Tower Resources upbeat on recent activity near Namibian blocks

Africa-focussed oil and gas company Tower Resources updated the market on activity at licence PEL 96 in Namibia on Tuesday, covering blocks 1910A, 1911 and 1912B.

The AIM-traded firm noted an announcement from Global Petroleum of updated prospective resource estimates for its licence PEL 94, covering block 2011A, which is immediately to the south of Tower's block 1911.

Global estimated that its Welwitschia Deep Albian carbonate prospect had best estimated unrisked gross prospective resources of 671 million barrels of oil, with a geological chance of success of 17%.

Tower said Global's estimate was based on a reinterpretation of existing 3D data, which it licensed from Namcor, taking into account recent well results in the area, and conducted by its consultant exploration manager, who is also a principal of Energy Explorers.

The company said the figure corresponded to the portion of the prospect on block 2011A, with about 25% of the Welwitschia structure lying in block 1911, which is covered by Tower's licence PEL 96.

Although that proportion was an estimate made without Global's detailed reinterpretation, it would imply that the total best estimate unrisked gross prospective resources of the Welwitschia Deep prospect's entire structure would be in the region of 895 million barrels.

Of that, around 224 million barrels would lie in block 1911, of which about 179 million barrels would be attributable to Tower.

“To place this into perspective, Albian carbonate and Upper Cretaceous turbidite intervals have also been identified within multiple structural traps across Tower's Namibian blocks,” the board said in its statement.

“These reservoirs are proven on block 1911 in the two wells drilled by Norsk Hydro in the mid 1990s, with well 1911/15-1 recovering oil from Albian carbonates as well as penetrating three source rock intervals.”

In particular, Tower said its licence PEL 96 also included two other giant structures and four other “substantial” leads in the Dolphin Graben, each of which contained multiple stacked reservoir targets, including Albian carbonates and Upper Cretaceous turbidites.

Both Alpha and Gamma were interpreted to be giant four-way dip closure structures, with billion-barrel potential analogous to Welwitschia.

The Dolphin Graben leads A, B, C and D, all of which are located directly adjacent to areas with mature source rocks, were estimated individually to range in size from 250 to 686 million barrels of prospective resources, based on Tower's own initial unaudited estimates.

“In addition to the structural plays identified above, Tower has also identified significant prospectivity in stratigraphic plays within the Cretaceous and Palaeogene intervals, with potential for deep-water turbidite reservoirs interbedded with mature source rocks.

“These are analogous to plays being explored by others in the Walvis and Orange basins in the South as well as the Namibe basin directly to the north.

“Tower is now undertaking further technical evaluation of the leads identified to-date as part of the work programme for the initial exploration period for PEL 96, with focused geological, geophysical, and geochemical analysis aiming to high-grade areas for further data acquisition.”

As it had previously disclosed, Tower received an unsolicited approach from an unnamed major oil company regarding its licence PEL 96 in the second half of 2019.

Tower said that the company remained interested in working on the project, but had not prioritised it during the first half, with the board expecting discussions to “remain on the back burner” in the second half, or at least until the Covid-19 pandemic situation was clearer.

That, the board said, had not affected its own plans for the licence, with the company awaiting “with great interest” the outcome of further work, such as Global's, and also further wells being drilled in Namibia, including Shell's well on licence PEL 39 and Total's Venus well, all of which it said would enhance its own basin modelling and prospect evaluation.

“At present we are concentrating on getting our Cameroon farm-out finalised and preparing for Covid-19 conditions to permit us to resume well preparations at Thali, and we hope to update the market with further news about this shortly,” said chairman and chief executive officer Jeremy Asher.

“But we are also continuing to work on our Namibian licence.

“Even though most of the work is desk-based at this early stage of the initial exploration period, it will be profoundly influenced by the insights we can gain from the physical exploration efforts of other parties, even in other basins in Namibia.”

Asher said the company was “especially interested” in what Global was doing on PEL-94, noting that the amount of 3D data already obtained on the Welwitschia Deep prospect suggested that that might already be close to being drill-ready.

“If Global is able to drill an early well on PEL 94 targeting the Albian carbonates and Cretaceous turbidites, this would bring extremely valuable insight to Tower on the multiple structures and leads on our PEL 96, and if it is on Welwitschia Deep, then it might also bring an early discovery providing immediate reserves to our company.”

At 1037 BST, shares in Tower Resources were down 4% at 0.32p.