Tower Resources pulls out of SAfrica deep water project

AIM-listed Africa-focused oil and gas explorer Tower Resources said it had pulled out of the South West Basin joint venture it had entered with New African Global Energy to focus on "a more balanced portfolio of proven and emerging basins".

Tower said New African would reimburse its Rift Petroleum subsidiary $0.5m (£0.34m), which was paid by Rift as part of its original farm-in agreement in 2013.

The south west basin was regarded as "high cost" and Tower said the decision to pull out would allow it to focus its efforts in South Africa on the Algoa-Gamtoos exploration region which offers greater near-term potential.

Tower chief executive Graeme Thomson said the company was now "concentrating on the area in South Africa with the greatest near-term commercial potential".

"We have enhanced our funding position and have also reduced our contingent commitments. The proceeds from this withdrawal mean that our South African work programme for 2016 is now self-funding."

South Africa's Petroleum Agency has granted Tower and New African approval to enter the first renewal period of the Algoa-Gamtoos project. The joint venture partners have drawn up a work programme and budget, which will include further geophysical work and the interpretation of previously acquired 3D seismic data with a view to seeking a partner for the next stage of operational activity.

"While Tower's current work programme is focused on the shallow areas the licence also includes unexplored deep-water acreage within the Outeniqua Basin," Tower said.

"In 2014 Total attempted to drill the Brulpadda-1 exploration well in Block-11B/12B adjacent to the Algoa-Gamtoos licence. However, the well was abandoned owing to mechanical difficulties with equipment on the rig and Total has indicated that it may return to drill in 2016/17."

"In the event of success at Brulpadda, the prospectivity of the deep-water part of Algoa-Gamtoos block would be significantly enhanced."