Tower Resources (LON:TRP) has told investors that in South Africa it is focusing on the opportunities for the near term.
The company revealed in a stock market statement that it had decided to exit the SW Orange Basin venture, which is in an ultra deep-water frontier exploration area.
It does, however, intend to focus on the Algoa-Gamtoos project which includes shallower waters, and according to Tower, offers greater near term potential.
Tower will receive $500,000 in cash, as a reimbursement, from its partner New Age as the SW Orange Basin project will no longer go ahead.
"We are concentrating on the area in South Africa with the greatest near-term commercial potential, have enhanced our funding position and have also reduced our contingent commitments,” said Graeme Thomson, Tower Resources chief executive.
“The proceeds from this withdrawal mean that our South African work programme for 2016 is now self-funding."
In September, Tower via its Rift Petroleum subsidiary, was given approval to enter the first renewal period for Algoa-Gamtoos and that will see a new work programme go ahead in 2016.
The programme will include geophysical analysis and reinterpretation of previously acquired 3D seismic data. The work is planned with a view to seeking a new partner to support subsequent phases of exploration activity.
Reinterpretation of seismic data shot in 2014 should allow new drillable prospects to be defined for a possible 2017/18 drill programme, Tower highlighted.
It also emphasised that Algoa-Gamtoos comprises multiple play across three basins, and whilst the initial programme is focussed on shallower water areas the company’s acreage position also includes the Outeniqua Basin.
House broker Peel Hunt said it reckoned Tower represented excellent prospective value given the renewd strategy and asset base.
It rates shares a 'buy' and targets 0.3p a long way from the current price of 0.085p.
Cenkos also greeted the news positively, saying that cash in, risk/funding requirement out was always going to be well-received in the current environment.
Shares added 6.25% to stand at 0.085p.