Business
Farm Out Agreement Reached
Farm Out Agreement Reached.
About this update from Tower Resources Plc
[{"type":"text","content":"\n RNS Number : 5710K Tower Resources PLC 22 December 2008 \n \nTower Resources plc\n('Tower')\n\nTOWER RESOURCES AND GLOBAL PETROLEUM LTD REACH AGREEMENT ON THE FUNDING OF DRILLING IN UGANDA EA5\n\nTower Resources plc, an AIM listed oil and gas exploration company and its wholly-owned subsidiary Neptune Petroleum (Uganda) Limited ('Neptune') have reached agreement ('Farm Out Agreement') to farm out an interest in Neptune's Uganda acreage to Global Petroleum Limited ('Global'), an Australian based oil company quoted on ASX and AIM. \n\nThe Farmout Agreement is subject to the consent of the Minister of Energy and Mineral Development of the Government of the Republic of Uganda. Global has the right to earn a 50% interest in Exploration Area 5 ('EA5'), north-western Uganda, by meeting the cost of two exploration commitment wells. \n\nUnder the terms of the Farm Out Agreement, Global will earn a 50% interest in the EA5 Licence and Production Sharing Agreement (PSA) by funding the Authority for Expenditure* (AFE) cost of drilling Iti-1 (subject to a cap as detailed below), the first well of a two well programme, and a second well, currently expected to be Sambia-1, when the results of Iti-1 have been interpreted. \n\nIt has been agreed that Global's funding of Iti-1 will be capped at $6.5 million in the event that drill stem testing is not justified, and $7.5 million in the event that the presence of hydrocarbons supports the need for a drill stem test programme. It has also been agreed that any costs in excess of these caps will be borne by Neptune (75%) and Global (25%). There are no expenditure cap levels for the drilling of the second well. Notwithstanding the above, Global may, after the first well, opt not to fund the second well in which case Global may, at their sole discretion, continue with a 25% interest in EA5 or withdraw from the licence altogether.\n\nTower is also pleased to confirm that a Letter of Intent has been signed with ASCOM S.A Group for the provision of a truck mounted land drilling rig, an MBU-125, currently in Southern Sudan, which is rated for drilling to 2700 metres.\n\nNeptune expects the rig to be available from February 2009 and also expects approval of the Environmental Im...