Tower Resources plc (the “Company” or “Tower” (TRP.L, TRP LN)), the AIM-listed Africa-focussed oil and gas exploration company, announces its preliminary results for the 12 months ended 31 December 2015.
- Portfolio refocus towards proven and emerging basins
- Award of a 100% interest in the Thali PSC located in the prolific Rio Del Rey basin, Cameroon
- Institutional placing to raise net US$8 million: Directors subscribed over $1million
- Board strengthened with the appointments of Philip Frank and Nigel Quinton
- Costs reduced and low near-term commitments
- Cash balance at year-end of US$3.5 million (2014: US$7.9 million)
- Look to strengthen asset base in this period of low acquisition and entry costs
Chairman and Chief Executive’s Joint Statement
2015 was a year of transition for Tower Resources plc.
We repositioned our portfolio to include interests in proven basins, with the signing in September of the Thali PSC (“Thali”) in the prolific Rio Del Rey shallow water area of the Republic of Cameroon. Tower has a 100% interest in Thali and has been accredited as an operator there. Thali already has three discovery wells, and is therefore part-way to reaching a commercial reserve threshold. In a very difficult equity market, we raised US$8 million in July to fund this acquisition and other activities, with the Directors subscribing over US$1 million. As part of this funding we welcomed M&G Investments as a major new shareholder with an 18% shareholding.
We have also moved to reduce and defer our other near-term commitments and associated costs, and by doing so to minimise risk whilst retaining material exposure to longer-term exploration upside. In areas where we see little chance of commerciality in the medium-term, we have withdrawn. We continue to respond to the oil price environment and the negative market sentiment towards the oil sector, by changing the focus of our current activity whilst preserving the best of our longer term exploration opportunities.
Tower wants to use this period of low acquisition and entry costs to further strengthen our asset base by assembling a larger but still focused portfolio of low risk exploration and appraisal opportunities in proven and emerging basins. We continue to seek sizable working interests, ideally as operator, which allows us to determine the precise nature, cost and timing of our activity. We are now operator of our 100% interests in Cameroon and Zambia, and it is as operator that we have applied for new licences in Namibia and elsewhere. We intend to keep near-term commitments and costs low, and to finance the higher cost activities through farm-outs to larger companies where and when appropriate.
Our focus is currently on western and southern Africa. Our criteria for new activity and investment are strict: we need to envisage returns of many multiples of our investment within the medium-term, as we do with Thali. We believe that the current market, difficult as it is, presents outstanding opportunities to assemble an attractive portfolio cost-effectively, including through sector consolidation.
With the increase in operated assets we wanted to bolster the technical skills on our Board, and therefore we appointed the highly experienced Phil Frank as an Independent Non-Executive Director, and Nigel Quinton as Exploration Director, at the end of September.
Our capital needs going forward will largely be a function of the terms and timing of further seismic work on Thali, together with any farm-out we may agree, and the number of additional compelling investment opportunities we find in the coming year. It is possible that we may need no more cash from the market this year, and if we do it will be for specific, value-creating purposes, for which we will seek shareholder support at the time.
At the AGM we are proposing to restructure and consolidate the Company’s shares so that for each 250 shares currently held shareholders will receive one new share. The main purposes of this are to reduce the volatility of the Company’s share price, which presently reflects the relatively large increments required for any price movement, and to be able to issue shares if needed for existing contractual arrangements, as the market price is currently below the nominal value. A separate circular is to be issued describing the procedure in more detail, together with the other AGM resolutions. The Board, staff and consultants who own over 15% of the issued share capital, have undertaken to vote in favour of these AGM resolutions.
This AGM also marks the retirement of Peter Blakey, 75, a founder of the Company. We are extremely grateful for all Peter has done for Tower, and wish him every happiness and good health.
We believe that Tower now has an attractive, focused portfolio, combining proven and emerging basin interests. Our team is appropriate for today’s conditions and our active management of near-term commitments and risk will position us well to reap the upside when the sector recovery comes.
J Asher, Chairman
G Thomson, CEO
The 2015 Annual Report is being printed and is expected to be posted to shareholders early next week.
Graeme Thomson (CEO)
Andrew Matharu (VP – Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Joint Broker)
Richard Crichton/Ross Allister
+44 20 7418 8900
Chris McMahon/ Alex Aleksandrov
+44 20 7016 9572