Tower seeks license extension to complete well preparations off Cameroon

Thali PSC; Source: Tower Resources

Oil and gas company Tower Resources has applied for an extension of its initial exploration period on the Thali license, located offshore Cameroon, to enable the completion of a well currently being prepared on the Njonji structure.

The work on the license is being conducted through Tower’s subsidiary, Tower Resources Cameroon SA, which holds a 100% interest in the shallow water Thali (formerly known as “Dissoni”) Production Sharing Contract (PSC), in the Rio del Rey basin, offshore Cameroon.

Tower was awarded the PSC on September 15, 2015 for an Initial Exploration Period of three years.

In an operational update released on Monday, Tower said it has completed its Environmental and Social Impact Assessment (ESIA) in respect of its intended drilling on the Thali block, including the well that the company is currently preparing to drill on the Njonji structure.

The company submitted its report to the Government in late June, which was then the subject of public hearings in July, and the company received its certificate of environmental compliance on August 6, 2018. This certificate is valid for drilling operations encompassing multiple wells in the Thali license area, subject to operations starting over the coming three years.

In addition, the company has filed its application with the Ministry of Mines, Industry and Technological Development (MINMIDT) for an extension of the Initial Exploration Period of the Thali license of up to one year from its current expiration date of September 14, 2018, as permitted under the company’s production-sharing agreement (PSA), for the purpose of completing the well currently being prepared on the Njonji structure.

The company noted it does not expect to receive a formal response from MINMIDT until September, but believes the extension will be granted given progress to date, and the terms of the PSA.

G&G work

Finally, the company has conducted a considerable amount of geological and geophysical (G&G) work in respect of the Thali block since receiving the reprocessed 3D seismic data rather later than expected in April, and has been sharing that work as completed with Oilfield International Ltd (OIL) the independent consultancy which the company has retained to compile a Reserves Report.

The company and OIL had originally planned to complete this work, and OIL’s work, earlier in the summer. However, the G&G work has expanded and is now expected to be complete in September, which will permit a more comprehensive report from OIL.

As explained by Tower, the additional work arises for two main reasons. First, the initial interpretation of the reprocessed 3D data appears to indicate that the gross intervals of key reservoirs increase toward the South and/or West of the original NJOM-1 well drilled by Total in 2008, but it is difficult to judge the amount of the increase in the reservoir intervals from the data in its present form.

Second, the improved resolution of the reprocessed 3D has provided a clearer definition of the faults which potentially separate the fault block compartments in Njonji, but has also raised questions over whether some of the faults which were originally thought to separate the different compartments are actually sealing or not, raising the attractive possibility of fewer, larger fault block compartments at Njonji than the five originally interpreted by Total and the company.

Both these questions will ultimately be answered by drilling, but further analysis will be of interest to shareholders, and also will help the company in refining the well location and in planning subsequent decisions, notably well testing, Tower said.

Further analysis

The company is, therefore, currently undertaking further petrophysical analysis of nearby wells, and using the sonic/density/deep induction logs to enhance the seismic data to better match the well log spectrum. This process emphasizes the higher frequencies and should provide a significant improvement in resolution.

The company is also refining its depositional model with more focused and detailed thickness mapping, which will help it to better evaluate the reservoir interval changes in 3D. Finally, the company has retained Dr Tim Needham of The University of Leeds Institute of Applied Geoscience to undertake a fault seal analysis.

The company currently expects that this additional work will be completed around the end of August and the results made available to OIL for incorporation into its Reserves Report which OIL are now targeting for completion during September.

The Reserve Report will also contain risked volumetric and financial evaluations of the other main oil prospects that the company haa identified on the Thali license, including the fault blocks on Thali to the South of Perenco’s producing Dissoni North field, and also prospects identified in the Idenao East structure in the North East of the license area, which are substantial. The reprocessed 3D seismic data has also provided the company with a clearer view of the deeper prospectivity of the block, which the company is also now analyzing, but this will not form part of the Reserve Report.

Rig contract talks in progress

Whilst the G&G work is being completed, the company is also in the process of negotiating rig and associated service contracts for the upcoming Njonji well, having selected a provisional well location and conducted initial preparatory work including well engineering.

Jeremy Asher, Chairman & CEO, remarked: “We are happy with the progress being made on the Njonji well. The board would like to see the Reserves Report as soon as possible, but we felt that this additional work was required to inform the best decision regarding the final well location, and should also positively impact the quality of the Reserves Report when complete.”

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. The Rio del Rey basin has, to date, produced over one billion barrels of oil and has estimated remaining reserves of 1.2 billion barrels of oil equivalent (“boe”), primarily at depths of less than 2,000 meters. The Rio del Rey is a sub-basin of the Niger Delta, an area in which over 34.5 billion barrels of oil has been discovered, with 2.5 billion boe attributed to the Cameroonian section.

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