Importantly, Tower’s share of the costs will be ‘carried’ for up to two wells (capped at US$4mln for each well).
Through the transaction itself Tower is acquiring Wilton Petroleum, a private company that owns the Marovoay stake, for US$1.75mln and 120mln Tower shares – which equates to US$4.7mln, or 7% of the group’s enlarged share capital.
Ophir is slated to start drilling the first well by mid-2014. This is expected to target the 90mln barrel Anjohibe prospect.
According to Tower there are over 20 prospects within the Marovoay block.
"The acquisition of Wilton Petroleum marks a new country entry for Tower and the first transaction with the recently appointed management team who all have prior experience of exploration in Madagascar,” said chief executive Graeme Thomson.
“It provides evidence that our new ventures team will originate and execute shrewd deals as we seek to diversify our portfolio and build a high impact Pan-African explorer around our world class Welwitschia prospect in Namibia."
In the City, Northland Capital analyst Andrew McGeary said: “Whilst the world class Delta prospect, offshore Namibia, remains Tower’s highest impact asset, it is encouraging to see its recently announced diversification strategy bearing fruit with this first new asset.
“This deal looks to tick most of the boxes; it is near term (carried well in mid-2014); relatively inexpensive (a US$700k promote) and, most importantly is in a prospective region operated by a respected partner in Ophir with analogous drilling from major Exxon amongst others nearby.
“The company has flagged an equity raise that should come as no surprise to the market and is at a relatively modest level. In the past management has fully supported such issues.”