LONDON - Tower Resources plc (AIM: TRP), an AIM-listed oil and gas company with a focus on Africa, has announced the execution of two farm-out agreements with Prime Global Energies Limited for its Thali license in Cameroon and PEL96 offshore Namibia. These agreements involve Prime acquiring minority, non-operated interests in the licenses and making significant financial contributions to the related work programs.
Prime will acquire a 42.5% interest in the Thali license, contributing $15 million towards its work program, including the drilling of the NJOM-3 well in 2025. Additionally, Prime has agreed to farm-in to PEL96 for a 25% non-operated interest. Tower Resources will receive $937,500 immediately and a further $3,437,500 upon completion of the agreements, totaling $4,375,000 in cash.
Completion of these agreements is anticipated by the end of Q1 2025, pending government, partner, and regulatory approvals. Prime, a UK-based company with extensive upstream operational experience, has notably acquired assets from ENI (BIT:ENI) in Pakistan in 2022 and has a significant presence in the region.
In addition to the cash contributions, Prime has committed to production-based payments of 10% of its after-tax share of profit oil from Thali to Tower, which will pass the majority onto Pegasus Petroleum Limited and retain a portion as previously disclosed. The deal also includes the issuance of 5,650,483,681 Ordinary shares in Tower to Pegasus.
The agreements are part of Tower's strategy to advance its operations in Cameroon and de-risk exploration licenses in emerging oil and gas provinces like Namibia and South Africa. The company's chairman and CEO, Jeremy Asher, expressed satisfaction with securing a partner with substantial resources and operational success.
The farm-out agreements are expected to enable Tower to drill the NJOM-3 commitment well, marking a significant milestone for the company. Moreover, Tower is in discussions with African lending banks for medium-term facilities to support early production from the Thali license.
The funds from the farm-out transactions, combined with additional financing, are expected to meet the NJOM-3 well commitment and further development costs. In Namibia, the funds will aid in evaluating large leads and prospects across the PEL96 license, including reprocessing of 2D seismic data to guide new 3D seismic data acquisition.
The share capital of Tower Resources will increase following the equity issue to Pegasus, with application for the new shares to be admitted to trading on AIM expected around January 15, 2025.
This news is based on a press release statement and reflects the company's ongoing efforts to strengthen its position and deliver value to its stakeholders.
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