AIM quoted oil and gas exploration company Tower Resources (LON:TRP) has confirmed that Spain’s Repsol is set to take a 44% working interest in the Namibian offshore licence 0010 and become operator.
Tower’s subsidiary, Neptune Petroleum, has also entered into a farm out agreement with Arcadia Expro Namibia to convert Tower’s 15 percent carried interest in the licence to a 30 percent working interest, subject to regulatory approvals. Under the terms of the farm-out agreement, Neptune is liable to reimburse to Arcadia 30 percent of its past costs on the licence, amounting to approximately US$5.3 million (£3.4 million) and will assume 30 percent of future costs.
Provided that the transfers are completed, the ongoing interests in the licence will be Repsol 44 percent, Tower 30 percent and Arcadia 26 percent.
An updated Competent Person’s Report produced in 2011 identified a number of prospects in the licence, including five targets in the Delta structure which, if oil and gas bearing, are estimated to contain some 9.3 billion barrels of recoverable oil and 14.5 TCF of gas. Repsol is presently examining a variety of rig options and is consulting with the Namibian government, Arcadia and Tower as it does so.
Tower said the busy exploration programme offshore Namibia will likely bring a number of rigs to the area and, with the relatively shallow water depth of between 900m to 1,300m over the Delta prospect, several rigs in the region would be suitable to drill the well. Furthermore, Repsol has an active drilling campaign in Angola.
In order to fund the acquisition and ongoing pre-drill costs of its 30 percent working interest in the licence and to provide additional working capital, Tower has raised £5.9 million before expenses through a conditional placing of 196.67 million new ordinary shares at a price of 3p per share. Of that, £3.15 million is being raised from existing institutional and other investors, with the balance of £2.75 million being subscribed by directors of the company.
Jeremy Asher, Tower’s chairman, said: “We are delighted to welcome Repsol, one of the foremost experts in West African offshore exploration, as a partner and operator in the 0010 licence. Repsol brings with it a wealth of operational expertise and a very impressive record of exploration success offshore Africa. This partnership further validates our belief in the very large hydrocarbon potential in the licence.”
