Tower Resources PLC - Africa-focused oil and gas company - Says Cameroon government agrees to further extension of exploration to May 2023. However, Tower Resources is redrawing its funding plans for drilling the NJOM-3 well at the Thali project, offshore Cameroon. Tower Resources says it has yet to receive approval from the government of Cameroon regarding its farm-out to Beluga Energy of a 49% non-operating working interest in its Thali production sharing contract. The farm-out to Beluga Energy Ltd covers $15 million towards the expected $16.8 million cost of the NJOM-3 well that Tower is planning to drill. Company has now informed Cameroon’s minister of mines, industry & technological development it will no longer be seeking approval of the farmout in its current form.
Company explains: ‘There are a number of reasons for this, but the most important is that during the last six months while the Government of Cameroon was conducting due diligence on the proposed transaction, the market environment has changed considerably. In particular, the company has been in discussion with local banks in Cameroon (including the bank with which it previously discussed this transaction in 2019) and the company now believes that debt financing may be available to cover a significant portion of the well cost. This should allow a restructured transaction which would require less of the equity in the project to be given up in return for the well funding, to the advantage of all parties.
‘It should also be noted that a restructured transaction (as contemplated in the original farmout documents) does not require government approval. Company intends to work with the banks with whom it presently has discussions, and with Beluga and other interested parties, to restructure the well financing over the next few months, with the objective of concluding a revised transaction in the third quarter of 2022, that is less dilutive to Tower shareholders than the present farmout structure.’
Current stock price: 0.24 pence, down 28% on Monday
12-month change: down 34%
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