Tower Resources: Farm-out Talks Progressing Well

Tower Resources Cameroon SA, a wholly-owned subsidiary of Africa-focused Tower Resources Plc, has hinted at good progress on the ongoing discussions with potential farm-in parties into the Thali PSC offshore Cameroon.

The progress in the negotiations, which largely are focused on partial or whole financing of the planned NJOM-3 well drilling in the Thali PSC and exchanging draft term sheet, comes shortly after the government of Cameroon gave the nod for the extension of the exploration period of the license.

“The Government of Cameroon has decided to grant a further exceptional one-year extension to the initial period of the Exploration Phase of the Thali PSC as requested by the Company,” Tower Resources said earlier while confirming the extension.

The farm-out talks had been put on hold in late 2019 awaiting the approval of the extension of the current exploration period of the Thali PSC in September last year.

And this week Tower Resources said it was working to complete the planned farm-out for the NJOM-3 well “within its desired timeframe although there can be no certainty as to timing or eventual outcome of such discussions.”

Earlier, Tower Resources, which holds a 100% license interest in Thali PSC, had informed shareholders of plans for the drilling were at an advanced phase following the completion of the site survey. 

The survey was led by Geoquip Marine, a global geotechnical data acquisition company, with the support of vessel MV Investigator as Tower Resources Plc inched closer to commencing the drilling operations on the NJOM-3 under a contract both parties signed in November 2019.

The survey was completed on February 7, 2020, involving the drilling of three boreholes to a depth of 80m with alternating sampling and PCPT (piezocone penetration tests) according to update by Tower Resources.

“Although the analysis of the data will take some weeks, the company's initial view is that the data from the three boreholes are consistent and in line with pre-survey expectations,” said Tower Resources at the time.

The company’s management is optimistic of the well spudding in June 2020 but “that is subject to further work and confirmation of equipment availability”.

“Some testing equipment will still need to be mobilized prior to spudding the well, along with personnel, and so this intended date is still subject to change,” the company said in a statement.

Tower Resources’ optimism for success in the search for oil and gas in the 119.2 km2 Thali PSC is hinged on the reputation of the Rio del Rey basin located in the eastern part of the Niger Delta known to be highly prolific.

An earlier independent Reserve Report by Oilfield International Limited estimated the contingent and potential resources on the Thali license to be approximately 18 MMbbls of oil concentrated on the proven Njonji-1 and Njonji-2 fault blocks while the gross mean prospective resources are estimated at 20 MMbbls of oil across the Njonji South and Njonji South-West fault blocks.

Meanwhile, in the Dissoni South and Idenao areas of the northern part of the Thali permit, the report estimates the presence of gross mean prospective resources of 111 MMbbls of oil spread across four prospects.

Tower Resources and other international Africa-focused oil and gas companies eyeing a share of Cameroon’s offshore market are encouraged by recent developments in the West Africa country’s upstream investment environment especially after the April 2019 approval of several upstream legislative proposals by the Cameroon Senate meant to replace the 1999 Petroleum Code. 

A key component of the legislative reforms is the approval of the proposal for a tax holiday for oil and condensate development in addition to the additional seven years for gas development. 

The Ministry of Mines, Industry and Technological Development is also pushing for the modification of the current production sharing contracts to allow oil and gas exploration and production firms to recover their costs from production based on Cameroonian offshore acreages.

Cameroon remains one of the few West Africa offshore oil and gas markets that would continue to attract international oil and gas explorers and producers with previous hydrocarbons sector investment outcomes likely to attract more participants into this upstream space.

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