Tower Resources Regulatory News (TRP)

3 May 2007 07:01

Tower Resources PLC03 May 2007 Press Release For immediate release: 03 May 2007 Tower Resources Plc Final Results for the 18 Months Ended 31 December 2006 Tower Resources plc (Tower" or "the Company"), the AIM-listed oil and gasexploration and production company today announces its final results for the 18months ended 31 December 2006. Highlights: •Uganda - Encouraging results from gravity and magnetic data - 2D seismic shoot to commence in September 2007 - Two wells anticipated early in 2008 •Namibia - Very large structures identified from seismic - One structure coincident with strong gas indications - Farm out discussions underway Commenting on the results, Peter Kingston, Executive Chairman of Tower said: "The evaluation programmes under way since the beginning of 2006 have yieldedvery encouraging results in both Uganda and Namibia and the Board's optimismabout prospectivity in both Licences has steadily increased over the reviewperiod. The success achieved by other operators in Uganda has raised awarenessof what promises to be an exciting new oil production province The year aheadwill see significant tangible development." For further information, please contact: Tower Resources plc www.towerresources.co.ukPeter Kingston, Executive Director 01985 211780 Blue Oar Securities*Olly Cairns 020 7448 4400 Aquila Financial Limited www.aquila-financial.comPeter Reilly 020 7202 2600Yvonne Fraser *Blue Oar Securities was formerly Corporate Synergy Plc and acts as NominatedAdvisor and Broker for the Company. Tower Resources plcChairman's Statement Your Company has made steady progress with its operations in Uganda and Namibiaduring 2006, continuing into this year to the point where seismic surveys areexpected to take place for each venture before the end of 2007. Preparations arealso underway to drill two wells in Uganda Block EA5 as early as possible in2008. The evaluation programmes under way since the beginning of 2006 haveyielded very encouraging results in both Uganda and Namibia and the Board'soptimism about prospectivity in both Licences has steadily increased over thereview period. The success achieved by other operators in Uganda has raised awareness of whatpromises to be an exciting new oil production province. These existingdiscoveries lie in the southern area of the sedimentary basin but theexploration focus is moving northwards towards the Tower Licence. Active seismicacquisition is being undertaken by Tullow and Heritage to the north of Block 2and in Block 1 no more than 50-100 kms from Tower's area of interest in Block 5.The past year has involved patient assessment of prospectivity - the next yearwill see excitement build culminating in the first exploration well. In Namibia, detailed discussions are underway with a farm-in partner. However,because of local sea conditions which have delayed 2-D seismic, and the possibleneed for 3D seismic acquisition, the overall seismic programme will be over alonger period than in Uganda. Two years or more may be necessary to complete theseismic programmes before a first exploration well is drilled in Namibia.Notwithstanding that, the detailed seismic processing and interpretation that isnow complete has revealed some very large structures coincident with strongindications of natural gas. Though the risk remains fairly high, success wouldbe highly rewarding. The Board is excited that the prospectivity of the Namibiaacreage has been significantly upgraded as a consequence of the evaluationprogramme. Financial HighlightsOperating loss over the reporting period from 1 July 2005 to 31 December 2006was £580,000. Capital expenditure was £720,000 being principally the capitalisedexpenditure on exploration studies. Cash balances at year end were £1,254,000and this has increased to £2,343,601 at the end of March after the introductionof £1,425,000 of new equity in the first quarter. £140,000, being the balance ofthe investment from Agile, is due at the end of April 2007. There is sufficientcapital to fund the Company's activities over at least the next six months andan expectation that new funds can be introduced if necessary to meet commitmentsfor the remainder of 2007.Operations Summary to end 2006 UgandaComprehensive evaluation of gravity and magnetic data gave encouragement thatthere were sufficient sediments at sufficient depth, to generate commercialquantities of hydrocarbons. The total contained basin area was shown to be atleast 1100 - 1200 sq kms, equivalent to more than 5 complete North Sea Blocks.Extension of the proven rift basins at the southern end of Lake Albertnorthwards into EA5 was confirmed, albeit at a shallower depth than Block 2.Geochemical assessment has confirmed the likelihood that hydrocarbons could havebeen generated in significant quantities. The largest structural featuresidentified by the gravity interpretation are of significant size, each up to 35sq km in total area. NamibiaApproximately 10,000 kms of seismic line length was purchased from TGS-Nopec,covering most of the 23,000 sq km Licence area, some of it in reasonably closespacing. The initial interpretation showed multiple structures, coincident withor adjacent to a large deep basin, mostly represented by moderate sized faulttraps, but three very large structures were present, adjacent to the deepestpart of the basin. Several of the basinal fault trap structures also showedindications of hydrocarbons. Geochemical studies indicated that four potential source rocks could be maturefor generation of hydrocarbons; the two deepest of which being likely to havesignificant areas at peak maturity. A surface seep detection survey yieldedambiguous results but gave some support for light liquid hydrocarbon seeps in acouple of places. Since year-end and looking forward UgandaWork in 2007 has largely been directed at planning for the seismic programme nowdue to begin shooting in early September. A geological field trip has just beencompleted, in conjunction with an evaluation of land satellite information.Valuable information was gathered but no obvious surface seeps of oil wereencountered, despite information from local communities of oil on the RiverNile. A further programme will be undertaken later in the year to investigatesome areas of interest in more detail. The highlight of this year in Uganda was the discovery by Heritage of oil underLake Albert at significantly greater depth than earlier discoveries, withinclosure of a very large structure. Reservoir sands were of high quality andcomparatively thick. NamibiaThe main focus of evaluation to date in 2007 has been the reprocessing of asmall number of key seismic lines and reinterpretation using AmplitudeVariations with Offset (AVO) analysis, which gives an enhanced assessment forthe presence of hydrocarbons, particularly natural gas. This analysis hasheightened the evidence to support natural gas presence, particularly in thenorthern area of the Licence. The most interesting result was the strongevidence of gas coincident with the largest known structure and futureevaluations will be focused on this prospect. AVO analysis of seismic linesthrough two previous dry holes on the Licence showed little evidence of gas inthe area of drilling and this is also encouraging. It is now unlikely that the seismic commitment programme can be started beforethe onset of the annual period when weather conditions are not suitable forseismic acquisition. Plans are being made to record at the earliest opportunity,which will likely be in November of this year. The seismic programme is beingdesigned to optimise the quality of AVO analysis. Corporate OutlookThe next year should be exciting for exploration in Uganda, with a wellprogramme being planned. As operations have become more advanced, the need tomeet the commitments as operator has required the input of more manpowerresources. Russell Langusch was no longer able to meet the growing demands asthe executive director and I have assumed the role of Executive Chairman todirect activities going forward. Russell's assistance in launching the companyand taking it forward during the early months was invaluable and the Boardthanks him for his contribution. His place on the Board has been taken by JeremyAsher who has also committed just over £1 million of new investment. He hasassumed the role of Audit Committee Chairman. His contribution to the Companyhas already been significant and I extend him a warm welcome to the Board. In the context of Uganda operations, the intention is now to put in place alocal administration in Kampala with a full-time general manager and suitablesupport staff. Operations and logistical resources will be established withmaximum use of local suppliers. An environmental impact assessment has beenprepared and submitted to the Uganda Government for approval prior to theseismic programme. Community liaison activities have already begun and will bean important element of local activities. A Health and Safety Management Systemhas been prepared and details are being finalised. Significant operations in Namibia will be slower to unfold but the scale of thepotential will support significant value for the Company. It is a priority tofarm out this Licence to a financially strong partner, who would undoubtedlybecome the operator. Current prospects for farming out are encouraging withdetailed discussions underway with a potential partner. Tower has now evolved from being a new Licence holder to being a seismic andsoon to be drilling operator. Tower will soon have the capacity to review andmanage other opportunities, probably in Africa, to maintain the current focus,although the emphasis will be on a small number of good quality prospects ratherthan a large portfolio. The year ahead will see significant tangibledevelopment. Thank you for your ongoing support. Peter KingstonChairman3 May 2007 GROUP INCOME STATEMENTFOR THE 18 MONTHS ENDED 31 DECEMBER 2006 18 months ended 7 months ended 31 December 30 June 2006 2005Continuing operationsGroup revenue - -Cost of sales - - ------------ ----------Gross profit - - ------------ ----------Administrative expenses beforecharge for share-based payments (490,872) (168,938)Share-based payments (89,250) - ------------ ----------Total administrative expenses (580,122) (168,938) ------------ ----------Group operating loss (580,122) (168,938)Finance income 66,226 11,350 ------------ ----------Loss before taxation (513,896) (157,588) Taxation - - ------------ ----------Loss for the period (513,896) (157,588) ------------ ----------Attributable to:Equity holders of the Company (513,896) (157,588) ------------ ---------- Loss per share (pence)Basic (0.15) p (0.14) pDiluted (0.15) p (0.14) p The results shown above relate entirely to continuing operations GROUP AND COMPANY STATEMENTS OF CHANGES IN EQUITYFOR THE 18 MONTHS ENDED 31 DECEMBER 2006 Share Share Share-based Retained Total Capital Premium payments Losses Equity reserve £ £ £ £ £Group Period ended 30 June 2005 Share 125,000 585,000 - - 710,000issuesNet lossfor 2005 - - - (157,588) (157,588) ------- ------- ----------- ------- -------Balance at 30 June 2005 125,000 585,000 - (157,588) 552,412 ------- ------- ----------- ------- ------- Period ended 31 December 2006 Balance at 1July 2005 125,000 585,000 - (157,588) 552,412Share issues 333,333 5,547,159 - - 5,880,492Net lossfor 2006 - - 89,250 (513,896) (424,646) ------- -------- ----------- ------- --------Balance at 31 December2006 458,333 6,132,159 89,250 (671,484) 6,008,258 ------- -------- ----------- ------- -------- Company Period ended 30 June 2005 Share 125,000 585,000 - - 710,000issuesNet lossfor 2005 - - - (157,588) (157,588) ------- -------- ----------- ------- --------Balance at 30 June 2005 125,000 585,000 - (157,588) 552,412 ------- -------- ----------- ------- -------- Period ended 31 December 2006 Balance at 1 July 2005 125,000 585,000 - (157,588) 552,412Share issues 333,333 5,547,159 - - 5,880,492Net lossfor 2006 - - 89,250 (500,167) (410,917) ------- -------- ----------- ------- --------Balance at 31 December 2006 458,333 6,132,159 89,250 (657,755) 6,021,987 ------- -------- ----------- ------- -------- GROUP BALANCE SHEETAS AT 31 DECEMBER 2006 1 December 30 June 2006 2005 £ £ASSETSNon-Current AssetsPlant and equipment 1,889 -Goodwill 4,018,795 -Intangible exploration andevaluation assets 773,450 - ------------ ---------- 4,794,134 - ------------ ----------Current AssetsTrade and other receivables 28,135 -Cash and cash equivalents 1,254,122 552,412 ------------ ---------- 1,282,257 552,412 ------------ ----------Total Assets 6,076,391 552,412 ------------ ---------- LIABILITIESCurrent LiabilitiesTrade and other payables 68,133 - ------------ ----------Total Liabilities 68,133 - ------------ ----------Net Assets 6,008,258 552,412 ------------ ---------- EQUITYCapital and ReservesShare capital 458,333 125,000Share premium account 6,132,159 585,000Share-based payments reserve 89,250 -Retained losses (671,484) (157,588) ------------ ----------Shareholders' Equity 6,008,258 552,412 ------------ ---------- The financial statements were approved by the Board of Directors on 2 May 2007and singed on its behalf by: Peter KingstonChairman COMPANY BALANCE SHEETAS AT 31 DECEMBER 2006 31 December 30 June 2006 2005 £ £ASSETSNon-Current AssetsPlant and equipment 1,889 -Loan to subsidiary undertakings 803,812 -Investment in subsidiaryundertakings 4,080,965 - ------------ ---------- 4,886,666 - ------------ ----------Current AssetsReceivables 28,135 -Cash and cash equivalents 1,174,321 552,412 ------------ ---------- 1,202,456 552,412 ------------ ----------Total Assets 6,089,122 552,412 ------------ ---------- LIABILITIESCurrent LiabilitiesTrade and other payables 67,135 - ------------ ----------Total Liabilities 67,135 - ------------ ----------Net Assets 6,021,987 552,412 ------------ ---------- EQUITYCapital and ReservesShare capital 458,333 125,000Share premium account 6,132,159 585,000Share-based payments reserve 89,250 -Retained losses (657,755) (157,588) ------------ ----------Shareholders' Equity 6,021,987 552,412 ------------ ---------- The financial statements were approved by the Board of Directors on 2 May 2007and singed on its behalf by: Peter KingstonChairman GROUP CASH FLOW STATEMENTFOR THE 18 MONTHS ENDED 31 DECEMBER 2006 18 months ended 7 months ended 31 December 30 June 2006 2005 £ £Operating activitiesGroup operating loss (580,122) (168,938) Adjustments for items not requiring an outlay of funds:- Depreciation of plant and equipment 426 -- Share-based payments charge 89,250 - ------------- -----------Operating loss before changes in working capital (490,446) (168,938) Increase in receivables and prepayments (26,251) -Increase in trade and other payables 44,493 - ------------- -----------Cash used in operations (472,204) (168,938) Interest received 66,226 11,350 ------------- -----------Net cash used in operating activities (405,978) (157,588) ------------- ----------- Investing activities Funds used in exploration and evaluation (716,801) -Payments to purchase plant and equipment (2,315) -Costs of acquiring subsidiaries (80,965) -Cash acquired with subsidiary undertakings 27,277 - ------------- -----------Net cash used in investing activities (772,804) - ------------- ----------- Financing activitiesCash proceeds from issue of shares 2,000,000 710,000Share issue costs (119,508) - ------------- -----------Net cash from financing activities 1,880,492 710,000 ------------- ----------- Increase in cash and cash equivalents 701,710 552,412 Cash and cash equivalents at beginning of period 552,412 - ------------- -----------Cash and cash equivalents at end of period 1,254,122 552,412 ------------- ----------- COMPANY CASH FLOW STATEMENTFOR THE 18 MONTHS ENDED 31 DECEMBER 2006 18 months ended 7 months ended 31 December 30 June 2006 2005 £ £Operating activitiesOperating loss (563,710) (168,938) Adjustments for items not requiring an outlay of funds:- Depreciation of plant and equipment 426 -- Share-based payments charge 89,250 - ------------- ----------- Operating loss before changes in working capital (474,034) (168,938) Increase in receivables and prepayments (28,135) -Increase in trade and other payables 67,135 - ------------- -----------Cash used in operations (435,034) (168,938) Interest received 63,543 11,350 ------------- -----------Net cash used in operating activities (371,491) (157,588) ------------- ----------- Investing activitiesPayments to purchase plant and equipment (2,315) -Costs of acquiring subsidiaries (80,965) -Loan granted to subsidiaries (803,812) - ------------- -----------Net cash used in investing activities (887,092) - ------------- ----------- Financing activitiesCash proceeds from issue of shares 2,000,000 710,000Share issue costs (119,508) - ------------- -----------Net cash from financing activities 1,880,492 710,000 ------------- ----------- Increase in cash and cash equivalents 621,909 552,412 Cash and cash equivalents at beginning of period 552,412 - ------------- -----------Cash and cash equivalents at end of period 1,174,321 552,412 ------------- ----------- NOTES TO THE FINANCIAL STATEMENTSFOR THE 18 MONTHS ENDED 31 DECEMBER 2006 1. Specific accounting policies 1.1 Basis of preparationThe financial statements are prepared on a going concern basis, under thehistorical cost convention and in accordance with International FinancialReporting Standards, as adopted by the European Union ("IFRS"), including IFRS6'Exploration for and Evaluation of Mineral Resources' and in accordance with theCompanies Act 1985. The Parent Company's financial statements have also beenprepared in accordance with IFRS and the Companies Act 1985. Although the Group is not yet required to prepare its financial statements underIFRS's the directors have decided to adopt IFRS's early. 1.2 Going concernDuring the period ended 31 December 2006 the Group made a loss of £513,896 (2005- £157,588). At the balance sheet date the Group had net assets of £6,008,258(2005 - £552,412) and its current assets exceeded its current liabilities by£1,214,124 (2005 - £552,412). As set out in note 14 below, the Group hasexpected exploration expenditure commitments of £4,586,000 due within one yearfrom the balance sheet date and a further £962,000 due between one and twoyears. The operation of the Group is currently being financed from the funds which theCompany raised from private and public placings of its shares. As stated in theDirectors' report, the Group is currently seeking to farm out its Namibianlicense to a financially strong partner who can become the operator of thatlicense. In the absence of finding a suitable farm out partner, the Company willhave to raise additional equity funds in order to meet the explorationexpenditure commitments of its two licenses. The Directors believe that the Group will either be able to find a suitable farmout partner in the near future or be able to raise necessary funds later thisyear for it to be able to meet its license commitments. Accordingly, theDirectors are satisfied that the going concern basis remains appropriate for thepreparation of these financial statements. 2. Loss per share The basic loss per ordinary share has been calculated using the loss for thefinancial year of £513,896 (2005: £157,588) and the weighted average number ofordinary shares in issue of 337,507,589 (2005: 112,922,705). The diluted loss per share has been calculated using a weighted average numberof shares in issue and to be issued of 338,718,970 (2005: 112,922,705). Thediluted loss per share has been kept the same as the basic loss per share as theconversion of share options decreases the basic loss per share, thus beinganti-dilutive. 3. Events after the balance sheet date Subsequent to 31 December 2006, the Company allotted 71,320,000 ordinary sharesof 0.1p each, raising new equity of £1,425,000 in cash. 4. The financial information set out above does not comprise full accounts asdefined in the Companies Act 1985. Full accounts will be sent to shareholdersbefore 11 May 2007 and will be available on the company's web site atwww.towerresources.co.uk. 5. No dividend is proposed in respect of the period. 6. The annual general meeting of the company will take place at 30 FarringdonStreet, London, EC4A 4HJ on 6 June 2007 at 11.00am . This information is provided by RNS The company news service from the London Stock Exchange