Tower Resources plc has reached an agreement with the Operator, Repsol Exploration (Namibia) (Pty) Limited, relating to the disputed costs associated with the drilling of the Welwitschia prospect, offshore Namibia.
According to Tower, the Operator’s estimate of well and other related costs for the drilling of the Welwitschia prospect, which had been completed on June 15, 2014, had increased to $33 million net to Tower. At that date, Tower’s subsidiary, Neptune Petroleum (Namibia) Limited, had settled $25.3 million of these costs.
Tower says that following amicable discussions with the Operator, agreement has been reached settling Neptune’s share of costs at $28.3 million. Consequently, a final cash payment of $3.0 million is being made by Neptune in full and final settlement of all costs associated with the well and the Licence exploration period which ended on August 22, 2014. The company says that this represents a net reduction of $4.7 million against the previous estimate.
A firm budget has been agreed for the next exploration period which extends to August 22, 2015. Tower explains that this work programme is designed to obtain a fuller understanding of the results of the well and of its implications for the remaining prospectivity of the Licence, especially the large untested deeper targets, including the Albian carbonates, now there is a well-tie to the existing 3D seismic.
Following the final $3.0 million payment, Tower’s cash position will be approximately $7.5 million. The company says that it is adequately funded for its remaining commitments with respect to the drilling of the Badada-1 well, onshore Block-2B, Kenya, which is expected to spud by early January 2015 and for which further cash costs of $1.9 million are budgeted.
Graeme Thomson, CEO, commented: “We are pleased to have resolved these matters and now to be working to improve our understanding of the untested prospectivity in our Namibia Licence. We can now focus on our exciting and potentially play-opening well onshore Kenya and continue developing our African portfolio.”