Tower Resources Regulatory News (TRP)

13 March 2020

Tower Resources plc

Cameroon Reserves Report Update

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed oil and gas company with its focus on Africa, is pleased to announce that it has received an updated independent Reserves Report (the "2020 Reserves Report") from Oilfield International Limited ("OIL") on behalf of the Company's wholly owned subsidiary, Tower Resources Cameroon S.A, covering its Thali production sharing contract, offshore Cameroon (the "PSC"). The 2020 Reserves Report, which conforms to SPE_PRMS guidelines, does not contain new technical information compared with the previous report prepared by OIL and announced by the Company on 1st November 2018 (the "2018 Reserves Report"), but the 2020 Reserves Report reflects updated prices and costs reflecting the changes in the market over the intervening 16 months or so.

The 2020 Reserves Report, like the 2018 Reserves Report, has quantified contingent and prospective resources across multiple fault block prospects on the Thali licence, including the existing oil discovery at Njonji in the southern part of the licence, together with their calculated Net Present Value ("NPV") and Expected Monetary Value ("EMV"), as detailed below. The NPVs and EMVs have been calculated based on two price sets: a standard North American forecast methodology using a February 2020 forecast price for 2021 and a constant money price escalation of 2% pa - the "Sproule Energy Forecast" - in order to provide comparability with other reports on other assets using this type of methodology; and the actual Brent Forward Curve at close of business on 10th March 2020, which is the primary focus of this 2020 Reserves Report, to illustrate the impact of the recent fall in oil prices, and to confirm the economic viability of the contingent resources in the current lower price environment.

2020 Reserves Report highlights:

§ Gross mean contingent resources of 18 MMbbls of oil across the proven Njonji-1 and Njonji-2 fault blocks (with low/best/high estimates of 5/15/34 MMbbls) are unchanged, with a development contingency probability of 80% on first phase and 70% on second phase;

§ Gross mean prospective resources of 20 MMbbls of oil across the Njonji South and Njonji South-West fault blocks (with low/best/high estimates of 5/16/39 MMbbls) are also unchanged;

§ Gross mean prospective resources of 111 MMbbls of oil across four identified prospects located in the Dissoni South and Idenao areas in the northern part of the Thali licence (with low/best/high estimates of 21/84/237 MMbbls) are also unchanged;

§ The NPV10 of the Best Estimate of Contingent Resources using the Sproule Energy Forecast is $179 million, with an EMV10 of $143 million, however it should be noted that these figures are based on a February 29th forecast based on a 2021 Brent price of $68/barrel;

§ The NPV10 of the Best Estimate of Contingent Resources using the March 10th 2020 Brent Forward Curve is $119 million, with an EMV10 of $91 million - these figures compare with the 2018 Reserves Report NPV10 of the Best Estimate of Contingent Resources of $158 million, and an EMV10 of $118 million using the then-current Brent Forward Curve at a time when the 2019 forward Brent price was over $71/bbl.

The reasons why the NPV10 and the EMV10 of the Contingent Resources at Njonji have fallen by less than 25% compared to the figures in the 2018 Reserves Report, despite an approximate halving of the oil price, are that:

· Forward Brent prices have fallen by less than prompt prices, which is usual when the prompt market is oversupplied, so for example the average forward price of Brent in 2021 is approximately $44/barrel;

· The projected costs of the project, which are low, have actually fallen a little reflecting the Company's actual experience in sourcing equipment and services for the NJOM-3 well; and

· The profit allocation mechanism in the PSC attributes a greater share of oil to the contractor when oil prices are low, and a smaller share of oil when prices are high, which can be observed in the different volumes of recoverable oil "attributable to Tower" for the different price scenarios, when comparing the tables below to those in the 2018 Reserves Report.

Jeremy Asher, Chairman and CEO, commented:

"We are pleased to present this updated 2020 Reserves Report on the Thali licence in Cameroon. I already observed last year that our project economics were attractive across a wide range of oil price scenarios, and in September last year I presented one of our internal cash flow forecasts showing the very attractive cash generation from the project assuming a flat $40/bbl Brent price, which can be still be found in our September 2019 corporate presentation on our website. The 2020 Reserves Report confirms the attractiveness of the Njonji project economics.

It is also worth noting that the riskier prospective resources on Thali can be tested at very low cost during the process of developing the contingent resources already discovered. In particular, the Phase 1 development process at Njonji will also test the Njonji South Prospective Resources of 18 million barrels (Pmean), which would be additional to the 18 million barrels (Pmean) of existing contingent resources already discovered at Njonji, thus providing a natural additional upside to the project which is not reflected in the NPVs and EMV10 of the contingent resources.

So even in the lower oil price environment in which we now find ourselves, which echoes the price environment at the end of 2015 shortly after we first entered the Thali license, the Thali license is an attractive asset which we expect will earn excellent returns."

2020 Reserves Report details:

The 2020 Reserves Report was independently compiled by UK-based industry specialist Oilfield International Limited and was based on the work that Tower undertook during 2018 including a reprocessing and reinterpretation of all of the existing 3D seismic data over the licence area, and substantial further analysis of the data including an independent fault seal analysis undertaken by Dr Tim Needham of the University of Leeds Institute of Applied Geoscience, as described in the executive summary of the 2018 Reserves Report, which is still available in the Company's website. The economic analysis in the report was updated as described above to reflect more recent price assumptions and also the Company's more recent experience with costs.

The tables below are summaries of some of the key tables in the Executive Summary of the 2020 Reserves Report, which is available on the Company's website. The "Gross" figures refer to the recoverable volumes from a given structure, the "Net Attributable to Tower" figures refer to the equivalent volumes that Tower can actually expect to receive for its own account in respect of its cost recovery and profit oil under the terms of its licence, using the March 10th 2020 Brent Forward Curve. As noted above, the "Gross" volumes are the same as in the 2018 Reserves Report, but the "Net Attributable to Tower" volumes differ from those in the 2018 Reserves Report because the of the profit allocation mechanisms in the PSC.

The NPV10 and EMV10 tables presented below are the tables based on the March 10th 2020 Brent Forward Curve, but the full set of valuation tables including the Sproule Energy Forecast tables are contained in the Executive Summary available on the Company's website.

Swanson's Rule: 40% P50+30% P90+30% P10

Swanson's Rule: 40% P50+30% P90+30% P10

The Executive Summary extracted from the 2020 Reserves Report includes more detailed versions of these tables and additional figures, tables, details relating to the initial development plan and a summary of risk factors. The Executive Summary is available on the Tower Resources website at www.towerresources.co.uk.

A glossary of technical terms is included at the end of this announcement.

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

Contacts

Notes:

In accordance with the guidelines for the AIM market of the London Stock Exchange, Dr. Mark Enfield, BSc Geology, PhD Geology, Advisor to the Board of Tower Resources plc, who has over 30 years' experience in the oil & gas industry, is the qualified person that has reviewed and approved the technical content of this announcement.

Tower Resources Cameroon S.A, a wholly-owned subsidiary of Tower Resources plc, holds a 100% interest in the shallow water Thali (formerly known as "Dissoni") Production Sharing Contract (PSC), in the Rio del Rey basin, offshore Cameroon. Tower was awarded the PSC on 15 September 2015 for an Initial Exploration Period of 3 years. Extensions to the Initial Exploration Period have been granted until 14 September 2020.

The Thali PSC covers an area of 119.2 km², with water depths ranging from 8 to 48 metres, and lies in the prolific Rio del Rey basin, in the eastern part of the Niger Delta. The Rio del Rey basin has, to date, produced over one billion barrels of oil and has estimated remaining reserves of 1.2 billion barrels of oil equivalent ("boe"), primarily at depths of less than 2,000 metres. The Rio del Rey is a sub-basin of the Niger Delta, an area in which over 34.5 billion barrels of oil has been discovered, with 2.5 billion boe attributed to the Cameroonian section.

Glossary:

Best Estimate: At least a 50% probability (P50) that the quantities actually recovered will equal or exceed the Best Estimate (in statistical terms, a median).

Brent Forward Curve: the prices on a given day for Brent Crude Oil for forward delivery, month by month, ranging from the first traded month forward for ten years or more.

Chance of Development: The chance of discovery multiplied by the chance of commercial success.

Contingent Resources: Those quantities of Petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, by the application of development Project(s) not currently considered to be Commercial due to one or more contingencies.

DST: Drill Stem Test.

EMV10: Expected Monetary Value derived from a discount rate of 10%.

EWT: Extended Well Test.

High Estimate: At least a 10% probability (P10) that the quantities actually recovered will equal or exceed the High Estimate.

Low Estimate: At least a 90% probability (P90) that the quantities actually recovered will equal or exceed the Low Estimate.

MDT: Modular Dynamic Formation Test.

Mean Estimate: The expected value of the full probability distribution of resource volumes.

MMbbls: Millions of barrels.

NPV10: Net Present Value at a discount rate of 10%.

Prospective Resources: Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.

Recoverable: Those quantities of hydrocarbons which are estimated to be producible from accumulations, either discovered or undiscovered. Note that Contingent and Prospective Resources as estimated herein are all estimates of recoverable quantities.

Risked: Quantities that have been adjusted for the probability of success or loss/failure.

Swanson Rule: A methodology for calculating the EMV of an oil or gas prospect.

Unrisked: Quantities which have not been adjusted for the probability of success or loss/failure.