TRP Flash note2 Jun 2025 10:59
Subject: Tower Resources* (TRP LN) - Flash note - NJOM-3 spud expected in 4Q25
Tower reported FY24 results and provided an update on progress towards contracting a jack-up rig to drill the NJOM-3 appraisal well on the Thali licence in Cameroon.
The Company confirmed that day-rates for jack-up rigs in the region are now substantially lower than they were in early 2024, and we expect Tower to complete rig selection and finalise the Thali licence extension ahead of drilling in 4Q25.
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YE24 finances strengthened by Prime farm-out agreements
Tower reported a FY24 loss of $0.98m (SPA est. -$1.16m) for the 12M to December 31 and ended the period with $0.3m cash on the balance sheet. Following the January farm-out of a 42.5% non-operated interest in the Thali licence to Prime, a farm-out of its Namibia licence and a share issue, the Company received cash proceeds of $938k immediately and will receive a further $3.4m cash following completion of the two farm-out agreements. This transaction, on completion, should transform the Company’s financing position and the Board remains confident that government approvals will be provided in due course.
Rig contract terms in Cameroon likely to be more favourable
Tower’s farm-out agreement with Prime will deliver a $15m gross contribution to the Thali work programme, which is still expected to cover the cost to drill and test the NJOM-3 appraisal well in Cameroon. The overall cost is now expected to benefit from the easing of the market for jack-up rigs and the fact that a couple of Tower’s neighbours also require rigs for drilling campaigns to begin around YE25. If they can share the same rig and some of the same services, Tower should be able to reduce the mobilisation and demobilisation costs associated with the well.
NJOM-3 appraisal well on track to spud in 4Q25
Tower has submitted applications to the Government of Cameroon for the further extension of the current exploration period of the Thali licence, and for the approval of the farm-out. The Company believes the Government would first like to see the rig selection completed, to provide more clarity on what extension may be required, though we note that the authorities have been highly supportive of the project to date. Tower commented that it can be ready to spud the NJOM-3 well in 4Q25, provided the necessary government approvals and the rig are in place in good time.
Namibia farm-out indicates potential upside from frontier exploration licences
Negotiations with Prime also resulted in an agreement to farm-out a 25% non-operated interest in the Company’s offshore Namibia PEL96 licence (80% WI) in return for $2.5m cash at completion. This is significant as it assigns a see-through valuation for the high risk/impact frontier exploration licence in the Walvis Basin, where Chevron acquired an interest in PEL82 last year. Tower has agreed a ~£1m capex budget for PEL96 in 2025, which will b
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