Times have changed for the better in the Exploration & Production business says Jeremy Asher, Tower Resources’ PLC (LON:TRP) chairman and chief executive.
After two years firmly on the back foot, oil has recovered to between US$50-60 per barrel and money has started to trickle back into the sector.
Tower itself has just raised £2.1mln to take forward its Thali prospect, offshore Cameroon.
That won’t be enough to drill a well, but it will allow Tower to reprocess old seismic data and Asher hopes this will be give the historic oil-in–place numbers a sufficient boost for the market to reassess the potential.
Asher himself does not need convincing.
Thali is an extraordinary asset he says but now, again, he has to persuade a market that has seen Tower falter a number of times.
The options to finance Thali are to bring in a partner, vendor or asset based finance or go back to the equity market.
“People are prepared to finance wells if they are for production and the economics are good.”
But with drill rig rates at rock bottom levels an equity raise to do deals for cash might be a better option if the share price does perk up.
“Though we will only go back to market if it is better deal than going with a third party.”
French group Total did the original drilling at Thali twenty years ago and Asher is confident it can find more potential net pay (oil) once it gets access to their drill logs.
“It certainly won’t be less” than the 39mln barrels already identified.
Total did not bother to test the wells he says.
Other fault blocks to be tested
There are also a number of other fault blocks in addition to the ones Total did drill.
“If each fault block has similar volumes, you can easily see a way to over 100mln barrels oil-i-P.”
And that is just in the shallows and not the depths Total went down.
Large discoveries have been made off the coast of Equitorial Guinea on a similar geological line, but Asher says the effort will concentrate on the shallow prospect so as not to confuse investors about where the effort will be directed.
“We just focused on 15mln barrels in two fault blocks that exist.”
“There might not have been so economic to develop ten years ago, but with rigs costs so low and production so cheap, It’s a no brainer to get those into production.”
“Get enough money in to do the work and have the prospects drill ready -seismic and environmental - and see what most cost effective way forward to finance the well.”