Cameroon: Tower Resources Declares Force Majeure

Oil company Tower Resources, working on development on the Thali offshore Block in Cameroon, has declared force majeure, citing the impact of COVID-19 and travel restrictions on its operations.

"Petroleum operations in Cameroon have already been affected by consequences of the Covid-19 pandemic, including international travel restrictions, and the Republic of Cameroon introduced its own travel restrictions on March 17th. Service providers are therefore temporarily limited in what they can do locally, as is Tower itself, and so the company last week notified the Ministry of Mines, Industry and Technological Development ("MINMIDT") of an event of Force Majeure under the terms of the PSC [Thali Production Sharing Contract].

This means that, during the force majeure period, the parties' obligations under the agreement are temporarily suspended, so that the same period of about seven months remaining under the current exploration period as at March 17, should still remain once the Force majeure period ends.

Tower has said that the planned NJOM-3 offshore well could still be spudded prior before September 15, 2020 despite the Force Majeure, if the situation returns to normal quickly enough, "but this is now inherently uncertain."

"...however, in any event, the company remains committed to drilling NJOM-3 as quickly as possible," Tower Resources said.

Tower is planning to drill the NJOM-3 well to test a discovery previously made by Total. The Thali PSC covers an area of 119.2 km², with water depths ranging from 8 to 48 meters, and lies in the prolific Rio del Rey basin, in the eastern part of the Niger Delta.

To remind, Tower Resources has recently signed a binding head of terms ("HoT") in respect of a farm-out of a 24.5% interest in the PSC to OilLR Pty Ltd ("OilLR").

The parties have now agreed to amend their agreement to extend the proposed completion date to June 30, 2020.

Jeremy Asher, Tower's Chairman and CEO, commented: "We are glad that our partners at OilLR remain committed to the Thali project despite recent market upheavals and despite the operational delays required by the global response to the Covid-19 pandemic. 

"As our recently released update to the Oilfield International Reserve Report has highlighted, the Thali project economics remain very attractive at current Brent prices, with forward prices still well above $40 per barrel during our expected production period. 

"The Force Majeure provisions of our PSC are designed to provide breathing space in precisely this kind of situation, and we are already planning and discussing with service companies how we can move forward as quickly as possible when things return closer to normal."

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