (together ca 98 million barrels oil equivalent).
  • OIL has calculated an EMV for the prospective resources of Tower and, in just the Delta Maastrichtian prospect, an EMV of US$744 million has been calculated. The Board believe there is also a very high upside in the other Delta horizons.

OIL has determined that there are now two prospects at Delta. The Maastrichtian prospect has been confirmed and the Palaeocene lead has been upgraded to a prospect. There are now three supplementary leads within the Delta structure: the Upper Campanian; the Campanian “wedge”; and at a deeper Albian horizon. The Alpha Palaeocene and Gamma Palaeocene leads are separate structures and would be the subject of further 3-D seismic before drilling.

OIL has used the seismic data, the two Namibian wells on the block and regional data to evaluate the likelihood that the reservoirs would be predominantly light oil-bearing; gas condensate-bearing or dry gas-bearing. For Delta, OIL concludes probabilities of 50%, 40%; and 10% respectively. The Gamma and Alpha structures are rated 45%, 44% and 11% respectively.

OIL have engineered the most likely development approach and associated capital cost, operating cost and production profiles for each case together with currently traded oil and gas prices (gas into Europe), escalated to 2020 first production and beyond. They have calculated NPV 10% after-tax values on that basis for each case. Each has been valued on an independent standalone basis to avoid trying to determine economies of shared facilities.

The final step has been to estimate a geological chance of success (“GCOS”) for each structure. DeltaM has been assessed as having a 40% GCOS and DeltaP a 24% GCOS. The leads have a GCOS ranging between 10 and 20%. An economic confidence factor has then been applied to the geological COS’s to calculate the economic COS “ECOS” which is used in the determination of risked reserves and the EMV calculations. DeltaM has a 31% ECOS; DeltaP a 19% ECOS; and the leads between 8% and 12%.

The OIL review team included two geophysicists, a geologist and a petroleum engineer having a total of 125 years of experience as technical specialists in the oil and gas industry. In particular, two of them have considerable experience of South America where South Atlantic exploration is most advanced. The OIL assessment has been undertaken in compliance with the SPE Petroleum Resources Management System (SPE-PRMS). OIL has had access to all available data from the Licence and a wide variety of regional technical information. They reviewed the work undertaken by Arcadia and specialist consultants and where relevant, undertook technical analysis of their own to accommodate their own wide and relevant experience, particularly of the Brazilian basins, and any publicly available information. Interaction with Arcadia took place to understand their technical approach but the conclusions drawn are entirely those of OIL.

The first exploration well, currently anticipated at the end of Q1 2012, will test as many as five zones of interest including two prospects and three leads targeting a “best estimate” resource potential of an estimated 6-12 billion barrels of recoverable oil equivalent (gross) depending on whether the fluid is predominantly gas or oil respectively.

Peter Kingston, Chairman of Tower Resources plc , commented:

“The comprehensive independent reassessment of the prospectivity of Namibia Licence 0010 has confirmed its potential as a world class group of oil and gas prospects. It is particularly encouraging that the 3-D seismic survey has substantially increased the reserve potential of the Delta structure and has led to an improvement in the chance of success with the first well. This well alone, still on schedule for the end of Q1 2012, will test a resource potential of significantly more than 5 billion barrels of oil equivalent.”

A copy of the letter from Oilfield International Limited summarising its conclusions will be available shortly on the Tower Resources website.

For more information on Tower Resources, please visit;


Tower Resources plc

Peter Kingston, Executive Chairman 07802 804852

Peter Reilly, Investor Relations Manager 07881 920542

Northland Capital Partners (NOMAD and Joint Broker)

0207 796 8800
Charles Vaughan (Broking)
Gavin Burnell / Edward Hutton (NOMAD)

Evolution Securities (Joint Broker)

Garry Levin, Chris Sim, Anu Tayal
0207 071 4300

In accordance with AIM guidelines, Peter Kingston, who is a petroleum reservoir engineer with over 40 years experience in technical, executive and advisory roles in the oil exploration and production industry, and is Executive Chairman of the Company, is the qualified person that has reviewed and approved the technical information contained in this announcement

Download press release [303KB]