Tower Resources has managed to find a partner for its Thali block, located offshore Cameroon, ahead of an exploration well planned for June 2020. Tower is still in talks with other potential partners for the farm-out of a further interest in the block.
The company said on Monday it had executed binding heads of terms (HoT) in respect of a farm-out to OilLR of a 24.5% working interest in its Thali Production Sharing Contract (PSC) in Cameroon.
Tower Resources said it would remain the operator of the Thali PSC under an industry-standard joint operating agreement (JOA), and in the event the formal farm-in agreement and approvals could not be completed in good time then OilLR would instead receive an appropriate share of the operator’s share capital and Tower’s intercompany loans to the operator, subject to a shareholder agreement, in order to reflect the intended farm-in economics and JOA terms.
The HoT are binding even though further documentation is required to effect the transaction, and the parties’ intention is to complete the transaction by April 15, 2020, subject to usual confirmatory due diligence and OilLR having provided payments to Tower and into escrow of $7.5 million in total at completion, and Tower having demonstrated that it has funding from its own or other sources for the balance of the $15 million (such funding to include the funds Tower has already spent on the well).
In particular, the HoT will terminate automatically on March 29, 2020, in the event that Tower has not received proof of funding in a form acceptable to it from OilLR by that date.
OilLR is a private company incorporated in Brisbane, Queensland whose principal shareholders are Art Malone and Greg Lee.
In addition to its farm-in to the Thali license, OilLR is presently in the final stage of acquiring interests in two additional appraisal/production assets.
Tower is still in discussion with several other parties regarding the farm-out of up to a further 24.5% interest in the Thali PSC on similar terms.
Jeremy Asher, Tower’s Chairman and CEO, commented: “We are delighted to have the opportunity to work with Greg Lee and Art Malone of OilLR on this project in addition to securing this funding for the well, and we intend to have the balance of the funding in place by the time this transaction completes.
“This agreement is also consistent with our intention to commence drilling NJOM-3 in June, subject to finalization of the rig schedule and the service companies’ schedules. We expect this well to transform the company by converting current contingent resources into proven reserves, so putting us firmly on the path to production in 2021.”
As previously reported, Tower is preparing to drill the NJOM-3 well at its Thali license with a tentative timeline set for June this year. In preparation for the well, Tower has recently completed a survey at the Njom-3 well site.
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