Tower Resources Regulatory News (TRP)

9 April 2014

Neither this Announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any new ordinary shares in any jurisdiction in which any such offer or solicitation would be unlawful. The information contained herein is restricted and is not for publication, release or distribution, in whole or in part, directly or indirectly, in, or into or from the United States, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction in which such publication, release or distribution would be unlawful.

Tower Resources plc

Placing of £19.3 million ($32.0 million)

Acquisition of Rift Petroleum Holdings Limited

Farm-in to Block 2B, Kenya

Preliminary Results to 31 December 2013

Tower Resources plc ("Tower Resources" or the "Company") (LN:TRP), the AIM listed Africa focused oil and gas exploration company, is pleased to announce: a placing and subscription to raise £19.3 million (US$32.0 million) before expenses (the "Placing"); the proposed acquisition of Rift Petroleum Holdings Limited ("Rift Petroleum"), a company with interests offshore South Africa and onshore Zambia; and the proposed farm-in to Block 2B onshore Kenya alongside Taipan Resources Inc. ("Taipan Resources") and Premier Oil plc ("Premier Oil"). These transformational transactions will create a diversified African portfolio with material activity and anticipated newsflow in the coming months and years, including 2 high impact wells in the next 9 months.

The Company is also pleased to announce its preliminary results for the 12 months ended 31 December 2013.

Highlights

· £19.3 million (US$32.0 million) to be raised by way of a Placing with certain existing and new investors at a price of 3.5 pence per Placing Share

· As a result of the Placing, the Company is now fully financed for the remaining firm well costs to drill the Welwitschia-1 well offshore Namibia, maintaining its 30% interest in the licence while minimising dilution of the overall interest to the shareholders

· Placing proceeds to be used to fund:

o The Company's share of the remaining firm well costs associated with the Welwitschia-1 well in Namibia, planned to spud late-April 2014 and targeting net risked prospective resources of 496mmboe

o Entry into South Africa and Zambia and funding ongoing costs associated with the all-share acquisition of Rift Petroleum

o Funding for proposed farm-in to Block 2B, onshore Kenya, alongside Premier Oil and Taipan Resources and to meet the Company's share of expected costs associated with the drilling of the Badada-1 well in Q4 2014

o Anticipated entry into the Dissoni Block, offshore Cameroon, subject to final agreement, and funding for 3D seismic acquisition in Q1 2015

· Proposed acquisition of Rift Petroleum in exchange for the issuance of 550 million ordinary shares in Tower Resources (the "Consideration Shares")

o Privately owned exploration company with exposure to what the Directors believe are two highly prospective areas offshore South Africa and two early stage licences onshore Zambia

o Provides only significant AIM exposure to emerging E&P region offshore South Africa with 50% interest in Algoa-Gamtoos, located between licences which have recently been farmed into by Total and Exxon - a farm-out process is underway with newly interpreted 3D seismic expected to be available in early Q3 2014

o Vendor shareholder contributing US$7.4 million in cash prior to completion to fund 2D process/interpreting and 3D seismic acquisition/process/interpreting

· Farm-in to 15% of Block 2B Kenya, agreed with Taipan Resources, for 15% working interest (Taipan currently 45%). Premier Oil (55%) farmed into Block 2B in December 2013

o Farm-in terms - US$4.5 million cash, 9 million Tower shares in two tranches (the "Farm-In Shares") and US$1.0 million contingent payment on spud of a second well

o Drilling of Badada-1 well anticipated Q4 2014, potential new Tertiary rift play opener in the Anza basin

· Tower has been named as preferred bidder in respect of the Dissoni Block, offshore Cameroon

· Announcement of preliminary results for the period to 31 December 2013

Graeme Thomson, Chief Executive Officer of Tower Resources, said:

"I am very pleased with the success of this Placing which broadens the institutional shareholder base in difficult markets. I am even happier with the announcement of the accompanying acquisition of Rift Petroleum and the conditional farm-in to Block 2B Kenya. These transactions, combined with our existing assets in Namibia and Western Sahara, and our ongoing negotiations in Cameroon, Madagascar and elsewhere, will transform Tower into a true Pan-African exploration company. On completion Tower will hold a diversified asset portfolio, in highly prospective hydrocarbon regions and at various stages of development, which should deliver numerous operational milestones in the coming months and years. Each asset has the individual potential to deliver substantial upside for our investors.

The acquisition of Rift Petroleum and the farm-in to Block 2B are both products of the hard work of our team over the last 12 months, and result in Tower's exposure to what we consider to be some of the most exciting exploration acreage in Africa. I look forward to updating the market on our further progress."

Jeremy Asher, Chairman of Tower Resources, added:

"The Board is delighted to be able to announce the signing of these transactions, and we hope that shareholders who may have been impatient for news can now see why it has taken a little time to coordinate and deliver their conclusion. Protecting and growing shareholder value is at the forefront of our thinking on all matters, and the recovery in Tower's share price presented the opportunity to fund our remaining costs associated with the drilling of the Welwitschia-1 well through a placing that is far less dilutive to shareholder interests than a farm-out. The team has been searching for a good entry point to South Africa for some time, so the chance to acquire the excellent Rift Petroleum assets there and in Zambia was also too good an opportunity to pass up, and we are delighted to welcome Julian McIntyre (the founder and indirect majority owner of Rift Petroleum) as a significant shareholder. Directors were unable to participate in this placing, owing to the fact that the Company was considered to be in a close period under the AIM Rules, but the placing was nevertheless over-subscribed and brings a number of new institutional investors into the company. As always, the Board would like to thank our existing shareholders for their continuing support and to extend a warm welcome to our new shareholders."

Readers are referred to the important notice that applies to this announcement. Unless otherwise stated, references to time contained in this announcement are to UK time. This announcement has been issued by and is the sole responsibility of Tower Resources plc.

Contacts

Tower Resources

Jeremy Asher (Chairman)Graeme Thomson (CEO)

Andrew Matharu (VP - Corporate Affairs)+44 20 7253 6639

Peel Hunt LLP

(Nominated Adviser and Joint Bookrunner)

Richard Crichton/Ross Allister/Al Rae+44 20 7418 8900

GMP Securities Europe LLP (Joint Bookrunner)

Rob Collins/Liz Williamson+44 20 7647 2800

Dundee Securities Europe LLP (Co-Lead Manager)

Paul Colucci/Derek Smith/Matt Einhorn+44 20 3440 6850

Vigo Communications

Patrick d'Ancona+44 20 7016 9573

Note regarding forward-looking statements:

This announcement contains certain forward looking statements relating to the Company's future prospects, developments and business strategies. Forward looking statements are identified by their use of terms and phrases such as "targets" "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative of those, variations or comparable expressions, including references to assumptions.

The forward looking statements in this announcement are based on current expectations and are subject to risks and uncertainties which could cause actual results to differ materially from those expressed or implied by those statements. These forward looking statements relate only to the position as at the date of this announcement. Neither the Directors nor the Company undertake any obligation to update forward looking statements or risk factors, other than as required by the AIM Rules for Companies or by the rules of any other applicable securities regulatory authority, whether as a result of the information, future events or otherwise. You are advised to read this announcement and the information incorporated by reference herein, in its entirety (with due regard to the risk factors) for a further discussion of the factors that could affect the Company's future performance and the industries in which they operate. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks on the Company's website (or any other website) is incorporated in, or forms part of, this announcement.

Any person receiving this announcement is advised to exercise caution in relation to the Placing. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.

This summary should be read in conjunction with the full text of the announcement which follows.

Background to and reasons for the Placing

The Board's strategy is to realise the potential of the core Namibian licence whilst continuing to capitalise on the extensive African operating experience within the Company. The transactions announced today demonstrate Tower's ability to identify, analyse, negotiate and execute high quality acquisitions as part of this strategy. The acquisition of Rift Petroleum provides a large interest in an exciting new exploration province with farm down opportunities. The farm-in to Block 2B Kenya gives the Company further African diversification and exposure to an attractive upcoming well; and the Placing allows the Company to maintain its interests in Namibia with minimum dilution to shareholders and to fund the diverse and various additional opportunities that now present themselves.

As previously announced, the Company has undertaken and made significant progress seeking a farm-out partner for a 10% working interest in Namibia PEL0010 (which would have reduced the Company's overall interest in the Namibian license by a third). A number of parties have conducted a full review of the data-room and strong interest from several of those parties was and continues to be shown. In considering a farm-out of part of its interest, the Directors were seeking to maximise the value of this core Namibian asset, balancing the cost of direct dilution of its interest via a farm-out against the potential impact to shareholders of dilution in the Company at an equity level if the interest were financed via a share placing. In December, as a result of the recovery in Tower's share price, it was clear to the Board that an equity financing had become a less dilutive alternative to existing holders than a farm-down of their working interest in Namibia, as well as creating funding options for further carefully selected asset acquisitions. Equity financing also enables Tower to fund its share of the remaining approved firm well costs for Welwitschia-1 and any further licence activity assuming continuation into a second renewal phase while retaining the 30 per cent working interest in the licence, which the Company believes is more valuable (pro rata) than a smaller share. For these reasons, while maintaining the farm-out process, the Company began preparing for an equity-based financing alternative and also accelerated its search for additional assets, and this has culminated in the transactions being announced today.

The Rowan Renaissance drillship is scheduled to commence drilling operations at the Welwitschia-1 well site in Walvis Bay, Namibia on or around 17 April 2014. Based on the CPR update completed by Oilfield International in June 2013, the well is targeting risked resources estimated at 496mmboe net to Tower's 30% interest.

Certain of the Placing proceeds alongside the existing balance sheet cash of US$14.0 million will be used to finance the remaining approved firm well costs and other PEL0010 licence activity, assuming continuation into the second renewal phase.

As previously outlined, one of the Board's key strategic objectives is to diversify the Company's portfolio outside of the Namibian asset via its new ventures efforts. The geographic focus of the new ventures team has been on coastal basins of Africa and the various East African Rift systems. Two types of opportunity have been prioritised:

· Significant equity (50-100%) in early stage acreage in relatively under-explored regions; and

· Smaller interests (10-25%) in drill-ready opportunities.

To assist the new ventures strategy, the Company announced on 5 July 2013 that it was entering into a long term strategic partnership agreement with P.D.F. Limited ("P.D.F.") to provide the Outsourced Exploration Department (OExD™) tailored to the expanding exploration and new ventures needs of the Company. The appointment of P.D.F. has enabled the Company to identify and evaluate new opportunities at a rate equivalent to a company much larger than the Company's current size. To-date, the Company's new ventures team and OExD™ have evaluated over 80 potential opportunities.

The Placing has provided the requisite funds to successfully execute the acquisition of Rift Petroleum, which falls within the former, significant equity/early stage category of opportunity through its 50% interest in the Algoa-Gamtoos licence, offshore South Africa. The farm-in to a 15% working interest in the drill ready Block 2B, Kenya, falls within the latter, drill-ready category of opportunity.

The acquisition of Rift will be completed via an all share transaction and is expected to complete at the same time as the Placing and the vendor will contribute US$7.4 million in cash to Rift Petroleum prior to completion to fund the completion and processing of 2014 3D seismic acquisition programme on the Algoa-Gamtoos licence. Approximately US$2.0 million of the funds raised in the Placing will be used to finance other 2014/H1 2015 licence activity in South Africa and Zambia.

The Company has also agreed to farm-in to Block 2B, onshore Kenya, with Taipan Resources for a 15% working interest. The farm-in will be funded through the proceeds of the Placing and includes $5.0 million in respect of back costs and 2014 seismic costs as well as US$3.0 million in well costs relating to the Badada-1 well which is anticipated to spud in Q4 2014. The farm-in is conditional on consent from Premier Oil and is expected to complete in late May or early June 2014.

The Placing

The Company has conditionally placed 550,000,000 new ordinary shares in the capital of the Company (the "Placing Shares") at a price of 3.5 pence per share to raise gross proceeds of £19.3 million (US$32.0 million) by means of a placing and subscription with institutional and other investors by Peel Hunt LLP, GMP Securities Europe LLP acting as joint bookrunners and Dundee Securities Europe LLP acting as co-lead manager. Application has been made for the Placing Shares to be admitted to trading on AIM. It is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares by 8.00 a.m. on 14 April 2014.

Following admission of the Placing Shares and the Consideration Shares, the Company's enlarged issued share capital will comprise 3,764,015,692 Ordinary Shares of 0.1 pence each with voting rights in the Company ("Ordinary Shares"). This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in the interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

The issue of the Farm-In Shares will take place in two equal tranches on completion of the farm-in and three months thereafter.

Use of Proceeds

The Placing is expected to raise gross proceeds of approximately £19.3 million (US$32.0 million) and the expected application of funds raised in the Placing, after expenses is summarised as follows:

* Gross Firm well AFE US$91m **Assuming continuation into second renewal phase +Includes long lead items rebate of US$1.7m ‡ Costs of US$7.4m paid by vendor shareholders prior to completion

Acquisition of Rift Petroleum

Tower Resources has entered into a share purchase agreement with Rift Petroleum Group Holdings Limited, under which Tower will acquire the entire issued and to be issued share capital of Rift Petroleum in exchange for the Consideration Shares. Rift Petroleum is a private exploration company focused on the emerging offshore South African region with additional licences located onshore Zambia. The acquisition is conditional on the admission of the Consideration Shares as well as certain other closing conditions.

The acquisition gives Tower Resources exposure to a 50% interest in two South African offshore areas. A number of oil majors have recently acquired acreage in the region, including Exxon, Total, Anadarko and Shell.

Rift Petroleum's primary asset, its interest in the Algoa-Gamtoos licence, alongside New Age Energy Algoa (Pty) Ltd, covers seven blocks and 11,809km², and is located between two licence areas that have recently been farmed into by Exxon and Total. The Algoa-Gamtoos licence consists of three prospective basins, Algoa to the east, Gamtoos to the west and the Outeniqua deep-water basin.

New 3D seismic in the Algoa Canyon play is expected to be available during early Q3 2014 whilst mapping of 2013 2D seismic is ongoing across the Gamtoos and Deepwater plays. A formal farm-out process in respect of the Algoa-Gamtoos licence is ongoing with a number of parties in active discussions regarding the acquisition of an interest in the block. Tower intends to continue these discussions with a view to maximising value to shareholders from this block.

Rift Petroleum also has rights (subject to various conditions) to acquire a 50% interest in any exploration right granted to New African Global Energy SA (Pty) Ltd pursuant to an application it is making under a Technical Cooperation Permit (TCP) over the SW Orange Basin area covering three blocks and 21,500km².

Rift Petroleum has also successfully bid and been awarded an 80% interest in two blocks (Block 40 and 41) onshore Zambia in the most recent licencing round.

Rift Petroleum was founded and is indirectly majority owned by Mr Julian McIntyre, a successful entrepreneur and investor with extensive experience in building businesses in sub-Saharan Africa. Mr McIntyre was founder and lead investor in Gateway Communications, a pan-African telecommunications business which played a major role in the development of network infrastructure in over 40 countries in Africa. Gateway was ultimately sold to Vodafone in 2008 for approximately US$700 million. Mr McIntyre will indirectly become a significant shareholder in Tower Resources following completion of the transaction.

The Company will acquire Rift Petroleum through the issuance of the Consideration Shares. Prior to the acquisition, the vendor and its majority shareholder have undertaken to contribute US$7.4 million in cash to the company. 50% of the Consideration Shares issued for Rift Petroleum will be subject to a hard lock-in for a period of twelve months with the remaining 50% subject to orderly market provisions.

Following the acquisition of Rift Petroleum, the Directors believe the enlarged company will be the only AIM-listed oil and gas company with a significant focus on offshore South Africa.

Farm-in to Block 2B, Kenya

Tower Resources (Kenya) Limited, a wholly owned subsidiary of Tower Resources, has agreed to acquire a 15% interest in Block 2B, Kenya, currently owned by Lion Petroleum Corporation, a wholly owned subsidiary of Taipan Resources. Taipan Resources currently holds a 45% interest and is the operator of the licence. The remainder of the licence is held by Premier Oil, which farmed in for a 55% interest in December 2013. The farm-in is conditional on consent from Premier Oil and is expected to complete in late May or early June 2014.

In consideration for the farm-in, Tower Resources will pay Taipan Resources US$4.5 million in cash, the Farm-In Shares and a contingent payment of US$1.0 million on spud of a second well. Half of the Farm-In Shares will be issued to Taipan on completion of the farm-in with half to be issued in three months' thereafter.

Taipan Resources announced a 51-101 compliant independent assessment of Block 2B, completed by Sproule International Limited, in February 2014. The total estimated mean gross unrisked prospective resources, based on 19 exploration leads on Block 2B, was reported as 1,593mmboe, an increase of 388 per cent on the earlier estimated figure of 410mmboe. Taipan also recently completed an additional 196 km 2D seismic which confirmed robust closure at the prospect. Taipan's seismic database over Block 2B totals almost 2,500 line km (including 400 km survey acquired in early 2013 and c.1,850 km vintage data). Processing of the 196 km seismic data is underway and due to be completed imminently. The data will be used to identify the drilling location for the Badada-1 prospect that is planned to be drilled during Q4 2014.

The farm-in provides Tower with exposure to what it considers to be an additional highly prospective region, further diversifying the Company's Pan African portfolio. A number of other companies, including Africa Oil, Afren and Tullow are active in the region and all are due to undertake drilling campaigns during 2014.

Cameroon - Dissoni Block

Tower Resources has been named as preferred bidder in respect of the Dissoni Block in Cameroon. The Company believes that Dissoni represents an opportunity to secure low cost entry to a mature region with low-risk, albeit low-volume, targets and significant exploration upside. The final licence award is subject to negotiation and finalisation of terms with the Government of Cameroon. There are a number of discoveries and leads located on the licence area with the Company aiming, subject to award, to undertake 3D seismic during Q1 2015.

Preliminary results for the year ended 31 December 2013

The Company is pleased to report its unaudited preliminary results for the 12 months ended 31 December 2013. The Company's financial information is included at the foot of this announcement.

IMPORTANT NOTICE

This announcement does not constitute or form part of any offer or invitation to purchase, or otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction.

The information contained in this announcement is not to be released, published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States or to any US Person. This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any US Person. Securities may not be offered or sold in the United States absent: (i) registration under the Securities Act; or (ii) an available exemption from registration under the Securities Act. The securities mentioned herein have not been, and will not be, registered under the Securities Act and will not be offered to the public in the United States.

This announcement does not constitute an offer to buy or to subscribe for, or the solicitation of an offer to buy or subscribe for, Ordinary Shares in the capital of the Company or any other security in any jurisdiction in which such offer or solicitation is unlawful. The securities mentioned herein have not been, and the Ordinary Shares will not be, qualified for sale under the laws of any of Canada, Australia, the Republic of South Africa or Japan and may not be offered or sold in Canada, Australia, the Republic of South Africa or Japan or to any national, resident or citizen of Canada, Australia, the Republic of South Africa or Japan. Neither this announcement nor any copy of it may be sent to or taken into the United States, Canada, Australia, the Republic of South Africa or Japan. In addition, the securities to which this announcement relates must not be marketed into any jurisdiction where to do so would be unlawful.

This announcement has been issued by and is the sole responsibility of the Company.

Peel Hunt LLP is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing (whether or not a recipient of this announcement). Peel Hunt will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of Peel Hunt nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it. The responsibilities of Peel Hunt, as nominated adviser under the AIM Rules for Nominated Advisers, are owed solely to London Stock Exchange and are not owed to the Company or to any Director or Shareholder or to any other person in respect of their decision to acquire New Ordinary Shares in reliance on any part of this announcement.

GMP Securities Europe LLP ("GMP") is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing (whether or not a recipient of this announcement). GMP will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of GMP nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it.

Dundee Securities Europe LLP ("Dundee") is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing (whether or not a recipient of this announcement). Dundee will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of Dundee nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it.

This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

RISK FACTORS

A number of risks including risks in relation to (i) the business and activities of the Company and its subsidiary undertakings (together the "Group"); (ii) the Group's operations in Africa; (iii) the oil and gas industry; and (iv) risks relating to the Ordinary Shares are set out in Part 2 of the Company's open offer circular dated 26 July 2013 (pages 18 to 28) (the "Circular Risk Factors"). The following additional risk factors are considered by the Company to be of particular relevance in relation to the Group's current and proposed activities and together with the Circular Risk Factors (which shall be deemed incorporated in full herein) are considered by the Company to be the risk factors which are specific to the Group and its industry and which are material to taking investment decisions in relation to the shares of the Company and should be read in conjunction with the other information contained in this presentation or available on the Company's website. Such factors are not intended to be presented in any assumed order of priority and are not an exhaustive list. Additional risks and uncertainties, which are currently unknown to the Company or which the Company does not currently consider to be material, may materially affect the business of the Group and could have material adverse effects on the Group's business, results of operation and financial condition.

An investment in the Company is highly speculative and involves a high degree of risk. No representation is or can be made as the future performance of the Group and there can be no assurance that it will achieve its objective.

Risks relating to the Group's business

Default and Sole Risk

Please refer to the Circular Risk Factors, and in particular, the risk factor headed "Farm-out and joint venture partners". The Company, through its wholly-owned subsidiary, Neptune Petroleum (Namibia) Ltd ("Neptune"), holds a 30 per cent working interest in Petroleum Exploration Licence 0010 located in offshore Namibia (the "Namibian Licence"). It is estimated that drilling of the Welwitschia-1 well under the Namibian Licence will commence during April 2014. Significant capital will be required to achieve completion of the agreed drilling programme for the Welwitschia-1 well. Any liquidity or cash flow problems encountered by Neptune or the other working interest owners in the Namibian Licence may lead to a delay in the drilling programme that may be detrimental to the programme or may otherwise have adverse consequences for the Group. If other working interest owners in the Namibian Licence are unable to pay their share of the costs as they fall due it may be that Neptune is required to pay such working interest owner's share of the costs in order to protect its interest in the Namibian Licence. Similarly, if the drilling programme budget is exceeded and/or the Group does not have sufficient funds for any part of its working interest then the Group will need to obtain additional financing to fund its share of the drilling programme costs.

If additional drilling programmes are proposed regarding the Namibian Licence, and if not all of the working interest owners in the Namibian Licence agree to participate, then such additional drilling programmes may be undertaken on a sole risk basis under the joint operating agreement relating to the Namibian Licence. If Neptune decides not to participate then it may incur additional costs in order to protect or buy back into its interest in any discovery which arises from such drilling programme.

Insurance

Please refer to the risk factor headed "Insurance coverage and uninsured risks" in the Circular Risk Factors. The Group insures its operations in accordance with industry practice and plans to insure the risks it considers appropriate for the Group's needs and circumstances. No assurance can be given that the insurance coverage which the Group obtains will be adequate and available to cover any claims arising.

Risks relating to the proposed transactions

Both the Group's and Rift's proposed acquisition and farm-in are subject to satisfaction of conditions precedent and completion. Accordingly, there can be no assurance that either or both of these transactions will be completed as intended or at all.

In entering into documentation regarding the proposed acquisition and farm-in, the Group has relied on information and warranties (subject to limitations of liability) provided by the respective vendors and this announcement includes information provided by these vendors or on their behalf. While the Group has sought to verify such information so far as practicable, there can be no assurance that such information is true and accurate or not misleading or contains no omissions. Further, should any claims arise against such vendors, there can be no guarantee that such claims will be satisfied in full or at all.

Please refer to the risk factors headed "Retention of key business relationships", "Project development risks" and "The Group's objectives may not be fulfilled" in the Circular Risk Factors. In entering into the proposed transactions, the Group will be establishing new key business relationships and will be reliant on these relationships, as well as those with other parties involved in the relevant assets as operators or otherwise. There can be no assurance that these relationships will develop as planned nor that the exploration and development of the relevant assets will proceed as anticipated.

Please also refer to the risk factors headed "Government regulations and permits", "Expropriation risk" and "RISKS RELATING TO OPERATIONS IN AFRICA" which will also apply to the proposed acquisition and farm-in, and the assets subject of those transactions, as they relate to assets in various African countries. On 12 March 2014, the National Assembly of South Africa passed the Mineral and Petroleum Resources Development Amendment Bill (the "Bill") to amend the Mineral and Petroleum Resources Development Act, 2002 ("MPRDA"). The Bill introduces state participation in exploration and production rights. Under the Bill, the State will acquire an automatic 20% free carried interest in all new exploration and production rights. In addition, the State is "entitled to a further participation interest in the form of … acquisition at an agreed price; or … production-sharing agreements". The provisions relating to strategic minerals (the amended Section 49 of the MPRDA) now also relate to "petroleum and forms of petroleum". This means that petroleum and petroleum products may be declared as strategic minerals. Under Section 49 of the MPRDA, the Minister may prohibit or restrict the grant of exploration and production rights for strategic minerals at any time. The Bill is not yet enacted and there can be no certainty whether it will be enacted as proposed, nor how or if it will apply to existing rights nor how it would be implemented in practice. Similar issues may arise in any of the other countries in which the Group operates or proposes to operate.

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

The results shown above relate entirely to continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2013

1 Basis of preparation, accounting policies and going concern

1.1 Basis of preparation

This financial information of the Group for the year ended 31 December 2013 has been extracted from the unaudited financial statements of the Group. The financial information for the comparative year ended 31 December 2012 has been extracted from the audited financial statements for that year. The financial information is 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"), and in accordance with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The unaudited financial information contained in this report does not constitute the Company's statutory accounts for the year ended 31 December 2013. Statutory accounts will be delivered to the Registrar of Companies following the Company's annual general meeting, sent to shareholders and will be available on Company's website. The auditors have agreed to the issue of these results and expect to issue an unqualified audit report on the 2013 accounts following formal completion of the audit.

The comparative figures for the year ended 31 December 2012 are not the statutory financial statements for that year. Those accounts have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) but did include a reference to going concern which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under section 498 of the Companies Act 2006.

The accounting policies applied in this financial information is consistent with those adopted and disclosed in the Group's annual financial statements for the year ended 31 December 2012, the significant ones are set out below.

The Group financial information is presented in US Dollars.

1.2 Going concern

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

On 9 April 2014, the Company announced a Placing to raise $32.0 million before expenses, the acquisition for shares of Rift Petroleum Holdings Limited ("Rift") and a farm-in to Block 2B, Kenya. The Board of Directors believes that the Placing will enable the Company to fund its share of the 2014 Namibian exploration well and other Licence 0010 costs, to fund the costs associated with the Rift assets and the drilling commitments and other work programmes at Block 2B, Kenya, to continue its operations, including the pursuit of future exploration opportunities, and to continue to meet, as and when they fall due, its liabilities for at least the next twelve months from the date of approval of these financial statements. The financial statements have been prepared on the going concern basis.

1.3 Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company and its subsidiaries and have been prepared by using the principles of acquisition accounting ("the purchase method") which includes the results of the subsidiaries from their date of acquisition. Intra-group sales, profits and balances are eliminated fully on consolidation.

1.4 Goodwill

Goodwill is the difference between the amount paid on acquisition of subsidiary undertakings and the aggregate fair value of their net assets - of which oil and gas exploration expenditure is the primary asset. Goodwill is capitalised as an intangible asset and in accordance with IFRS3 'Business Combinations' is not amortised but tested for impairment annually and when there are indications that its carrying value is not recoverable. Goodwill is shown at cost less any provision for impairment in value. If a subsidiary undertaking is sold, any unimpaired goodwill arising on its acquisition is reflected in the calculation of any profit or loss on sale.

1.5 Oil and Gas Exploration and Evaluation Expenditure

All exploration and evaluation costs incurred or acquired on the acquisition of a subsidiary are accumulated in respect of each identifiable project area. These costs are classified as intangible assets and are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves (successful efforts). Other costs are written off unless commercial reserves have been established or the determination process has not been completed. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences the accumulated costs for the relevant area of interest are transferred from intangible assets to tangible assets as 'Developed Oil and Gas Assets' and amortised over the life of the area according to the rate of depletion of the economically recoverable costs.

1.6 Impairment of Oil and Gas Exploration and Evaluation Assets

The carrying value of unevaluated areas is assessed at least annually or when there has been an indication that impairment in value may have occurred. The impairment of unevaluated prospects is assessed based on the Directors' intention with regard to future exploration and development of individual significant areas and the ability to obtain funds to finance such exploration and development.

1.7 Decommissioning costs

Where a material liability for the removal of production facilities and site restoration at the end of the field life exists, a provision for decommissioning is made. The amount recognised is the present value of estimated future expenditure determined in accordance with local conditions and requirements. An asset of an amount equivalent to the provision is also created and depreciated on a unit of production basis. Changes in estimates are recognised prospectively, with corresponding adjustments to the provision and the associated asset.

1.8 Plant and equipment

Plant and equipment is stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost less estimated residual value of each asset over its expected useful life as follows:

Computers and equipment, fixtures fittings and equipment - Straight line over 4 years

The assets' residual values and useful lives are reviewed and adjusted if necessary at each year end. Profits or losses on disposals of plant and equipment are determined by comparing the sale proceeds with the carrying amount and are included in the statement of comprehensive income. Items are reviewed for impairment if and when events indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount which is the higher of an asset's net selling price and value in use.

1.9 Share based payments

The Company makes share-based payments to certain directors by the issue of share options or warrants. The fair value of these payments is calculated either using the Black Scholes option pricing model or by reference to the fair value of the remuneration settled by way of the grant of such options or warrants. The expense is recognised on a straight line basis over the period from the date of award to the date of vesting, based on the Company's best estimate of shares that will eventually vest.

1.10 Foreign currency translation

(i) Functional and presentational currency

Items included in the financial statements are shown in the currency of the primary economic environment in which the Company operates ("the functional currency") which is considered by the Directors to be the U.S Dollar. The exchange rate at 31 December 2013 was £1 = US$1.6574 (2012: £1 = US$ 1.6255).

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Transactions in the accounts of individual Group companies are recorded at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the year end. All differences are taken to the statement of comprehensive income.

1.11 Deferred taxation

Deferred income taxes are provided in full, using the liability method, for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred income taxes are determined using tax rates that have been enacted or substantially enacted and are expected to apply when the related deferred income tax asset is realised or the related deferred income tax liability is settled.

The principal temporary differences arise from depreciation or amortisation charged on assets and tax losses carried forward. Deferred tax assets relating to the carry forward of unused tax losses are recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

1.12 Cash and cash equivalents

Cash and cash equivalents are carried at cost and comprise cash in hand, cash at bank, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less.

2 Group operating loss

The Group's operating loss is stated after charging/(crediting) the following items:

* excluding share-based payment charge

3 Operating segments

The Group has two reportable operating segments: Africa and Head Office. Fixed assets and operating liabilities are located in Africa, whilst the majority of current assets are carried at Head Office. The Group has not yet commenced production and therefore has no revenue. Each reportable segment adopts the same accounting policies. In compliance with IFRS 8 'Operating Segments' the following tables reconcile the operational loss and the assets and liabilities of each reportable segment with the consolidated figures presented in these Financial Statements, together with comparative figures for the year ended 31 December 2012.

The 'adjustments' in the above tables represent the offsetting of inter-segmental receivables and payables

4 Loss per share

The diluted weighted average number of shares in issue and to be issued is 2,051,459,663. The diluted loss per share has been kept the same as the basic loss per share because the conversion of share options and share warrants would decrease the basic loss per share, and is thus anti-dilutive.

5 Employee costs

The employee costs of the Group, including directors' remuneration, are as follows:

The above amounts for 2013 have all been charged in administration expenses. However, the comparative figures for 2012 included a total of $728,543 that had initially been capitalised as exploration and evaluation assets but was subsequently included in the amount impaired in the financial statements for that year.

6 Intangible assets

The above capitalised E&E costs at 31 December 2013 relate to the Group's Namibian licence ($8,591,212) and SADR licence ($302,614). These costs have not been impaired because commercial reserves have not yet been established or the determination and evaluation process is incomplete. In the opinion of the Directors, taking into account the expiry dates of those licences, the likelihood of their renewal, the availability of funds, and the intention to continue exploration and evaluation in both license areas, no indication of impairment of the E&E assets currently exists.

7 Trade and other receivables

Included in the above Group figure is an amount of $1,196,534 in respect of VAT repayable by the Government of Uganda to the subsidiary, Neptune Petroleum (Uganda) Limited. Discussions are continuing between local management and the Ugandan Government regarding repayment of this amount and the Company is optimistic that a successful outcome will be reached and so no provision for impairment has been made.

8 Trade and other payables

Included in the above Group figure is an amount of $1,200,000 in respect of potential liability for withholding tax in Uganda of the Group's subsidiary, Neptune Petroleum (Uganda) Limited. No formal assessment from the Ugandan Government has been received by the Group and discussions are continuing between local management and the Ugandan Government regarding the potential liability.

The remaining payables balance represents liabilities incurred by the Group in the course of its normal commercial activities and are payable within a period of approximately 45 days.

9 Exploration expenditure commitments

The Group is committed to funding its 30% share of an exploration well on Licence 0010 in Namibia. Approval was given by the Namibian authorities in January 2013 for the Repsol Group to become capital operator of and to acquire a 44% interest in the Licence. The Second Renewal Exploration Period concludes on 22 August 2014 and requires that an exploration well be drilled. There is then an optional Third Renewal Exploration Period to 22 August 2016 for which a one well commitment would be required. Drilling of the exploration well, Welwitschia-1, is planned to start in mid April 2014 at a budgeted net cost of approximately $27.0 million and other net licence costs of approximately $3.0 million. This budget includes a net of approximately $1.5 million of consumables that may not be used in the well and which can be rebated at approximately this amount. As at 31 December 2013, the Group has paid a total of $3.0 million of cash calls towards these net costs and since then has paid a further approximately $3.4 million.

10 Share capital

The share capital issues during 2013 are summarised as follows:

Details of share options outstanding at 31 December 2013 are as follows:

(*) These options vest in the beneficiaries in equal tranches on the first, second and third anniversaries of grant.

11 Share warrants

Details of the warrants outstanding at 31 December 2013 are as follows:

These warrants vest in the beneficiaries on the first anniversary of grant.

The following table shows the interests of the Directors in the share warrants in issue.

The weighted average exercise price of the share warrants was 2.04 pence with a weighted average contractual life of 3 years and 98 days. The number of warrants vested and exercisable at the end of the year was 25,319,199.

12 Share-based payments charge

In compliance with the requirements of IFRS 2 on share-based payments, the fair value of options or warrants granted during the year is calculated using the Black Scholes option pricing model. For this purpose the volatility applied in calculating the above charge varied between 54.13% and 65.75% (depending upon the date of grant) and the risk free interest rate was 0.50%.

The Company's share price ranged between 1.15p and 4.85p during the year. The closing price on 31 December 2013 was 4.675p per share. The weighted average exercise price of the share options was 2.97p with a weighted average contractual life of 3 years and 43 days. The total number of options vested at the end of the year was 19,166,666.

13 Gain on acquisition of business combination

On 4 October 2013 the Company completed the purchase of the entire issued share capital of Wilton Petroleum Limited. The following table summarises the fair value of assets acquired and the consideration paid.

The 120,000,000 ordinary shares in the Company issued in part consideration for the acquisition are locked-in for a period of 12 months from the date of completion.

14 Subsequent events

On 24 January 2014, Tower announced that it had issued 19,250,000 new Ordinary Shares at an average issue price of 4.2p to raise $0.78 million net of costs via a modest draw-down on its Equity Financing Facility ("EFF") with Darwin Strategic Limited ("Darwin").

On that same date Tower also issued 1,573,181 New Ordinary Shares under contractual arrangements as part payment for services provided in the second half of 2013 at an average price of 3.1p per New Ordinary Share. The value of those services settled by the issue of shares was fully accrued for in the Consolidated Statement of Comprehensive Income for 2013.

Since 1 January 2014 Tower has issued a total of 2,874,294 New Ordinary Shares following the exercise of options and warrants. The total of warrants and options outstanding as at 8 April 2014 was 99,157,794 and the Issued Share Capital was 2,664,015,692 Ordinary Shares.

At 8 April 2014, Tower's cash balance was approximately $14 million, having paid cash calls in connection with the Welwitschia-1 well of approximately $6.4 million.

On 9 April, the Company announced a Placing to raise $32.0 million before expenses at a placing price of 3.5 pence per share, the acquisition of Rift Petroleum Holdings Limited for 550 million ordinary shares and a farm-in to Block 2B, Kenya, for a consideration of $4.5 million cash and 9.0 million ordinary shares. The issued share capital after the completion of these Placing and the acquisition of Rift Petroleum will be 3,764,015,692 Ordinary Shares.