Petroleum Africa
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Thursday, April 10, 2014
Tower Resources had quite a few interesting items to announce, the first being its placing and subscription. The company is looking to raise £19.3 million before expenses by way of a placing with certain existing and new investors at a price of 3.5 pence per placing share. As a result of its placing Tower is now fully financed for the remaining firm well costs for the Welwitshcia-1 well offshore Namibia.
The funds from the placing will also be used in its proposed acquisition of Rift Petroleum Holdings, a company with interests offshore South Africa and onshore Zambia. The proposed acquisition of Rift Petroleum in exchange for the issuance of 550 million ordinary shares in Tower Resources will give Tower access to what the company believes to be two highly prospective areas offshore South Africa and two early stage licenses onshore Zambia. The South Africa acreage, the Algoa-Gamtoos, is located between acreage recently farmed into by ExxonMobil and Total.
The funds will also aid in covering its proposed farm-in to Block 2B onshore Kenya alongside Taipan Resources and Premier Oil. Farm-in terms for the Kenyan block include $4.5 million cash, 9 million Tower shares in two tranches and $1.0 million contingent payment on spud of a second well. The drilling of Badada-1 well is anticipated Q4 2014 and will target a potential new Tertiary rift play opener in the Anza basin.
There is also its anticipated entry into the Dissoni Block, offshore Cameroon, which is still subject to a final agreement and the funding for 3D seismic acquisition in Q1 2015. Tower has been named as a preferred bidder in respect of the Dissoni Block.
These transformational transactions will create a diversified African portfolio with material activity and anticipated news flow in the coming months and years, including two high impact wells in the next nine months.
Graeme Thomson, CEO of Tower Resources, said: “I am very pleased with the success of this Placing which broadens the institutional shareholder base in difficult markets. I am even happier with the announcement of the accompanying acquisition of Rift Petroleum and the conditional farm-in to Block 2B Kenya. These transactions, combined with our existing assets in Namibia and Western Sahara, and our ongoing negotiations in Cameroon, Madagascar and elsewhere, will transform Tower into a true Pan-African exploration company. On completion Tower will hold a diversified asset portfolio, in highly prospective hydrocarbon regions and at various stages of development, which should deliver numerous operational milestones in the coming months and years. Each asset has the individual potential to deliver substantial upside for our investors. The acquisition of Rift Petroleum and the farm-in to Block 2B are both products of the hard work of our team over the last 12 months, and result in Tower’s exposure to what we consider to be some of the most exciting exploration acreage in Africa. I look forward to updating the market on our further progress.”
Jeremy Asher, Chairman of Tower Resources, added: “The Board is delighted to be able to announce the signing of these transactions, and we hope that shareholders who may have been impatient for news can now see why it has taken a little time to coordinate and deliver their conclusion. Protecting and growing shareholder value is at the forefront of our thinking on all matters, and the recovery in Tower’s share price presented the opportunity to fund our remaining costs associated with the drilling of the Welwitschia-1 well through a placing that is far less dilutive to shareholder interests than a farm-out. The team has been searching for a good entry point to South Africa for some time, so the chance to acquire the excellent Rift Petroleum assets there and in Zambia was also too good an opportunity to pass up, and we are delighted to welcome Julian McIntyre (the founder and indirect majority owner of Rift Petroleum) as a significant shareholder. Directors were unable to participate in this placing, owing to the fact that the Company was considered to be in a close period under the AIM Rules, but the placing was nevertheless over-subscribed and brings a number of new institutional investors into the company. As always, the Board would like to thank our existing shareholders for their continuing support and to extend a warm welcome to our new shareholders.”
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