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Tower and Repsol settle costs on Welwitschia prospect offshore Namibia

19th December 2014

Tower Resources has reached agreement with Repsol Exploration (Namibia) relating to the disputed costs associated with the drilling of the Welwitschia prospect, offshore Namibia

Tower Resources has reached agreement with Repsol Exploration (Namibia) relating to the disputed costs associated with the drilling of the Welwitschia prospect, offshore Namibia
Following amicable discussions with the operator, agreement has been reached settling Neptune’s share of costs at USD 28.3m

“We are pleased to have resolved these matters and now to be working to improve our understanding of the untested prospectivity in our Namibia licence,” said, Graeme Thomson, CEO.

“We can now focus on our exciting and potentially play-opening well onshore Kenya and continue developing our African portfolio”

As announced on 3 September 2014, Repsol’s (operator of the block) estimate of well and other related costs for the drilling of the Welwitschia prospect, which had been completed on 15 June 2014, had increased to USD 33m net to Tower.

At that date, Tower’s subsidiary, Neptune Petroleum (Namibia), had settled USD 25.3m of these costs.

Following amicable discussions with the operator, agreement has been reached settling Neptune’s share of costs at USD 28.3m. Consequently, a final cash payment of USD 3.0m is being made by Neptune in full and final settlement of all costs associated with the well and the licence exploration period which ended on 22 August 2014.

This represents a net reduction of USD 4.7m against the previous estimate.

A firm budget has been agreed for the next exploration period which extends to 22 August 2015. This work programme is designed to obtain a fuller understanding of the results of the well and of its implications for the remaining prospectivity of the licence, especially the large untested deeper targets, including the Albian carbonates, now there is a well-tie to the existing 3D seismic.

Following the final USD 3.0m payment, Tower’s cash position will be approximately USD 7.5m. The company is adequately funded for its remaining commitments with respect to the drilling of the Badada-1 well, onshore Block-2B, Kenya, which is expected to spud by early January 2015 and for which further cash costs of USD 1.9m are budgeted.

 

 

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