Tower Resources (LON:TRP), the oil and gas exploration company with interests in Uganda and Namibia, has raised £4.275m in a significantly oversubscribed share placing priced at 4.75p. The new cash will be used to increase the company’s working capital resources and help it fund near term seismic operations in Uganda. After two unsuccessful wells drilled on its EA5 licence in Uganda between 2009 and early 2010, the company is hoping to get lucky with its third attempt later this year. In addition, Tower said it was speeding up plans for a well in Namibia and was hoping to drill there before the end of 2011.
The Tower Resources share price rose by 3.6% to 5.68p on the news. The fundraising came with an update on Tower’s plans for its projects in the coming months. On licence 0010 in Namibia, where Tower has a 15% carried interest, processing of 3D seismic data has been completed and data quality is excellent. On first inspection, the results of the 2D seismic interpretation are enhanced and the very large, simple four way dip closed Delta structure has been confirmed. There are also clear indications of “pock marks”, which are an accepted indication of light hydrocarbons, constrained below the regional seal and within the closure of the structure – these represent an indication of hydrocarbons, completely independent of the hydrocarbon indications interpreted from AVO analysis of the 2D seismic.
Detailed interpretation, which will include evaluation of direct hydrocarbon indicators and also reservoir facies characteristics, has begun and significant results are expected by the end of March 2011. Arcadia Petroleum, which is the operator of licence 0010 and is funding Tower for the cost of the first well, has accelerated its programme to put in place funding and to contract a deep water drilling rig with a view to drilling in the final quarter of 2011. This timing now has a high priority but is subject to timing of rig availability. Tower said the Competent Person’s Report would be updated with a view to publication before the middle of 2011.
Turning to Uganda, Tower said that the initial findings of a gravity gradiometry survey (GGI) late last year had been confirmed during the final interpretation. Those findings include the probable existence of an active oil generation “kitchen” and an apparently closed structural feature with an area greater than 100 sq km, in a location where basin modelling projects that good quality reservoir should be present. Tower said it now believed that the apparent volume and depth of “kitchen” were sufficient to generate enough oil to fill a commercial-sized trap and that the new target area is sufficiently large and well defined to contain recoverable resource potential of more than 100 million barrels.
A seismic programme of 150-200kms is now being planned with targeted timing of an April 2011 start and duration of about one month. All government consents have been received to proceed with the seismic programme and the process of appointing a seismic contractor is underway. Uncertainty still remains over the timing of the Ugandan Government’s sanction of a future regional development programme, leading Tower to believe that there may be a delay before a potential farm in party will commit to funding its outstanding licence commitments. The latest equity fundraising has been carried out to undertake the seismic programme on schedule so that a well can still be drilled in September or October 2011.
Peter Kingston, the executive chairman of Tower, said: “I am delighted that a first well in Namibia, to test the huge potential of the Delta prospect, is now a target for this year. I am also pleased that the final commitment well in Uganda will test a good prospect which could yield material value to shareholders if successful.”