Tower Resources Regulatory News (TRP)

Press Release

18th May 2011

Tower Resources plc

Final Results for the 12 months ended 31 December 2010

Tower Resources plc ("Tower" or "the Company"), the AIM-listed oil and gas exploration company, today announces its final results for the 12 months ended 31 December 2010.

Highlights:

Namibia

·; Independent Competent Persons Report ("CPR") in mid-2010 confirmed huge potential based on 2-D seismic

·; 3-D seismic survey interpretation has been completed since the year end and confirmed clear structural closure, sustained reservoir thickness and direct hydrocarbon indicators at the main Maastrichtian prospect level

·; A recently identified Albian age reservoir may be significant.

·; 3-D AVO interpretation fine tuning still in process but near completion

·; CPR update incorporating full 3-D interpretation underway and due for completion by end-June 2011

·; Financial and operational planning activities in progress with a view to drilling early in 2012

Uganda

·; Prospectivity of EA5 has been enhanced by the results of an aero gravity gradiometry survey

·; A probable oil generation kitchen has been identified

·; A large high structural area has also been identified where reservoir quality may be productive

·; A seismic survey is ready to begin so that a well can be drilled before the end of 2011

Commenting on the results, Peter Kingston, Executive Chairman of Tower said:

"The 3-D seismic data acquired in Namibia has confirmed the exciting potential in the Delta Maastrichtian reservoir with very strong hydrocarbon indications being seen. A second potentially significant reservoir has been identified in a formation of Albian age and the secondary leads have been confirmed to be present. A well early in 2012 will finally test one of the world-class, multi-billion barrel resource potential prospects in the Company's Namibian Licence. While Namibia can transform Tower as a company, I am pleased that Uganda may still deliver substantial shareholder value from a well in the second half of this year. The next year promises to be one of the most exciting of my professional career."

For more information on Tower Resources, please visit; www.towerresources.co.uk

Contacts:

CHAIRMANS STATEMENT

The next twelve months are going to be the most exciting in the Company's history, building up to the definitive test of the Namibia project potential with the drilling of the first well scheduled for early in 2012. As announced on 8 July 2010, an independent Competent Person Report (CPR) on the Namibia venture, based on 2-D seismic data, confirmed the world class scale and quality of the Licence and concluded that the Delta structure, currently being prepared for drilling, has a 26% chance of finding 2.4 billion barrels of oil equivalent ("boe") gross recoverable resources from the most clearly defined reservoir horizon. The report also confirmed significant prospective resources in less well defined horizons in the Delta structure and in the Alpha and Gamma structures. In combination, the latter two leads would hold about 5 billion boe of un-risked gross recoverable resources. Such potential represents truly exciting exploration targets. The interpretation of 3-D seismic data has further confirmed that potential, and an updated CPR is expected to be completed in mid-June 2011.

While Namibia will provide the greatest excitement, a third well is also planned in Uganda which could create significant additional shareholder value. This well appears to have a better chance of success than the first two, based on interpretation of the cumulative evidence to date. A high resolution aero gravity gradiometry ("GGI") survey was completed during July 2010, with final interpretation finalised in December. The interpreted data clearly indicates an area where basin depth plunges to about 2,500 metres and this is expected to be favourable for the generation of hydrocarbons. It also highlighted a clearly defined structural high not too far from the newly defined kitchen. This interpretation has provided the basis for a focused seismic programme, which is about to begin.

Meaningful progress with prospective farm-in partners for the Uganda Licence was delayed whilst discussions about completion of the Heritage/Tullow transaction and the subsequent sale of assets by Tullow to Total and CNOOC remained unresolved. To avoid serious delay to the commitment programme and to meet the budgeted cost of the seismic programme which is due to begin shortly, the Company raised approximately £4.28 million by way of a share placing in February 2011. The tax negotiation has now been sufficiently well resolved to allow development of the substantial reserves discovered in the Albertine Graben to date to continue, and a farm in partner is now being actively sought for the EA5 commitment well.

Financial Highlights and Going Concern

The Group's loss for the year ended 31st December 2010 was $1,311,453, an increase of $265,674 over the corresponding period for 2009. Capital expenditure on exploration studies, drilling operations, licence management costs and licence fees amounted to $7,966,961 after receiving $1,851,180 from farm-in partners. Cash balances at 31 December 2010 totalled $1,213,428.

All operational expenditure for the Namibian project during the year was met by the Licence operator, Arcadia Petroleum and Tower's financial carry will continue until completion of the first well and, if this is successful, a second well. The Group continues to operate in Uganda and is liable to meet the ongoing operating costs of its local operating subsidiary until funding for forward operational commitments is secured. The remaining commitment is a well which needs to be started before 27 March 2012. The current strategy remains to reach agreement with third parties to fully fund this well, which the current programme calls to be drilled before the end of 2011. The Company is part way through a farm-out process coordinated by ENVOI, a consultancy specialising in identifying funding partners for exploration programmes. Global Petroleum Plc retains, but has not yet exercised, an option under agreed terms to become a 25% licencee and to participate in future operations. If it elects to participate in the current seismic and the commitment well it will be liable for its share of costs incurred since completing Avivi-1.

In February 2011, and in advance of securing external funding for Uganda operations, the Company raised cash of $6,882,745 net of costs via a share placement. This funding will enable it to meet the projected cost of the seismic project and working capital requirements for the next 12 months. The Board is confident that the Uganda commitment well can be funded within the remaining duration of the Licence term.

Operations Summary to end 2010

Namibia

The seismic vessel, "Geowave Master", arrived on location on Monday 28 June 2010 to begin the 3-D seismic acquisition programme and completed the survey on 6 September 2010. The data quality is excellent and processing was completed early in 2011.

The Company commissioned an independent review of its interest in Namibia Licence 0010 by Oilfield International Limited ("OIL") in mid-2009 and, after receiving an interim report early in 2010, asked for the study to be upgraded into a full Competent Persons Report. This was completed and a summary was published on 8 July 2010. The assessment by OIL has been undertaken in compliance with the SPE Petroleum Resources Management System (SPE-PRMS). OIL reviewed the work undertaken by Arcadia and Tower and where relevant, undertook technical analysis of their own to accommodate their own wide and relevant experience, particularly of the Brazilian basins, which may be analogous in certain respects to those in northern Namibia. OIL have calculated prospective resources based on seismic data, well data from two wells drilled on the Licence in the early 1990s and the judgement of its relevant specialists.

OIL confirmed the main structural features as Delta (at two separate levels, Maastrichtian and Palaeocene) and Alpha and Gamma (at the Palaeocene level only) but, also, some significant, high risk resource potential in stratigraphic features between the main 4-way dip closed anticlines. The main conclusions were as follows:

·; The Delta structure at Maastrichtian level ("DeltaM") is classified as a prospect, which, in a technical sense, means it is suitable to drill without further information - the Delta, Gamma and Alpha structures at Palaeocene level are classified as leads, which require further information to raise them to prospect level.

·; OIL has used the seismic data, the two Namibian discoveries and regional data to evaluate the likelihood that the reservoirs would be predominantly light oil-bearing with a possible gas cap; gas condensate-bearing or dry gas-bearing. For Delta, OIL concludes probabilities of 50%, 40% and 10% respectively. All other structures are rated 45%, 44% and 11% respectively.

·; Prospective resources for the prospect and leads at the 50% probability level have been estimated as follows:

·; In the event of light oil, gross recoverable resources amount to 7.55 billion barrels and 12.4 trillion scft of natural gas. Net figures for Tower are 1.08 billion barrels and 1.8 trillion scft of natural gas.

·; In the event of gas condensate, gross resources amount to 765 million barrels and 28.5 trillion scft of natural gas. Net figures for Tower are 109 million barrels and 4.1 trillion scft natural gas.

·; In the event of dry gas, gross resources amount to 67 million barrels and 27.8 trillion scft natural gas. Net figures for Tower are 10 million barrels and 3.9 trillion scft natural gas.

·; OIL have engineered the most likely development approach and associated capital cost, operating cost and production profiles for each case together with currently traded oil and gas prices (gas into Europe), escalated to 2020 first production and beyond. They have calculated NPV 10% after-tax values on that basis for each case. Each has been valued on an independent standalone basis to avoid trying to determine economies of shared facilities.

·; The final step has been to estimate a geological chance of success ("COS") for each structure. This has made use of all basic technical information but also an intensive review of the AVO data, in particular interpretations prepared by consultants to Arcadia. DeltaM has been assessed as having a 26% COS; DeltaP 8% COS; GammaP a 12% COS; and AlphaP a 20% COS. An economic confidence factor of about 85% was then applied to the geological COS's to calculate the economic COS used in the EMV calculations.

OIL have estimated that the net risked prospective resources attributable to Tower's 15% working interest of Namibia Licence 0010 is 170 million barrels of oil equivalent, having an EMV of US$696 million (UK£0.38 per share).

Uganda

On 1 March 2010 the Company announced that it had completed operations on the Avivi-1 exploration well in Uganda Licence EA5. The well was plugged and abandoned and the rig released on 27 February. The well, which was drilled to a total depth of 764 metres, did not encounter oil, but persistent methane gas traces were encountered. Water was recovered from the target reservoir interval using a wireline fluid sampler and electric logging confirmed the absence of oil and gas.

Avivi-1 demonstrated a thick interval of organically rich clays which could be good quality source for oil generation, if present at greater depth. It could also provide an effective seal where covering a viable structural trap. Laboratory analysis of the water sample indicated evidence of hydrocarbon signatures. The GGI survey confirmed a potential hydrocarbon kitchen beyond the coverage of existing data which is large enough to supply a commercial scale oil accumulation. A working petroleum system has therefore now been confirmed based on independent analysis of all available geochemical and geophysical data and this represents a significant de-risking of the presence of hydrocarbons. The quality of reservoir sands at the Avivi-1 location was poor but reservoir characteristics were more consistent with the objective river channel facies than reservoirs encountered at the first well. The lack of good quality reservoir at either well location increases the emphasis on identifying structures close to the deepest area of the basin, where the chances of encountering better reservoir are improved.

Wireline pressure data from Avivi-1 has also given a reliable aquifer pressure and pressure gradient in the aquifer. This matches exactly with the equivalent data in EA1 indicating that there may be regional connectivity at reservoir target level. The water sample and pressures obtained from Avivi-1, when combined with Iti-1 well data, confirm the likelihood that Iti-1 contains oil to a possible structural spill point in poor quality reservoir. The water analyses have allowed reinterpretation of Iti-1 electrical logs and this confirms the possible presence of some hydrocarbons in the Iti-1 basal sand. This could be consistent with effective, connected porosity being much lower than the total porosity. These conclusions do not imply any commercial significance at Iti-1 but are positive for the potential of a future oil discovery elsewhere in EA5.

Sedimentology studies also indicate that the basin history is consistent with acceptable reservoir quality being present within the Licence and that the poor quality reservoirs located in the first two wells may not prove to be the norm. Results from the GGI survey are consistent with the conclusion that both well locations may not have been ideal for preservation of reservoir quality.

Since Year End and Looking Forward

Namibia

The 3-D seismic interpretation was largely completed by mid-April 2011 - this work evaluated structural mapping, prospect definition and mapping of AVO anomalies. Clear structural closure, sustained reservoir thickness and direct hydrocarbon indicators - AVO anomalies and pock marks - have been confirmed at the main Maastrichtian prospect level. Additional potential is confirmed at the Palaeocene horizon (defined as a lead in the Competent Persons Report (CPR)) but also at two other formations deeper than the Maastrichtian, viz the Campanian and Albian. The remaining interpretation work focusing on detailed fine tuning of the AVO attributes to get the best possible understanding of the significance of hydrocarbon indicators in determining optimum well locations and estimating a chance of success. The interpretation is sufficiently complete to begin an updated CPR and for Arcadia to begin funding activities. A farm out programme is underway but alternative funding options are being considered. There is scope to share a drilling rig with operators of nearby Licences and relevant discussions have been held. At present, it appears that suitable rigs will be available when required, early in 2012.

Uganda

A contract for the 2-D seismic programme of 150-200 kms has been signed with TESLA-IMC International Limited - line clearance is due to begin shortly. Completion of acquisition and processing is targeted for mid-July 2011, by which time a well location can be selected. A high density geochemical survey, conducted by GORE Geochemical Surveys, was completed at the end of April over the prospect area together with focussed sampling around the two existing wells and an oil-bearing well in EA1. Interpretation is scheduled for completion by the end of June. The Environmental Impact Assessment and early operational planning for a third well have begun.

With the uncertainty with respect to long term development planning in Uganda having been resolved, a final phase of the farm out programme has been initiated. The Company has raised additional equity capital to undertake the seismic programme in time for a well to be drilled in October 2011, subject to rig availability.

Future Outlook

The next year will determine Tower's future. Our Namibian Licence is independently confirmed to have world class potential, having three giant simple structures, with areas between 350 and 950 square kilometres, and strong hydrocarbon indications from seismic data. Such prospects are extremely rare in our industry. The drilling of a well in Namibia is planned for early in 2012 and success would transform the value of your Company. Uganda still has genuine potential and there is good reason to believe that a location can be found for a well to be drilled within six months to test potential resources of about 100 million barrels. A discovery of that scale could add significant shareholder value.

Peter Kingston

 Chairman

May 17th 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2010

The results shown above relate entirely to continuing operations.

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2010

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

The financial statements were approved by the Board of Directors on 17 May 2011 and signed on its behalf by:

Peter Kingston

 Chairman

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2010

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2010

1. Accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated below.

1.1 Basis of preparation

The financial statements are prepared on a going concern basis, under the historical cost convention and in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS"), including IFRS 6 'Exploration for and Evaluation of Mineral Resources' and in accordance with the Companies Act 2006. The Parent Company's financial statements have also been prepared in accordance with IFRS and the Companies Act 2006. The Group and Company financial statements are presented in US Dollars.

1.2 Going concern

During the year ended 31 December 2010 the Group made a loss of $1,311,453 (2009: $1,045,779). Included in this loss is a share based payments charge of $180,921 (2009: $335,842). At the year end date the Group had net assets of $27,282,152 (2009: $27,356,124) and cash balances of $1,213,428 (2009: $8,581,474). Subsequent to the year end in February 2011 the Company raised $6,882,745 from the issue of new ordinary shares.

The Group currently has cash balances of approximately $5.6 million and therefore will not require further funds to meet its remaining budgeted operating and Uganda seismic costs of about $5.6 million (including appropriate contingency) for the period ending 31 May 2012 (being approximately 12 months from approval of these financial statements) whether or not Global elects to continue in Uganda. In the event that Global exercises its option to participate in future Uganda operations, it would be liable to repay approximately $1 million in back costs and contribute another $1.5 million to forward operations excluding drilling. The final well commitment is estimated to cost $7,500,000. In the most likely case that Global will meet their 25% share of costs, the Group would need to contribute up to $4 million to the cost of this well but if Global do not contribute, the Group would be responsible for meeting the full cost from other external sources. The Directors are confident that they will be able to raise the additional funds and continue to meet their final Uganda well funding obligation as it falls due. In coming to this conclusion, the Directors noted the continued interest of several potential farminees and previous recent capital raisings reflecting the continued support being received from its shareholders including the Directors.

The operations of the Group are currently being financed from funds which the Company raised from private and public placings of its shares. The Group has not yet earned revenue as it is still in the exploration phase of its business. The Group is reliant on the continuing support from its existing and future shareholders.

The Board believes that the Group will have sufficient cash and other resources to fund its activities and to continue its operations for the foreseeable future and for the Group to continue to meet its liabilities as they fall due, and for at least the next twelve months from the date of approval of these financial statements. The financial statements have, therefore, been prepared on the going concern basis.

2. Loss per share

For the purposes of the diluted loss per share the weighted average number of shares in issue and to be issued is 1,020,753,084. The diluted loss per share has been kept the same as the basic loss per share as the conversion of share options decreases the basis loss per share, thus being anti-dilutive.

3. The Directors do not recommend a dividend for the year ended 31 December 2010 (2009: Nil).

4. Intangible assets

Goodwill arose on the acquisition of the Company's subsidiary undertakings in prior years. The Group tests goodwill for impairment annually and when there are indicators of impairment.

The Group's exploration and evaluation ("E&E") assets at 31 December 2010 consist entirely of capitalised expenditure in relation to the Group's Ugandan ($17,283,863), Namibian ($697,054) and SADR ($150,113) licences. These amounts have not been written off to the statement of comprehensive income as exploration expenses because commercial reserves have not yet been established or the determination process has not been completed.

The outcome of ongoing exploration and evaluation, and therefore whether the carrying value of E&E assets will ultimately be recovered, is inherently uncertain. The Directors have assessed the value of the E&E expenditure carried as intangible assets, and in their opinion, no further impairment is necessary. This assessment includes a review of the expiry dates of licenses and the likelihood of their renewal, available funds and the intention to continue exploration and evaluation.

5. Subsequent events

Since the end of 2010, $6,882,745 was raised in February, via an equity placing of 90,000,000 new ordinary shares, to meet the cost of the Uganda seismic programme which is currently underway and which is due to be completed around the end of June 2011. A drilling consultancy firm has been appointed to manage the programme for a third Uganda commitment well, currently targeted for October 2011, subject to rig availability. Interpretation of the Namibia 3-D seismic is in its final stages and an updated Competent Persons Evaluation is underway with a final report (CPR) expected before the end of June 2011. Arcadia Petroleum, which is obliged to fund Tower's share of a first exploration commitment well, is making progress towards meeting its funding requirements and the selection of a drilling vessel in good time. The current objective is to drill the well in the first quarter of 2012.

6. The full Report and Accounts will be posted to shareholders shortly and a copy will also be available on the Company's website www.towerresources.co.uk.

7. The Annual General Meeting will be held at 11.00am on 21st June 2011 at One America Square, Crosswall, London, EC3N 2SG.