How it's doing
Tower Resources PLC's (LON:TRP) Thali project has a mean figure of 111 million barrels (MMbbls) of oil identified across four prospects in the northern part of the Thali licence and 20 MMbbls of oil identified at the Njonji South and Njonji South-West fault blocks.
Using a 10% discount the value of the prospective resources is US$82mln.
Jeremy Asher, chairman and chief executive of Tower, has said the group expected the Njonji-3 well to transform the 18mln barrels of Pmean contingent resources on the Njonji structure into reserves, which would be “transformative” for the project and Tower.
The Njonji-3 (NJOM-3) well will be drilled to a total depth of 1,100 metres intersecting at least three reservoir zones already identified.
In early February, Tower told investors that it is expecting to finalise its drill schedule later this month for the well, while in March it agreed to farm-out a 24.5% working interest in Thali to Australia-based private company OiLR.
The farm-out will provide US$7.5mln towards the cost of the NJOM-3 well at Thali, which has an estimated total cost of US$15-16mln.
Tower will also receive an overriding 10% royalty from the contractor's share of production to cover costs already sunk into the well, with the agreement expected to be signed off formally on 15 April.
Discussions are underway with several other parties regarding a farm-out of up to a further 24.5% interest in the Thali PSC on similar terms.
Timing of Tower’s NJOM-3 well is presently uncertain as the coronavirus (Covid-19) pandemic continues to disrupt the offshore industry – which inherently involves international travel and relies on supply chains.
In a statement in late March, Tower told investors a spud date before 15 September 2020 could still be possible, despite the operation currently being in ‘force majeure’. In any event, the company said it remains committed to drilling NJOM-3 - a test of the Njoni project located inside the Thali PSC area - as quickly as possible.
Additionally, the company noted that it has extended its preliminary agreement, head of terms, with OilLR - which is set to acquire a stake in the project – with a new completion date of 30 June.
Both parties agree that the transaction cannot be completed until the environment stabilises sufficiently for the project to move forward. It added that both parties are committed to completing the transaction.
Elsewhere, Tower has a 50% stake in the Algoa-Gamtoos exploration area offshore South Africa that sits immediately adjacent to Total’s huge gas condensate discovery at Brulpadda.
Total encountered 57 metres of net pay in Lower Cretaceous reservoirs with an estimated one billion barrels at least of condensate.
Tower’s Algoa-Gamtoos contains an area of the same deepwater basin margin.
The group also has an 80% interest in three exploration areas (blocks 1910A, 1911 and 1912B) that cover a total of 23,297 square kilometres in the Walvis Basin and Dolphin Graben offshore Namibia.
An initial four year exploration period requires a minimum spend of $5mln on work.
It will include the acquisition and reprocessing of existing 2D seismic data and new seismic.
In October, Tower said it had shared the information "to explore the potential to co-operate in respect of Tower's Namibian Blocks" with a major international oil company.
This follows preliminary talks between the parties during the summer.
What the boss says, chairman Jeremy Asher
"We are delighted to have the opportunity to work with Greg Lee and Art Malone of OilLR on this project in addition to securing this funding for the well, and we intend to have the balance of the funding in place by the time this transaction completes.
“This agreement is also consistent with our intention to commence drilling NJOM-3 in June, subject to finalisation of the rig schedule and the service companies' schedules."
- Finance and spudding of NJ0M3 well
- Results from NJ0M3 well
- Talks over Namibia acreage lead to a deal