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LONDON (Alliance News) - Tower Resources PLC Wednesday said it has signed the Thali production sharing contract offshore Cameroon, marking the company's entry into the region where it will explore and appraise several shallow drill targets starting in 2017 or 2018.
"Our entry into Cameroon marks a shift in our risk profile from frontier to proven basins and introduces an asset with existing discoveries into the Tower portfolio. The Thali block provides Tower with lower risk exploration and appraisal potential in this shallow-water proven-producing region and provides a base from which the Company can expand its portfolio in Cameroon," said Chief Executive Graeme Thomson.
Tower Resources holds a 100% stake in the contract, which was signed on Tuesday at the offices of Société Nationale des Hydrocarbures in Yaoundé in the presence of several country delegates including the Ministry of Mines.
"Tower's signature of the Thali production sharing contract represents a low cost entry into a mature region with low-risk exploration/appraisal targets and the potential for significant upside," said the company.
Tower will conduct three phases of exploration under the terms of the contract. The first phase of exploration will last for three years and comprise of geological and geophysical studies, 100 kilometres squared of 3D seismic acquisition and drill with a minimum financial commitment of USD13.0 million.
The second phase, which would happen after the contract is renewed, would last for two years and comprise of one exploration or appraisal well with a minimum financial commitment of USD15 million.
The third phase, which would happen once the contract has been renewed for the second time, will last for another two years and Tower will drill one further exploration or appraisal well with a minimum financial commitment of another USD15 million.
Tower may relinquish the contract at the end of each phase as long as it has met the minimum work obligations.
The Thali area covers an area of 119.2 kilometres squared, with shallow water depths varying between 8.0 to 42.0 metres. The area lies in the Rio del Rey basin, in the eastern part of the Niger Delta.
The Rio dey Rey basin has produced over one billion barrels of oil to date, and has estimated remaining reserves of 1.2 billion barrels of oil equivalent, most of which is considered n shallower waters, the company said.
Tower said there is already 7.0 million barrels of oil that have been discovered on the Thali block, but are deemed as sub-commercial. However, the company believes better seismic imaging could increase and turn those barrels into commercial discoveries.
Tower's initial priority will be the acquisition of 3D seismic in the first half of 2016. The seismic will be used to update the existing 24 year old data set to allow better resolution of shallow plays as well as imaging of deeper sections. Tower expects to be drilling in 2017 to 2018.
"The market downturn in the services sector presents an opportunity for the Company to leverage lower seismic and drilling costs and a partner will be sought in due course to share Tower's financial commitment and provide additional technical input," said the company.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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