Tower Resources PLC (AIM:TRP), the oil and gas company focused on Africa, said the potential value of all of its projects has increased during the pandemic.
In its full-year results covering 2021, the AIM-listed company said that while the pandemic had presented operational problems over the last two years, it was also a period when the world woke up to the consequences of several years of underinvestment in the oil and gas industry. As a result, the price of oil has risen substantially, which has buffed up the economic case for Tower’s projects but has also led to increased drilling activity around the world and with it longer lead times and higher prices for rigs and services.
Tower said its priority is to get the NJOM-3 well drilled at the Njonji development, as this is the gateway to the rest of the development.
The company is in discussions regarding the final financing arrangements for the well.
READ: Tower Resources redraws financing plans for Cameroon well
“It now appears that we can raise some debt financing at the level of our Cameroon subsidiary to help with the NJOM-3 costs, which (if it can be done) would obviously be preferable to the asset-level dilution of the farm-out as originally structured. We do not want to comment further on these discussions at this stage, and we cannot be certain what the final arrangements will be, but we do believe that we will be able to achieve a better overall outcome than the farm-out, while also avoiding a further approval process,” the company’s senior management said.
“The remainder of 2022 looks like being a crucial period for our company,” the company added.
Profit before tax in 2021 was positive at US$47,299, compared to a loss of US$1.36mln in 2020, despite the company still being at the pre-revenue stage.
While administrative costs rose to US$1.28mln from US$755,605 the year before, the company benefited from a US$1.48mln VAT provision this time around.
READ: Tower Resources receives favourable ruling in tax tribunal
The cash balance at the end of 2021 was unchanged at US$10,000, since when the company has raised £1.5mln through a placing of 568mln shares.