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Tower Resources extends Wilton Petroleum deadline after Ophir u-turn

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Tower Resources (LON:TRP) has extended the deadline for its acquisition of Wilton Petroleum, which has 20% a stake in the Marovoay Block on shore Madagascar.

When Tower initially agreed the deal, in July, it was planned that the project operator Ophir Energy (LON:OPHR) would drill a well in the first quarter of 2014 and that Wilton’s share of the costs would be carried, but Ophir has now decided it won’t drill the Marovoay well.

The well is a ‘commitment’ well and under the terms of the licence with the government it must be drilled by April 2014 for the asset to be retained.

Tower said talks are currently ongoing between the relevant parties.

"In the light of Ophir's changed position, discussions are progressing to restructure our arrangements in a way that better suits the current objectives of all parties concerned, including the Madagascan authorities and ourselves,” said chairman Jeremy Asher.

“There have been positive proposals and hence we have agreed an extension to the closing deadline and will provide a further update as soon as appropriate."

City broker Northland Capital described it as disappointing news, and also said an extension is a sensible precaution.

In a note analyst Andrew McGeary said: “Tower had bought into a carry in very late stage exploration, with the Ophir commitment well due in Q114. At this stage it is unclear what any new arrangement will mean in terms of a revised agreement, operator or timescale.

“If a new operator is sought/farm-out conducted that seems likely to mean at least a delay in operations. However, the statement does cite positive proposals so it is a case of wait and see.”

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Price: 0.52999 GBX

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