(Alliance News) - Tower Resources PLC said Monday it has declared force majeure at its Thali project in Cameroon.
Shares in Tower Resources closed 16% lower in London on Monday.
Tower is still hoping to spud NJOM-3 before September 15.
As a result of the force majeure, Tower has amended its heads of terms with OilLR Pty Ltd over the farm-out of 24.5% of Thali, extending the proposed completion date to June 30.
"Tower is satisfied that OilLR's intended investors have the funds to complete the intended farm-in, and both Tower and OilLR are still committed to completing the transaction, but both parties also agree that the transaction cannot be completed until the environment stabilises sufficiently for the project to move forward," the company added.
Tower noted it is also continuing discussions with other potential investors in the Thali PSC, and while it fully expects OilLR to complete the agreed farm-in as set out in the heads of terms.
Tower said: "The company has also agreed with OilLR that in the event it receives additional offers of firmly committed funds which aggregate to more than USD15 million, and if (and only if) OilLR is unable to make an escrow payment on an agreed schedule, then the company will have the right to reduce OilLR's share of the total farm-out down to a minimum of USD5 million to accommodate the other potential investors."
Tower said this will ensure extending the completion schedule will not materially delay its access to funding from other sources.
Tower Chair Jeremy Asher said: "We are glad that our partners at OilLR remain committed to the Thali project despite recent market upheavals and despite the operational delays required by the global response to the Covid-19 pandemic.
"As our recently released update to the Oilfield International Reserve Report has highlighted, the Thali project economics remain very attractive at current Brent prices, with forward prices still well above USD40 per barrel during our expected production period. The Force Majeure provisions of our PSC are designed to provide breathing space in precisely this kind of situation, and we are already planning and discussing with service companies how we can move forward as quickly as possible when things return closer to normal."
By Paul McGowan; paulmcgowan@alliancenews.com
Copyright 2020 Alliance News Limited. All Rights Reserved.
Tower Resources (TRP)