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 announce that Tower Resources (Namibia) Limited, a wholly owned subsidiary of Tower, has signed a new Petroleum Agreement (“PA”) with the Government of the Republic of Namibia covering an 80% operated interest in blocks 1910A, 1911 and 1912B, offshore Namibia, together with the National Petroleum Corporation of Namibia (“Namcor”) (10%) and ZM Fourteen Investment CC (10%).
The Company has previously advised shareholders that it has had a long-standing application with the Namibian Ministry of Mines and Energy (“MME”) and has been working to conclude a PA, which was noted in the 2018 Interim Report to shareholders in September. The Company can now advise shareholders that the terms of the PA have been agreed with the MME and signed by all parties. Issuance of the licence remains dependent on the finalisation of a Joint Operating Agreement (“JOA”) among Tower Resources (Namibia) Limited (80%, Operator), its carried interest partner Namcor (10%) and its local partner ZM Fourteen Investment CC (10%), and completion of other ancillary documentation.
The PA covers 23,297 km2 of the northern Walvis Basin and Dolphin Graben, encompassing blocks 1910A, 1911 and 1912B, and a more detailed description and map of the blocks can be found on the Company's website. This is an under-explored region in which recent drilling results have proven the presence of a working oil-prone petroleum system and good quality turbidite and carbonate reservoirs. This is also an area that Tower knows well since blocks 1910A and 1911 formed part of Tower's original licence PEL0010, which Tower and its partners, Repsol Exploration (Namibia) (Pty) Limited (“Repsol”) and Arcadia Expro Namibia (Pty) Ltd (“Arcadia”), relinquished in 2015.
The PA is structured to comprise an Initial Exploration Period of four years (which may be extended to five in appropriate circumstances), followed by options for Tower and its partners to enter a First and Second Renewal Period of two years each. The work programme for the Initial Exploration Period comprises regional play fairway evaluation and acreage high-grading activities including CRS mapping, sequence stratigraphy, sedimentology and basin modelling, geochemical, gravity and magnetics analysis, 2D/3D seismic interpretation and mapping, and petrophysics and well failure analysis, based on a data base build comprising:
The minimum exploration expenditure for the Initial Exploration Period is US$5 million, which is to be supported by a bank guarantee of US$0.5 million.
If the Company elects to enter the subsequent exploration periods, these would each comprise a single exploration well commitment and a minimum financial commitment of US$20 million.
Geological evaluation has identified the presence of Albian carbonate and Upper Cretaceous and Palaeocene turbidite reservoir intervals, which has also been proven in offset wells, including Norsk Hydro's 1911/15-1 well which encountered oil shows in the 1911 block in the 1990s. These intervals may be found in multiple structural traps across the new licence area. These include giant (1,000 km2+) 4-way dip closured structures in the west of the licence and 4-way and 3-way fault dependent structural closures within the Dolphin Graben, which well results such as Wingat-1 indicate is likely to contain mature source rocks. Potential stratigraphic traps (associated with Cretaceous and Palaeogene basin floor turbidite systems) have also been identified within the new licences.
The giant structures in the west of the licence include two (Alpha and Gamma) which were similar in size and potential to the Delta structure to the south of block 1911, where Repsol, Tower and Arcadia drilled the unsuccessful Welwitschia well in 2014.
Significant potential has also been identified within structural closures (50 km² to 125 km²) identified and mapped across the Dolphin Graben, all of which are located directly adjacent to source kitchens. More than eight 3-way fault dependent and 4-way dip closed structural traps have been identified so far, all of which compromise of multiple stacked targets which include Palaeogene and Cretaceous turbidites (being explored for in the southern part of the basin) as well as Albian carbonates and deeper syn-rift clastics.
In addition to the structural plays outlined above, Tower anticipates that stratigraphic plays exist within Cretaceous and Palaeogene intervals in the new licence, with potential for deep-water turbidite reservoir interbedded with mature source rocks (analogous to plays being explored for by Tullow and other in the southern part of the basin). These stratigraphic plays will be worked up as part of the Initial Exploration Period work programme.
Jeremy Asher, Chairman and CEO commented:
“We are very excited about our new Petroleum Agreement in Namibia. As a company, we know Namibia very well, and the wells drilled in the Walvis Basin during the past few years have provided a much greater level of understanding of the regional geology. As a result, Namibia and the Walvis Basin and Dolphin Graben, in particular, are now attracting great attention from well-respected explorers, both large and small, and are also once more attracting considerable farm-in interest and investment”.
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.