Tower Resources PLC (LON:TRP) told investors it has held detailed talks over a loan facility that could cover work programmes ongoing at the Thali production-sharing contract in Cameroon.
The company revealed that the proposed facility would provide up to US$10mln to the project operator for the NJOM-2 well, which is presently in progress.
Subject to results, the financing facility could be expanded to support the next three production wells and a platform planned for the Njonji field, the company added.
READ: Tower says projects remain attractive
Tower noted that while it has in place a farm-out agreement with OilLR Pty Ltd, which has pledged US$7.5mln of financing, the funds have yet to arrive in escrow as agreed, and the AIM-quoted company has the right to reduce OilLR's investment to US$5mln or to terminate the agreement.
The company said it is in talks with another potential farm-in partner, and, it is considering its options with regard to the OilLR agreement.
"We are very pleased that these discussions regarding a loan facility for Thali have gained traction because debt financing has remained our preference since we first explored the idea last year,” Jeremy Asher, Tower chair and chief executive said in a statement.
“The possibility of a facility that can be extended to cover the next stage of work following NJOM-3 is especially attractive as it would significantly reduce the work and time required between drilling NJOM-3 and drilling the next three wells and achieving first oil.”
“We must stress that these discussions are not yet concluded, but they are material enough that they affect our other decisions regarding farm-out investment, not least the amount of additional funds we may need, and they also naturally affect the decision-making for our potential farm-out partners.
“We hope to bring these discussions to a conclusion as quickly as possible, but I hope that shareholders will also understand that it is very difficult to predict timeframes at the moment. Nevertheless, this is an exciting time for Tower," Asher added.
