Tower Resources Raises £7 Million After Consultants Point To Overlooked Potential In Its Ugandan “Duster” - Oilbarrel - Sep 30, 2009
"Tower Resources has raised £7 million through a placing of 350 million new ordinary shares priced at two pence per share, giving the Africa-focused explorer the financial headroom to fund its second all-important well in Uganda in the event it finds itself bereft of partners willing to take a punt on the prospectivity of its EA5 licence.
Followers of the AIM company will be only too aware that its hopes of emulating Tullow Oil’s string of discoveries in Uganda took something of a battering this summer when the Iti-1 well came in dry, giving its partner in EA5, Australia’s Global Petroleum, the right to pull out of the second commitment well on the licence. Tuesday’s highly dilutive fundraising, which represented 34.7 per cent of the company’s enlarged issued share capital, means Tower now has the resources to drill that second well and fund itself for the next 12 months regardless of Global’s decision.
That decision may now be more positive than shareholders feared back in June when the Iti-1 well was abandoned after it was deemed to have failed to encounter any reservoir sands. But three months is a long time in the oil and gas business and since Iti-1 was P&A in June, Tower has been able to come back to the market with some positive news. Tower hired some independent consultants to re-evaluate the Iti-1 well data and they concluded that the well had encountered between 15 and 20 metres of net reservoir sand with “significant” potential to contain oil. This conclusion would need to be verified by a well test and this is not going to happen in the near-term. It does, however, provide some comfort that the acreage does hold potential oil-bearing reservoirs.
The priority now is to drill the second well on the licence, with the company hoping for a February 2010 spud date. Detailed re-examination of seismic data, now calibrated by well data, is helping its technical team better understand the subsurface rocks. It now seems that the Iti and Sambia structures are not analogous to Tullow’s Buffalo/Giraffe discovery in Block 1, which had been the big pre-drill hope, but there is still scope for thick reservoir sands further to the east. This means the company will take a bit of time to determine the target of its second well.
This should cost about US$7.5 million to drill and while Tower is now in a position to fund this by itself, the AIM firm remains confident it will have a partner for the well. Global Petroleum, which funded most of the cost of the first Ugandan well, is still considering whether it wishes to participate in funding 25 per cent of the second well. As yet there is no indication where Global will participate in the second well but investors may as well cling to the saying that “no news is good news”. In the meantime, Tower plans to enter discussions with other potential third party partners to help defray the costs of drilling and add credibility to its exploration campaign.
“The future now looks much more interesting than it did three months ago,” chairman Peter Kingston said in the interim results statement, which showed a loss of US$264,789 for the first six months of 2009. “Uganda still shows potential for large oil discoveries and a second well early in 2010 has a reasonable chance of success.”
He pointed out that the major infrastructure work to develop the Tullow Oil/Heritage Oil discoveries in Blocks 1 and 2 will significantly reduce the economic threshold for discoveries in EA5. In other words, it’s not the company-making stuff investors once hoped for but nor is it a complete write-off.
There was further encouragement for beleaguered shareholders this week. Three company directors, Peter Taylor, Peter Blakey and Jeremy Asher, participated in the placing, subscribing for 20 million, 17.5 million and 24.1 million placing shares respectively, a combined investment of more than £1.2 million. This kind of personal commitment always reassures investors and could help win further backing for the company’s belief that the EA5 licence still has much to offer (it’s also worth noting that Taylor and Blakey are also directors of Global…)
For many shareholders, of course, the real potential in the Tower portfolio lies in Namibia, where the prospect sizes can be measured in the billions rather than millions of barrels. Kingston this week described the reserves potential here as “massive”. But this is a real jam tomorrow situation, with first drilling not expected until late 2011. For now, the focus remains Uganda where shareholders will be keeping every crossed that the second well on EA5 fares better than the first. "
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|Autor (Datum des Eintrages):||Popeye82 (07.10.09 14:09:12)|
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