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The share price of Tower Resources (LSE:TRP) took a 12% leap upward today following the release of its first half results and the release of an update on its Namibia offshore licence 0010. The 0.35 pence increase drove the share price to 3.28 by 12:30pm UTC.
Mid-Year Results
The emphasis in the first half report is on positive trending operational activities, with the company otherwise describing its financial results as “somewhat less exciting.”
In the area of funding, Tower has managed to raise £5.9 million by selling shares to institutional investors and company directors, increasing shares in issue by 14%. The company also entered into an £8 million Standby Equity Distribution Agreement with YA Global Master SPV Ltd. It completed a £5.4 million placement with institutional investors and company directors to fund the drilling of the Mvule-1 well in Uganda. Tower also negotiated a £20 million Equity Financing Facility with Darwin Strategic Ltd.
Operationally, the company is now seeking a rig for drilling the first well on their Delta prospect. The well is expected to contain more the 9 billion barrels of oil and 14.5 trillion cu. ft. of gas, classified as gross, un-risked recoverable potential. Tower appointed Philip Swatman as Senior Independent Director during the first half, and named Graeme Thomson as CEO.
Financially, the company reported a loss of £5.9 million, which includes £4.7 million in costs attributed to the closure of its unsuccessful Mvule-1 well. Although the company had cost issues including currency fluctuations and several one-off costs, its cash position improved over the six month to £1.5 million.
Changes at Namibian Licence 0010
Tower also announced today that Repsol has agreed to farm-in as the Operator of the project with a 44% working interest. In conjunction with that move, the company has negotiated a farm-out agreement with Arcadia Expro Namibia through Tower subsidiary, Neptune Petroleum, whereby Tower’s 15% carried interest in the licence will be converted to a 30% working interest. At the end of the day, once all regulatory approvals are secured, Tower will have a 30% interest, Repsol will have 44%, and Arcadia will own 26%. The licence is in relatively shallow waters, so there are a number of drilling rigs readily available to move into the area. The area is estimated to contain 9.3 billion barrels of recoverable oil and 14.5 tcf of gas.
Executive Perspectives
Tower Chairman, Jeremy Asher, said, “This is an extremely exciting time to be involved with Tower Resources. Our increased interest in licence 0010 and our improved financing capacity together with the continued support of shareholders make me feel that we are now ideally positioned to derive maximum upside from our existing assets and to capitalise on new opportunities in Africa.”
Company Spotlight
Tower Resources was admitted to the Alternative Investment Market on the LSE in August 2005. The company specialises in oil and gas exploration the sub-Saharan Africa, with current exploration licences off the shores of Namibia and both off and onshore in the Sawahari Democratic Republic. The company is in negotiations for licences in Uganda.
