Tower Resources Regulatory News (TRP)

7 February 2022

Tower Resources plc

Namibia Update and statement regarding the Graff-1 exploration well

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN), the AIM-listed oil and gas company with a focus on Africa, is pleased to provide an update on activity in respect of license PEL 96 in Namibia, covering blocks 1910A, 1911 and 1912B (the "Namibian Blocks") and in particular the recent news regarding the Shell-operated Graff-1 exploration well.

Tower has noted the announcements by the National Petroleum Corporation of Namibia ("Namcor"), and also operator Shell Namibia Upstream B.V. ("Shell"), and partner QatarEnergy, confirming that the Graff-1 well on PEL 39 has made a discovery in both its primary and secondary targets, and proved a working petroleum system for light oil in the Orange Basin, offshore Namibia. The partners' announcements say that they intend to perform further laboratory work and also intend to drill a second exploration well, to determine the size and recoverable potential of the discovery. The Graff-1 well was drilled, apparently without incident and in around 50 days, to a total depth of 5,376 metres in water depths of approximately 2,000 metres.

Other press reports have indicated that the well has been drilled in a slope channel system with a startigraphic trap, and has encountered at least one 60-metre layer of hydrocarbons, holding an estimated 250-300 million barrels of light oil, in an Upper Cretaceous sandstone reservoir. While the announcements say nothing about the source rock, it appears reasonable to infer that the light oil has been generated in Lower Cretaceous (probably Aptian-Barremian) or possibly older/deeper source rocks.

Tower's net acreage position of 18,637 km2 is believed to be the third largest net acreage position in the Namibian offshore, after Exxon and Eco Atlantic Oil & Gas.

Tower's Namibian Blocks, covering a gross area of 23,297 km2, are in the Northern area of Namibia's offshore, in the Walvis basin which is closer to the border with Angola and the Namibe basin, approximately 950 kms away from Graff-1. While this is a considerable distance, certain conclusions can nevertheless be drawn that are relevant to our Namibian Blocks.

1. Initial conclusions

The most important point is that the Graff-1 well demonstrates conclusively the potential for source rocks in the Namibian offshore to have been buried sufficiently to generate light oil in substantial quantities. In the past, this had been open to question, as the only potentially commercial reservoir previously encountered in the Namibian offshore had been the Kudu gas discovery, and the Lower Cretaceous source rock at Wingat-1 (about 250 kilometres to the South of our Namibian Blocks) had produced light oil but until now no substantial oil-charged reservoir was found. The result at Graff-1 therefore reduces the risk of all leads which may rely on similar source rocks, even though each source rock carries its own characteristics and the risks of migration, charge and reservoir are also unique to each case.

The Graff-1 well also would appear to indicate, if the press reports are correct, that the slope channel system with a stratigraphic trap has enabled successful migration of oil into a potentially commercial scale reservoir, which is encouraging for further plays of the same type in both Namibia and South Africa.

2. Tower's Namibian Blocks

This key conclusion is relevant to our Namibian Blocks because our license area contains a large number of prospects and leads in the Cretaceous turbidites (sandstones) and also in the Albian carbonates and early Cretaceous clastics; and the license area also contains stratigraphic intervals that correlate with regional Lower Cretaceous source rocks which are buried at a sufficient depth to put them in the light oil window. We now have confirmation that these source rocks are potentially capable of producing oil in quantities required to charge substantial reservoirs.

We note that the two wells drilled by Norsk Hydro in the mid-1990s in the Tower block 1911 already penetrated both Upper Cretaceous turbidites and Albian carbonates, with well 1911/15-1 recovering light oil from Albian carbonates, as well as penetrating three source rock intervals including one in the Upper Cretaceous (which is oil-prone, but not mature) and two Lower Cretaceous intervals. In addition to the oil potential from the marine source rocks encountered in the Lower Cretaceous, the oil actually recovered from well 1911/15-1 appears to be from deeper Lacustrine sources, also thought to be Lower Cretaceous, which are clearly mature.

As previously announced, our Namibian Blocks contain two giant structures (identified on the map on our website at the link below as Alpha and Gamma) and four other substantial leads in the Dolphin Graben (identified on the same map as leads A, B, C and D), each of which contain multiple stacked reservoirs including Albian carbonates and Upper Cretaceous turbidites. Both Alpha and Gamma are interpreted as giant 4-way dip closured structures with billion-barrel potential. The Dolphin Graben Leads A, B C & D, all of which are located directly adjacent to areas with mature source rocks, are each estimated to hold between 250-686 million barrels of prospective resources (arithmetically summed gross, unrisked, Pmean), based on Tower's own initial unaudited estimates.

In addition to the structural plays identified above, Tower has also identified significant prospectivity in stratigraphic plays within the Cretaceous and Palaeogene intervals, with potential for deep-water turbidite reservoirs interbedded with mature source rocks.

These various plays include leads in the slope channel system and the base of slope/fan setting, similar to Graff and Venus respectively, although we do not yet have enough information to say how closely analogous individual structures may be.

For more information on our Namibian Blocks, please see our website at this link:

https://www.towerresources.co.uk/operations/namibia/

3. Next steps

Tower has already been conducting basin modelling to support technical evaluation of the leads identified to date as part of the work programme for the Initial Exploration Period for PEL 96. We are now moving forward with more detailed and focused geological and geophysical analysis aiming to high-grade areas for further seismic data acquisition, and we will also be looking out for further information regarding Graff and Venus as and when it becomes available. Once this work is complete, we will acquire new 3D seismic data over the most promising leads/prospects in line with our work programme.

Jeremy Asher, Tower's Chairman and CEO, commented:

"We are delighted by the Graff-1 discovery, for the Republic of Namibia and our partners at Namcor, and also for the greater confidence that this discovery gives us in our own Namibian Blocks. As Immanuel Mulunga, Managing Director of Namcor, has said, this should put to rest any remaining doubts about the hydrocarbon potential of Namibia. We hope that this discovery will bring prosperity to Namibia, and that the further exploration and appraisal activity it generates will also reduce costs and provide further insights to assist all of us exploring in the area."

Contacts:

Notes:

In accordance with the guidelines for the AIM market of the London Stock Exchange, Dr Mark Enfield, BSc, PhD, and a member of 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.