RE: Full funding for Njom-3 fast approaching!!!19 Jan 2023 12:17
No doubt final approvals from BGFI Bank should quickly follow on from funds in place from Tower's néw Institutional Invester EEPC, along with a significant re-rate in sp on confirmation. Gla :-)
30/6/22
Cameroon well plans win funding offer from Central African bank
Tower Resources close to finalising deal with BGFI Bank for Njom-3 appraisal-cum-exploration well
30 June 2022
A junior oil player in Cameroon has secured vital funding from the largest banking group in Central Africa to drill an appraisal-cum-exploration well that could prove up a 35 million-barrel discovery.
London-listed Tower Resources has been working hard on plans to drill a probe at the Njonji discovery on its Thali production sharing contract in the Rio Del Rey basin, but a proposed 2020 well was delayed by Covid-19.
However, Tower has now executed a term sheet with BGFI Bank for a medium-term loan of Central African Francs 4.42 billion ($7.1 million) as partial financing for its Njom-3 well.
This deal reflects the difficulty junior oil companies have in sourcing finance from European lenders who are distancing themselves from fossil fuels, which has meant reverting to non-traditional lenders, including African banks.
The BGFI loan should cover about 40% of the well’s estimated cost of $18 million, with Tower providing the balance, some $4 million of which has already been committed.
Tower plans to conclude financing discussions in the third quarter of this year, and begin drilling shortly after.
For the proposed 2020 operation, the operator had planned to use the jack-up COSL Seeker, but it is unclear which rig the company will use this time around.
BGFI’s loan has a five-year term, with Tower saying it “will be secured by a modest restricted cash balance — or bank guarantee — and a partial parent company guarantee, as well as a pledge of revenues from Njonji production in due course”.
An 8% per annum interest rate will be applied to the loan, with a moratorium on payments in the facility’s first year.
The term sheet is not yet binding, with the loan subject to executing definitive documents and Tower coming up with its funding for the well.
Njom-3 will appraise the reservoirs already discovered and connected to the Njom-1 well and also test additional reservoirs identified from 3D seismic data.
Tower chief executive Jeremy Asher said: “We are delighted to announce this step forward in the financing of the Njom-3 well and also in our relationship with BGFI Bank.”
With BGFI on board, he said raising the additional funds for the drilling operation will be “a much smaller and more manageable” task.
“We are continuing to look at financing options at the asset level within Tower Resources Cameroon SA, including with Beluga Energy and its investors, though obviously for smaller amounts than discussed previously,” he said.
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