Tower Resources PLC (AIM:TRP) shares rocketed around 40% higher on Tuesday as the AIM-quoted small-cap’s Cameroon project took an important step forward.
The planned NJOM-3 appraisal well, which is hotly anticipated, promises to unlock a valuable development project and at the same time significantly re-value Tower (which today has a market capitalisation of around £8 million).
A farm-out deal to Prime Global Energies already, on paper, makes a mockery of the current market price – with Tower selling a 42% stake in the project for $15 million in cash and retaining the other 58% of the asset.
De-risking the project with the NJOM-3 well, slated for the third quarter, is expected to be a more decisive catalyst for Tower (which also holds interests offshore Namibia and South Africa.
A success in NJOM-3 could enable a field development and subsequent production within around 18 months (subject to regulatory approvals and finance).
Today’s 40% rally on the news that a rig contractor had been selected for NJOM-3 underlines the seemingly underappreciated opportunity.
Plans advance
This morning, Tower announced it had issued a Letter of Award to ADES for the provision of a jack-up rig - Admarine 510, a jack-up unit built in 2019 and capable of operating in water depths up to 375 feet – for the well.
Also significant to note is the fact that Tower is securing the rig on favourable terms.
"We are delighted to make this award, and are looking forward to working with ADES on the NJOM-3 well this year,” said chief executive Jeremy Asher.
The Admarine rig is presently completing its five-yearly recertification in Bahrain.
It has also been contracted by Addax Petroleum for another Cameroon well (which will come after NJOM-3 in the schedule), and, together, this arrangement is mutually beneficial.
“Our rig selection process has been made a little more complex by the opportunity to coordinate our timing with that of other nearby oil and gas companies, including Addax Petroleum in particular, however, I believe it has resulted in a very good commercial outcome for all parties,” Asher added.
This initial agreement with ADES remains subject to contract and regulatory approval in Cameroon, as well as the completion of Tower’s farm-out to Prime Global Energies (announced earlier this year).
In London, Tower shares climbed 43.5% to trade at 0.029p each.