Tower Resources plc
Welwitschia-1A Drilling Update
13 June 2014
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM-listed Africa-focussed oil and gas exploration company, through its wholly-owned subsidiary, Neptune Petroleum (Namibia) Limited ("Neptune"), provides the following update with respect to the Welwitschia-1A well on PEL0010, offshore Namibia.
The Rowan Renaissance drillship commenced drilling operations on PEL0010 on 23 April 2014 and the Welwitschia-1A well spud on 1 May 2014. Repsol Exploration (Namibia) (Pty) Limited ("Repsol"), the Operator of Namibia PEL0010 (Repsol 44% working interest, Tower 30% working interest), has confirmed that the firm commitment well reached total depth of 2,454 metres TVDRT (Total Vertical Depth Below Rotary Table). Logging evaluations indicate that the Palaeocene, Maastrichtian and upper Campanian section reservoirs were less well-developed than prognosed and no hydrocarbons were encountered.
Drilling has been behind schedule initially owing to late rig-delivery and operational issues during drilling and logging, including the onset of winter weather conditions. Current expectations from the Operator are that costs will now be around 10% in excess of the $91 million gross firm well budget.
The estimated cost of continuing the current well to test the deeper targets, including the Albian, now appears to be as much as a further $40 million gross. Despite our interest in the deeper targets, with their large potential resources, this raises the question whether it may be better to wait for the full analysis of the current well before deciding whether and where to drill a second well and test the deeper targets with the benefit of that further information. As a result, the Partners have agreed not to drill further at this time and to evaluate the information and its implications for the Block. The well is being plugged and abandoned.
Nigel Quinton, Head of Exploration commented "Our first well in this huge frontier block has shown that the Maastrichtian and Palaeocene reservoir sands were less well-developed in this location than we had hoped for, which was always recognised as a critical risk factor. As of now, our view of the prospectivity of the deeper section including the Albian carbonates, remains unchanged. As usual in frontier areas, it will take time to fully interpret the results of the well and assess the implications for the remaining prospectivity of PEL0010."
Jeremy Asher, Chairman, commented: "Obviously we are disappointed, but we await the more detailed analysis and will then consider our options afresh. Shareholders will recall from the CPR that the chances of success in these upper targets ranged from 31% downwards to 8%, with lower chances as we went deeper, and facing odds like this is the nature of our business. Knowing this, our strategy has been to diversify our asset portfolio with the recent acquisitions of assets offshore South Africa, in Zambia and onshore Kenya, and we have applications in progress in Cameroon, Ethiopia and elsewhere. We want to keep our options open on PEL0010, but we also want to conserve sufficient funding for the commitment work that lies ahead on our other assets, which hold great promise."
Graeme Thomson, CEO, stated: "The well emphasises the risk of exploration and the wisdom of having moved to diversify our portfolio. We expect much activity in the coming months on and in the areas surrounding our assets. In South Africa we await the new 3-D on our Algoa-Gamtoos block and Total is scheduled to be drilling its Brulpadda-1 well on the adjacent block shortly. Planning for our year-end Badada-1 well on Block 2B onshore Kenya is underway and regional activity is rising. Our projects in Zambia, SW Orange Basin SA, Cameroon, Ethiopia and elsewhere are gaining momentum."
Contacts
Tower Resources plc
Graeme Thomson (CEO)
Nigel Quinton (Head of Exploration)
Andrew Matharu (VP - Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Joint Broker)
Richard Crichton/Charles Batten
+44 20 7418 8900
GMP Securities Europe LLP (Joint Broker)
Rob Collins/Liz Williamson
+44 20 7647 2800
Vigo Communications
Chris McMahon/ Peter Reilly
+44 20 7016 9572
Notes
In accordance with the guidelines for the AIM market of the London Stock Exchange, Nigel Quinton, BA, MA, FGS, Head of Exploration for Tower Resources plc, who has over 30 years' experience in the oil & gas industry, is the qualified person that has reviewed and approved the assessment of the drilling update set out above.
