Tower Resources plc
Badada-1 Well Site Preparation and Rig Contract
12 December 2014
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM-listed Africa-focussed oil and gas exploration company, notes the announcement dated 11 December 2014 from the Operator, Taipan Resources Inc. (("Taipan") (TSX-V: TPN)), relating to the Badada-1 well operations, onshore Kenya (Tower 15%, Premier Oil 55% and Taipan 30% working interests).
Lawyers representing Taipan's wholly-owned Kenya-based subsidiary, Lion Petroleum Inc. ("Lion"), together with Taipan, Premier Oil plc, the County Government of Wajir, the Ministry of Energy and Petroleum, the Attorney General and the National Land Commission appeared in the High Court of Kenya on 10 December 2014 where they received confirmation of the amendment to the injunction served on 17 November 2014 which had allowed work to continue at the Badada-1 well-site. A further hearing is scheduled after the projected completion of the well, but will not affect our drilling timetable.
In addition, Taipan, on behalf of the Block-2B joint-venture partners, have executed a contract with Greatwall for the GW-190 land rig and have also contracted Aberdeen-based Norwell Engineering to manage the drilling operations of the Badada-1 well. The GW-190 land rig recently completed the drilling of the Sala-1 discovery in Block-9 of Anza Basin, Kenya, adjacent to Block-2B.
Further to the Company's announcement on 27 November 2014, Taipan has advised that drilling is expected to commence in early January 2015. The well is expected to take approximately 70 days to drill and gross well costs are estimated at US$20 to US$25 million (US$3.0 to US$3.75 million net to Tower).
The Badada-1 well will test analogous geology to the Lokichar Basin where Tullow Oil and Africa Oil continue to unlock the potential of the Tertiary Rift sequence. The well is designed to test the Tertiary age reservoirs with the total depth of the well planned between 3,000 to 4,000 metres.
Taipan's estimate of gross mean unrisked prospective resources for Badada-1 is 251mmboe (Source: Sproule International Limited ("Sproule") February 2014). This compares with Tower's estimate of gross unrisked prospective resources ranging from 402mmboe (P10) to 16mmboe (P90) with a Pmean of 169mmboe and reflects its more conservative approach to the extent of the Badada structure. In the event of success with the Badada-1 well, we envisage material upside potential in Block-2B with multiple follow-on prospects and leads in a Tertiary sequence analogous to the Tertiary discoveries in Block 10BB and 13T of the Lokichar Basin.
As part of the Operator's focus on local content a number of Kenyan companies have been contracted to provide well-site services including logistics, road repairs and the drilling of water wells and other services. In addition, as part of the programme of corporate social responsibility in the Anza Basin, the Operator has embarked on a number of initiatives including clean water projects and access to basic medical care for the local community.
Graeme Thomson, CEO, commented "Well-site preparations are gathering momentum for the drilling of the Badada-1 well during this exciting time for Tower's shareholders which will see the Company drill its first frontier exploration well in Kenya in early January 2015. Success with Badada-1 would de-risk our subsurface thesis of the Anza Basin and result in material potential upside in Block-2B with further exploration drilling in 2016/17."
Contacts
Tower Resources
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 Company's estimate of the resource potential set out above.
