Tower Resources plc (the “Company” or “Tower” (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, is pleased to provide the following operational update on its work on the Thali licence in Cameroon, conducted through its wholly owned subsidiary Tower Resources Cameroon SA.
The Company has completed its Environmental and Social Impact Assessment (“ESIA”) in respect of its intended drilling on the Thali block, including the well that the Company is currently preparing to drill on the Njonji structure. The Company submitted its report to the Government in late June, which was then the subject of public hearings in July, and the Company received its certificate of environmental compliance on 6th August 2018. This certificate is valid for drilling operations encompassing multiple wells in the Thali licence area, subject to operations commencing over the coming three years.
In addition, the Company has filed its application with the Ministry of Mines, Industry and Technological Development (“MINMIDT”) for an extension of the Initial Exploration Period of the Thali licence of up to one year from its current expiration date of 14 September 2018, as permitted under the Company’s production-sharing agreement (“PSA”), for the purpose of completing the well currently being prepared on the Njonji structure. The Company does not expect to receive a formal response from MINMIDT until September, but believes the extension will be granted given progress to date, and the terms of the PSA.
Finally, the Company has conducted a considerable amount of geological and geophysical (“G&G”) work in respect of the Thali block since receiving the reprocessed 3D seismic data rather later than expected in April, and has been sharing that work as completed with Oilfield International Ltd (“OIL”) the independent consultancy which the Company has retained to compile a Reserves Report. The Company and OIL had originally planned to complete this work, and OIL’s work, earlier in the summer. However, the G&G work has expanded and is now expected to be complete in September, which will permit a more comprehensive report from OIL.
The additional work arises for two main reasons. First, the initial interpretation of the reprocessed 3D data appears to indicate that the gross intervals of key reservoirs increase toward the South and/or West of the original NJOM-1 well drilled by Total in 2008, but it is difficult to judge the amount of the increase in the reservoir intervals from the data in its present form. Second, the improved resolution of the reprocessed 3D has provided a clearer definition of the faults which potentially separate the fault block compartments in Njonji, but has also raised questions over whether some of the faults which were originally thought to separate the different compartments are actually sealing or not, raising the attractive possibility of fewer, larger fault block compartments at Njonji than the five originally interpreted by Total and the Company. Both these questions will ultimately be answered by drilling, but further analysis will be of interest to shareholders, and also will help the Company in refining the well location and in planning subsequent decisions, notably well testing.
The Company is, therefore, currently undertaking further petrophysical analysis of nearby wells, and using the sonic/density/deep induction logs to enhance the seismic data to better match the well log spectrum. This process emphasises the higher frequencies and should provide a significant improvement in resolution. The Company is also refining its depositional model with more focused and detailed thickness mapping, which will help us to better evaluate the reservoir interval changes in 3D. Finally, the Company has retained Dr Tim Needham of The University of Leeds Institute of Applied Geoscience to undertake a fault seal analysis; Dr Needham is widely acknowledged as a leading expert in this field.
The Company currently expects that this additional work will be completed around the end of August and the results made available to OIL for incorporation into its Reserves Report which OIL are now targeting for completion during September.
The Reserve Report will also contain risked volumetric and financial evaluations of the other main oil prospects that we have identified on the Thali licence, including the fault blocks on Thali to the South of Perenco’s producing Dissoni North field, and also prospects identified in the Idenao East structure in the North East of the licence area, which are substantial. The reprocessed 3D seismic data has also provided us with a clearer view of the deeper prospectivity of the block, which we are also now analysing, but this will not form part of the Reserve Report.
Whilst the G&G work is being completed, the Company is also in the process of negotiating rig and associated service contracts for the upcoming Njonji well, having selected a provisional well location and conducted initial preparatory work including well engineering.
Jeremy Asher, Chairman & CEO, remarked:
“We are happy with the progress being made on the Njonji well. The Board would like to see the Reserves Report as soon as possible, but we felt that this additional work was required to inform the best decision regarding the final well location, and should also positively impact the quality of the Reserves Report when complete.”
Market Abuse Regulation (MAR) Disclosure
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.
Tower Resources plc
+44 20 7157 9625
Jeremy Asher, Chairman and CEO
Andrew Matharu, VP – Corporate Affairs
SP Angel Corporate Finance LLP
Nominated Adviser and Broker
+44 20 3470 0470
Tower Resources Cameroon S.A, a wholly-owned subsidiary of Tower Resources plc, holds a 100% interest in the shallow water Thali (formerly known as “Dissoni”) Production Sharing Contract (PSC), in the Rio del Rey basin, offshore Cameroon. Tower was awarded the PSC on 15 September 2015 for an Initial Exploration Period of 3 years.
The Thali PSC covers an area of 119.2 km², with water depths ranging from 8 to 48 metres, and lies in the prolific Rio del Rey basin, in the eastern part of the Niger Delta. The Rio del Rey basin has, to date, produced over one billion barrels of oil and has estimated remaining reserves of 1.2 billion barrels of oil equivalent (“boe”), primarily at depths of less than 2,000 metres. The Rio del Rey is a sub-basin of the Niger Delta, an area in which over 34.5 billion barrels of oil has been discovered, with 2.5 billion boe attributed to the Cameroonian section.
The Thali Block has the potential to hold up to four distinct oil play systems, including the established play in which three discovery wells, one gas (Rumpi-1), one oil and gas (Njonji-2) and one oil (Njonji-1), have already been drilled. Prior to the interpretation of the recently reprocessed 3D seismic data covering the block, the most recent contingent Oil-In-Place estimate for the Njonji discovery was 39 million barrels (Pmean, gross) with an estimated 7 to 15 million barrels of recoverable oil.
In accordance with the guidelines for the AIM market of the London Stock Exchange, Dr. Mark Enfield, BSc Geology, PhD Geology, FGS, Advisor to the Board of Tower Resources plc, who has over 30 years’ experience in the oil & gas industry, is the qualified person that has reviewed and approved the technical content of this announcement.