Tower Resources Gets Busy In Namibia With Repsol Farm-out And Fund Raising-7470d

Finance Tower Resources has agreed a farm-out with Repsol that will see Repsol take a 44 per cent working interest in Tower’s Namibian offshore licence and become operator. Tower has also agreed a separate farm-out agreement with Arcadia to convert Tower’s 15 per cent carried interest in the licence to a 30 per cent working interest subject to requisite regulatory approvals. 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 trillion cubic feet of gas. Repsol is presently examining a variety of rig options and is consulting with the Namibian government. The busy exploration programme offshore Namibia will likely bring several rigs to the area and, with the relatively shallow water depth of between 900m to 1,300m over the Delta prospect, several rigs would be suitable to drill the well. Tower’s chairman, Jeremy Asher, commented: "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." Tower’s CEO, Graeme Thomson, added: "We are also very pleased that we have increased our holding in the licence to 30 per cent subject to the requisite government approvals. We believe that the transaction announced today provides shareholders with an increased holding in a very exciting prospect at a compelling price and materially increases the upside potential per share for all of Tower’s shareholders." "We look forward in due course to updating the market once a rig has been secured to drill the first well on the independently certified 9.3bn barrel Delta prospect. We will be in dialogue with Repsol regarding a rig and look forward to updating shareholders in due course. We are not willing to overpay for an early slot and are quite prepared to be patient if this achieves the best economics for us." "We continue to consider opportunities to expand Tower’s asset base in Africa and explore various options to maximise value for shareholders." Tower Resources has also raised £5.9 million through a placing at 3p per share, which represents a slight premium over the previous closing price. Given that Chariot Oil & Gas has commenced drilling of the Nimrod prospect to the south of Namibia, any drilling success offshore will have a positive impact on Tower Resources and other players in the region. The farm-out deal with Repsol enables Tower to take this project forward faster than when Arcadia was operator. By increasing its stake in the licence to 30 per cent, Tower has reaffirmed its conviction in the prospectivity of the licence. Westhouse Securities has also interpreted these developments positively, describing the placing as providing a positive endorsement of management and the asset given market conditions; particularly with respect to frontier exploration plays such as Tower Resources. Westhouse continues: "It is likely that the company will need to raise additional capital ahead of drilling and given that Tower is currently a one well company the stock is likely to continue to suffer the appropriate market discount. 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