Settlement Agreement

RNS Number : 8120O

Tower Resources PLC

25 September 2013

 



25 September 2013

Tower Resources plc

Settlement Agreement

Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)), the AIM listed Africa focussed oil and gas exploration company, is pleased to announce the signing of a Settlement Agreement ("Agreement") between Tower, Wilton Petroleum Limited ("Wilton"),  Ophir Energy plc  ("Ophir") and its wholly owned subsidiary Ophir Madagascar Limited ("Ophir Madagascar") relating to the Marovoay Block-2102, onshore Madagascar.

On 3 July 2013, Tower announced the conditional acquisition of Wilton for an initial combination of US$1.75 million cash and 120 million Tower shares locked-in for 12 months, which at yesterday's closing price valued Wilton at US$4.2 million; this was scheduled for completion by 31 August 2013. Wilton's sole asset is a 20% interest in Block-2102, onshore Madagascar, carried for one firm exploration well by Ophir Madagascar (80% interest, Operator) capped at a net value of US$4.0 million under a Farmout Agreement dated 8 July 2010 (as amended).   

The first exploration well was scheduled to be drilled by 19 April 2014, as per Amendment No.6 to the Production Sharing Contract ("PSC") signed by OMNIS, Ophir Madagascar and Wilton on 11 April 2013.

On 2 September 2013, Tower announced that Ophir Madagascar had verbally indicated to Wilton that they did not wish to proceed with the commitment well. This resulted in Tower extending the completion date of the Wilton transaction to 30 September 2013 in order to accommodate negotiations between the parties.  

On 23 September 2013, Ophir announced that it had notified OMNIS (Office des Mines Nationales et des Industries Stratégiques) in Madagascar of its intention to relinquish the interest in and operatorship of Block-2102 in order to concentrate on its core, material assets.

In order to compensate Wilton, inter alia, for the loss of its carry in the well of up to US$4.0 million and its interest in Block-2102, a Settlement Agreement has been executed by the parties dated 24 September 2013, under the terms of which Wilton will receive US$6.0 million in cash from Ophir by no later than 26 September 2013. Tower plans to then proceed to complete the acquisition of Wilton: the 120 million consideration shares will represent 4.6% of the enlarged issued share capital of Tower.

Tower will continue discussions with OMNIS regarding the future licensing of Block-2102. 

Tower's CEO, Graeme Thomson, commented "Given the very recent changes to Ophir's position in Madagascar to concentrate on its core, material assets, we are pleased to have reached an all parties agreement. On completion of the Wilton acquisition, including payment of the cash consideration of $1.75 million to the vendors, Tower's net cash balances will increase by $4.25 million (before any taxes) to approximately $18 million."

Jeremy Asher, Chairman of Tower, added "We originally conceived the Wilton acquisition as a means to add a near term drilling opportunity with minimum cash outlay. The opportunity has instead transformed into a further fund-raising at a substantial premium to our last placing, which has also put us into a good position to negotiate a new licence in due course. The additional funds further ease our position in respect of our multi-billion barrel upside exploration well, Welwitschia-1, operated by Repsol offshore Namibia, where preparations continue on track for spud in February 2014.  We remain firmly committed to new ventures with near term drilling or early stage interests where we can keep initial cash outlays to reasonable levels, including in Madagascar and also in Cameroon where, following the recent licencing round, we have been invited to negotiate a new PSC."

Contacts

Tower Resources plc

Graeme Thomson (CEO)
Andrew Matharu (VP - Corporate Affairs)

[phone]

Peel Hunt LLP (Nominated Adviser and Joint Broker)
Richard Crichton/Charles Batten
[phone]

GMP Securities Europe LLP (Joint Broker)

Rob Collins/Liz Williamson
[phone]

 

Vigo Communications

Chris McMahon/ Peter Reilly
[phone]

 

END

 

 

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