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(Alliance News) - Tower Resources PLC said Monday it has signed a farm-out agreement with Australian firm OilLR Pty Ltd for a 25% working interest in the Thali production sharing contract in Cameroon.
Shares in the Africa-focused oil & gas firm were 12% higher at 0.48 pence on Monday in London.
The farm-out will cover USD7.5 million towards the cost of the NJOM-3 well that Tower Resources is planning to drill on the block.
The well's cost is expected to be between USD15 million to USD16 million, of which USD3 million has already been spent.
OilLR will receive a 25% working interest in the contract, subject to an overriding royalty of 10% for Tower on the contract share of production.
Tower Resources will remain operator of the Thali PSC through its subsidiary Tower Resources Cameroon SA under a joint-operating agreement. Should the farm-in agreement not be completed in time, OilLR will instead receive a stake in Tower Resources Cameroon.
The agreement is subject to due diligence and OilLR paying into escrow USD7.5 million in total at completion, but both companies expect the deal to be completed before April 15.
"We are delighted to have the opportunity to work with Greg Lee and Art Malone of OilLR on this project in addition to securing this funding for the well, and we intend to have the balance of the funding in place by the time this transaction completes. This agreement is also consistent with our intention to commence drilling NJOM-3 in June, subject to finalisation of the rig schedule and the service companies' schedules," said Chair and CEO Jeremy Asher.
By Dayo Laniyan; dayolaniyan@alliancenews.com
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