Tower Resources Regulatory News (TRP)

8 Apr 2008 07:01

Tower Resources PLC08 April 2008 Press Release For immediate release: 08 April 2008 Tower Resources Plc Final Results for the 12 Months Ended 31 December 2007 Tower Resources plc ('Tower' or 'the Company'), the AIM-listed oil and gasexploration and production company today announces its final results for the 12months ended 31 December 2007. Highlights: Uganda- 2D seismic survey completed early 2008- Two wells planned to be drilled in 2008- Costs largely covered by farmout agreement Namibia- 2D seismic survey completed- Giant structures identified as viable exploration targets- First exploration well may now be drilled in 2009- Costs covered by farmout agreement Commenting on the results, Peter Kingston, Executive Chairman of Tower said: "Year 2007 saw progress with seismic surveys in Uganda and Namibia and TowerResources is now entering an exciting 1-2 year period during which the potentialof its current two Licences in Namibia and Uganda will be tested by wells. Thepotential of each licence is such that a successful exploration well in eitherwould be classed as a "company maker". The Board is also hoping to add a limited number of new ventures during thecourse of 2008." For further information, please contact: Tower Resources plc www.towerresources.co.ukPeter Kingston, Executive Chairman 01985 211780 Blue Oar Securities 020 7448 4400 Aquila Financial Limited www.aquila-financial.comPeter Reilly 0118 979 4100 TOWER RESOURCES PLC CHAIRMAN'S STATEMENT Year 2007 saw progress with seismic surveys in Uganda and Namibia. The Namibiaseismic data was collected in August and early September 2007 and is in thefinal stages of interpretation. A forward programme will be recommended by theoperator, Arcadia, by the end of April 2008. There is a reasonable chance that awell will be drilled in 2009. Seismic operations in Uganda have been much morecomplex given its onshore location in the far northwest region of the country.The survey was completed successfully on 12 February 2008 and detailedprocessing of the data is currently underway. A forward programme is expected tobe agreed in May, with two wells currently expected to be completed before theend of 2008. Significantly, Tower completed negotiations with partners that enable funding ofoperations to be largely covered by third parties in both licences. ArcadiaPetroleum Limited is funding all of the future Namibia costs up to and includingtwo wells. Orca Exploration Group Inc (Orca) is funding most of the Ugandaseismic costs and, if it chooses to continue into the drilling commitmentprogramme, it will meet most of the cost of drilling two commitment wells.Further details are given below. Your Company is now entering an exciting 1-2 year period during which thepotential of its current two licences will be tested by wells. The potential ofeach licence is such that a successful exploration well in either would beclassed as a "company maker". The Company's strategy remains to concentrate onsuch high impact opportunities, which can largely be funded by farminees. Thisapproach dictates that the exploration portfolio will remain small to avoidquality dilution. Notwithstanding, the Board is hoping to add a limited numberof new ventures during the course of 2008. Financial Highlights Operating loss over the reporting period from 1 January 2007 to 31 December 2007was $1,284,471. Capital expenditure was $7,651,416 being the capitalisedexpenditure on exploration studies and seismic surveys. Third party funding wasagreed from farm- in partners to meet $8,752,398 of the total investmentcommitment including recovery of some back costs. Cash balances at year end were$5,534,815 although significant amounts will be required in the first half of2008 to meet the cost of operations still underway at the end of 2007. There issufficient capital to fund the Company's activities over at least the next sixmonths and an expectation that new funds can be introduced if necessary to meetcommitments for the remainder of 2008 and 2009. Operations Summary to end of 2007 Uganda The first half of 2007 was focused on completing technical evaluations;preparing for seismic operations; and holding discussions with potential fundingpartners. A six-month extension to the First Exploration Period, to 27 March2008, was approved in February 2008. This allowed for expected delays instarting the seismic programme (the Second Exploration Period is now in effect).In mid-2007, a small operational organisation was put in place to manage theseismic programme led by Marilyn Hill, a former oil and gas banker having wideexperience of working in developing countries at senior levels of government. While Neptune Petroleum (Uganda) Limited, Tower's Uganda operating subsidiary,prepared to conduct seismic operations, an Option Agreement was finalised inAugust with Orca Exploration Group Inc, a Toronto TSX Exchange listed companywhich operates the Songo Songo gas production and distribution venture inTanzania. Under the terms of the Agreement, Orca undertook to fund 83.33% ofseismic operations and certain back costs up to a contribution by them of $US6million. Above a gross cost of $US7.2 million, costs were to be shared 50% each.In return for this funding, Orca has an option to participate in a two welldrilling commitment programme, funding 83.33% of drilling costs ($10 million outof the first $12 million) and a like proportion of testing costs ($5 million outof the first $6 million) with cost sharing beyond the agreed limits to be 50%each. Orca would become a 50% Licence interest holder on committing to thedrilling programme. Orca has an agreed period from completion of seismicprocessing work to make further commitments which, in effect, gives them untilabout end May 2008 to reach a decision on whether it wishes to proceed. The commencement of seismic recording was delayed until 6th December 2007because of bad weather related delays to programmes with other operators. Aftera slow, weather affected start, the programme was completed in very good time,on 12th February 2008. Additional gravity data was also recorded, to fill ingaps to the north and south of the seismic recording area and to provide adirect correlation with recorded seismic. Namibia Seismic operations began on 25th August 2007 and 735 kms of 2-D seismic datawere recorded in the period to 2nd September 2007. The prime area of focus wasin the north west of the licence where interpretation of bought seismic data hadrevealed giant structures under deep water (up to 1,500 metres) with indicationsof hydrocarbons. The new data is of high quality and a comprehensive dataprocessing and interpretation programme was still underway at year end. On 20th September 2007 the Minister of Mines and Energy of the Republic ofNamibia approved the farm-out of an 85% interest in Tower's licence, coveringoffshore blocks 1910A, 1911 and 2011A, to Arcadia Petroleum Limited (Arcadia).The Minister also approved the transfer of the Operatorship of the licence toArcadia. He had previously agreed an extension of the initial exploration periodfrom two years to four years to accommodate Arcadia's proposed programme. Under the terms of the farm-out, Arcadia has committed to fully fund a programmeof activity in four parts which includes: • shooting and interpreting the recently completed 2-Dimensional seismic programme; • recording and interpreting a 3-Dimensional seismic programme, presently contemplated in early 2008; • an exploration commitment well; • a second well which might be an appraisal well or a second exploration well. Arcadia has the option to withdraw from its commitment at the end of each ofthese four stages of operation or to assign all or part of its interest to athird party agreeing to meet the funding commitment. In the case of withdrawaland failure to assign, the full 85% interest will revert to Neptune. Arcadia hasalso reimbursed 85% of certain historic costs to Tower amounting to about US$1.6million. Arcadia Petroleum Limited is a substantial trader of oil and related products.They bring considerable financial strength to the licence as well as access tovery relevant expertise in exploration, development and shipment of oil andnatural gas. Since Year-end and Looking Forward Uganda The basic seismic processing is now complete and it has confirmed the structuralfeatures identified by the gravity interpretation. More specific processing willnow be targeted at optimising and ranking specific drilling locations andinvestigating the presence of hydrocarbon indications. This work is important tothoroughly assess and rank the probability of success for each well location.Confirmation has been received that your Company is authorised to continue asthe sole Licensee into the Second two-year Exploration Period. Orca ExplorationGroup is expected to decide on their future intentions under the terms of theOption Agreement by end-May. It is expected that a recommendation in respect tothe forward 2008 programme will be made to the Tower Board and subsequently tothe Uganda Government by end-June 2008. It is particularly pleasing that the small operating organisation, comprisingmostly Ugandan nationals, developed to manage the seismic programme hasperformed effectively and this promises well for the future. I am also verypleased that the local company's interaction with local communities has beensuccessful and that a variety of carefully targeted social investmentinitiatives has been greatly appreciated. These socio-economic activities willbe further developed during the drilling phase of operations with a particularemphasis on sustainability and widespread benefit. Further details on theseprogrammes are given in the Directors Report. Namibia Comprehensive processing and interpretation of the 2-D seismic data is nearcompletion. Results to date have confirmed that the giant prospects previouslyidentified are viable exploration targets, having apparent four-way structuralclosure and strong hydrocarbon indications. However, geological modeling hasindicated a potentially different reservoir type and construction and thischanged perception is currently being built into the assessment of futureprogramme priorities. Recommendations are presently expected to be finalised byArcadia for partner and government approval by end May 2008. Corporate Outlook The year 2007 saw a great deal of positive progress for your Company. In 2008 wewill build strongly on this even though the first well in Uganda may be delayedto the final quarter. The procedures that need to be followed with partners andgovernment are naturally time consuming and it is important to delay commitmentsto contractors until a definite timetable can be guaranteed. The delay willallow minimisation of well location risk and may offer opportunities to workwith the other Operators in Uganda, to coordinate use of drilling rigs andassociated services, thereby substantially reducing costs. Your Board is verypleased that both Uganda and Namibia are being confirmed to have company makingpotential thus avoiding too much dependence on a single project. Activitycontinues to identify similar high quality ground floor opportunities. Thank you for your continued support. Peter KingstonChairman7 April 2008 CONSOLIDATED INCOME STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 Year ended 18 Months ended 31 December 2007 31 December 2006 $ $Revenue - -Cost of sales - - Gross profit - - Administrative expenses before chargefor share-based payments (913,652) (954,399) Share-based payments (370,819) (174,841) Total administrative expenses (1,284,471) (1,129,240) Group operating loss (1,284,471) (1,129,240) Finance income 164,668 122,518______________________________________________________________________________ Loss before taxation (1,119,803) (1,006,722)Taxation - - Loss for the period (1,119,803) (1,006,722) Attributable to:Equity holders of the Company (1,119,803) (1,006,722) Loss per share (cents)Basic (0.21) c (0.30) cDiluted (0.21) c (0.30) c The results shown above relate entirely to continuing operations. GROUP STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2007 Share-based Share Share Payments Retained Total Capital Premium Reserve Losses Equity $ $ $ $ $Balance at 1 July 2005 244,875 1,146,015 - (308,715) 1,082,175Share issues 652,999 10,866,884 - - 11,519,883Loss for 2006 - - 174,841 (1,006,722) (831,881)_______________________________________________________________________________________ Balance at 1 January 2007 897,874 12,012,899 174,841 (1,315,437) 11,770,177Share issues 154,631 2,913,307 - - 3,067,938Loss for 2007 - - 370,819 (1,119,803) (748,984)_______________________________________________________________________________________ Balance at 31 December 2007 1,052,505 14,926,206 545,660 (2,435,240) 14,089,131_______________________________________________________________________________________ CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2007 31 December 2007 31 December 2006 $ $ ASSETSNon-Current AssetsPlant and equipment 106,967 3,339Goodwill 7,979,502 7,979,502Intangible exploration and evaluation assets 711,590 1,408,868 8,798,059 9,391,709 Current AssetsTrade and other receivables 3,121,389 55,116Cash and cash equivalents 5,534,815 2,456,825 8,656,204 2,511,941 Total Assets 17,454,263 11,903,650 LIABILITIESCurrent LiabilitiesTrade and other payables (3,365,132) (133,473) Total Liabilities (3,365,132) (133,473) Net Assets 14,089,131 11,770,177 EQUITYCapital and ReservesShare capital 1,052,505 897,874Share premium 14,926,206 12,012,899Share-based payments reserve 545,660 174,841Retained losses (2,435,240) (1,315,437) Shareholders' Funds 14,089,131 11,770,177 CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 31 DECEMBER 2007 Year ended 18 Months ended 31 December 2007 31 December 2006 $ $ Cash flow from operating activitiesGroup operating loss for the year (1,284,471) (1,129,240)Adjustments for items not requiring an outlay of funds: Depreciation of plant and equipment 2,241 753Share-based payments charge 370,819 174,841 Operating loss before changes in working capital (911,411) (953,646) Increase in receivables and prepayments (3,066,272) (48,564)Increase in trade and other payables 3,231,658 76,154 Cash used in operations (746,025) (926,056)Interest received 164,668 122,518 Net cash used in operating activities (581,357) (803,538) Investing activitiesFunds used in exploration and evaluation (8,055,120) (1,316,094)Funds received from farm-in partners 8,752,398 -Payments to purchase plant and equipment (105,869) (4,092)Costs of acquiring subsidiaries - (143,308)Cash acquired with subsidiary undertakings - 48,553 Net cash from/(used in) investing activities 591,409 (1,414,941) Financing activitiesCash proceeds from issue of shares 3,067,938 3,915,078Share issue costs - (234,116) Net cash from financing activities 3,067,938 3,680,962 Increase in cash and cash equivalents 3,077,990 1,462,483Cash and cash equivalents at beginning of period 2,456,825 994,342 Cash and cash equivalents at end of period 5,534,815 2,456,825 NOTES TO THE FINANCIAL INFORMATIONFOR THE YEAR ENDED 31 DECEMBER 2007 1 Basis of preparation The Group's financial statements, from which this financial information has beenextracted, are prepared on a going concern basis, under the historical costconvention and in accordance with International Financial Reporting Standards,as adopted by the European Union ("IFRS"), including IFRS6 'Exploration for andEvaluation of Mineral Resources' and in accordance with the Companies Act 1985. The financial information contained in this report does not constitute fullstatutory accounts within the meaning of Section 240 of the Companies Act 1985.The figures are extracted from the audited financial statements for the yearended 31 December 2007 which will be filed with the Registrar of Companies, sentto shareholders and will be available on the Company's website atwww.towerresources.co.uk in due course. The comparative figures for the eighteen months ended 31 December 2006 are notthe statutory accounts for that financial period. Those accounts, which wereprepared under IFRS, have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors was (i)unqualified, (ii) did not include a reference to any matters to which theauditors drew attention by way of emphasis without qualifying their report, and(iii) did not contain a statement under section 237(2) or (3) of the CompaniesAct 1985. 2 Going concern During the year ended 31 December 2007 the Group made a loss of $1,119,803 (18months to year end 31.12.2006 - $1,006,722). At the balance sheet date the Grouphad net assets of $14,089,131 (2006 - $11,770,178). The Group has expectedexploration expenditure commitments of $3,571,900 due within one year from thebalance sheet date and a further $16,000,000 due between one and two years. The operation of the Group is currently being financed from funds which theCompany raised from private and public placings of its shares together withmonies raised under a farm-out agreement with Arcadia Petroleum Limited inrespect of its Namibian licence. In addition, the Group has concluded anagreement with Orca Exploration Group Inc under which that Company iscontributing an agreed proportion of the Seismic and Drilling costs involved inrespect of the Group's Uganda licence. Whilst the Company may have to raise additional equity towards the end of 2008in order to meet its share of the exploration expenditure commitments of its twolicenses, the Directors believe that the Group will be able to secure thesefunds and, accordingly, are satisfied that the going concern basis remainsappropriate for the preparation of these financial statements. 3 Loss per share Year ended 18 Months ended 31 December 2007 31 December 2006 $ $ Loss for the year/period (1,119,803) (1,006,722) Weighted average number of share in issue 526,897,228 337,507,589 Basic loss per share (0.21)c (0.30)c The diluted loss per share has been calculated using a weighted average numberof shares in issue and to be issued of 530,895,322 (2006: 338,718,970). Thediluted loss per share has been kept the same as the basic loss per share as theconversion of share options decreases the basis loss per share, thus beinganti-dilutive. 4 DividendsNo dividend is proposed in respect of the financial year. 5 Annual general meetingThe annual general meeting of the Company will take place at 12pm on 28th May2008 at the office of: Sprecher Grier Halberstam LLP1 America Square, Crosswall, London, EC3N 2SG 6 Intangible assets Exploration and evaluation assets Goodwill Total $ $ $CostAt 1 January 2007 1,408,868 7,979,502 9,388,370Additions 8,055,120 - 7,545,547Monies received under farm-out agreements (8,752,398) - (8,752,398) At 31 December 2007 711,590 7,979,502 8,181,519 Amortisation and impairmentAt 1 January 2007 - - -Amortisation for the year - - -Impairment loss for the year - - - At 31 December 2007 - - - Net book valueAt 31 December 2007 711,590 7,979,502 8,181,519At 31 December 2006 1,408,868 7,979,502 9,388,370 Goodwill arose on the acquisition of the Company's subsidiary undertakings. TheGroup tests goodwill for impairment annually and when there are indicators ofimpairment. The amounts for intangible exploration and evaluation (E & E) assets representcosts incurred in relation to the Group's Ugandan and Namibian licences. Theseamounts will be written off to the income statement as exploration expensesunless commercial reserves are established or the determination process is notcompleted and there are no indicators of impairment. The outcome of ongoingexploration and evaluation, and therefore whether the carrying value of E & Eassets will ultimately be recovered, is inherently uncertain. The Directors haveassessed the value of the oil and gas exploration and evaluation expenditurecarried as intangible assets and in their opinion no provision for impairment iscurrently necessary. As discussed in the Chairman's statement, during 2007 the Group entered into twofarm-out agreements. The farm-out partners have contributed $8,752,398 towardspast and future exploration and evaluation costs. These receipts have beendeducted from the past E & E costs of the Group, as shown above. The net E & Ecosts consist of $514,000 in Uganda and $198,000 in Namibia. 7 Share capital and options 31 December 2007 31 December 2006 $ $Authorised10,000,000,000 ordinary shares of 0.1p each 19,900,000 19,900,000 Allotted, called up and fully paid537,107,878 (2006: 458,333,333) ordinary shares of 0.1p each 1,052,505 897,874 The share capital issues during 2007 are summarised as follows: Number of Share capital Share 0.1p shares at nominal value premium $ $ At 1 January 2007 458,333,333 897,874 12,012,899Shares issued for cash 78,774,545 154,631 2,913,307 At 31 December 2007 537,107,878 1,052,505 14,926,206 The details of share options outstanding at 31 December 2007 are as follows: Number of Share options At 1 January 2007 9,000,000Granted during the period 6,000,000Exercised during the period (1,000,000)Lapsed during the period (2,000,000) At 31 December 2007 12,000,000 Date of Grant Number of options Option price Exercisable between 21 December 2005 3,000,000 1.5p 21/12/05 - 21/12/1028 February 2006 1,000,000 1.5p 28/02/07 - 28/02/1128 February 2006 2,000,000 1.5p 28/02/09 - 28/02/11 8 February 2007 1,000,000 3.125p 08/02/07 - 08/02/12 3 May 2007 3,000,000 2.25p 03/05/08 - 03/05/1220 September 2007 2,000,000 2.75p 20/09/08 - 20/09/12 The Company's share price ranged between 1.65p and 3.68p during the year. Theclosing share price as at 31 December 2007 was 2.75p per share. This information is provided by RNS The company news service from the London Stock Exchange