Tower Resources makes solid progress on Thali licence

The AIM-traded firm said that was in respect of its intended drilling on the Thali block, including the well that it was currently preparing to drill on the Njonji structure.

Tower submitted its report to the government in late June, which was then the subject of public hearings in July, and the company said it received its certificate of environmental compliance on 6 August.

That certificate was valid for drilling operations encompassing multiple wells in the Thali licence area, subject to operations beginning over the coming three years.

In addition, Tower said it had filed its application with the Ministry of Mines, Industry and Technological Development (MINMIDT) for an extension of the initial exploration period of the Thali licence of up to one year from its current expiration date of 14 September, as permitted under its production-sharing agreement, for the purpose of completing the well currently being prepared on the Njonji structure.

The company said it did not expect to receive a formal response from MINMIDT until September, but believed the extension would be granted given progress to date, and the terms of the PSA.

Finally, Tower said it had conducted a “considerable amount” of geological and geophysical work in respect of the Thali block since receiving the reprocessed 3D seismic data later than expected in April, and had been sharing that work as completed with Oilfield International - the independent consultancy which Tower had retained to compile a reserves report.

The company and Oilfield International had originally planned to complete that work, and Oilfield’s work, earlier in the summer.

However, it said the geological and geophysical work had expanded, and was now expected to be completed in September, which would permit a “more comprehensive” report from Oilfield International.

The firm said the additional work arose for two main reasons - the first being the initial interpretation of the reprocessed 3D data, which appeared to indicate that the gross intervals of key reservoirs increased toward the south and west of the original NJOM-1 well drilled by Total in 2008, but it was “difficult” to judge the amount of the increase in the reservoir intervals from the data in its present form.

Second, the company said the improved resolution of the reprocessed 3D provided a clearer definition of the faults which potentially separated the fault block compartments in Njonji, but also raised questions over whether some of the faults which were originally thought to separate the different compartments were actually sealing or not, raising the “attractive possibility” of fewer, larger fault block compartments at Njonji than the five originally interpreted by Total and Tower.

Both those questions would ultimately be answered by drilling, but further analysis would be of interest to shareholders, and also would help the company in refining the well location and in planning subsequent decisions, notably well testing, the board explained.

Tower said it was therefore currently undertaking further petrophysical analysis of nearby wells, and using the sonic/density/deep induction logs to enhance the seismic data to better match the well log spectrum.

That process emphasised the higher frequencies, and should provide a “significant improvement” in resolution.

Tower said it was also refining its depositional model with more focused and detailed thickness mapping, which would help it to better evaluate the reservoir interval changes in 3D.

Finally, the firm said it had retained Dr Tim Needham of the University of Leeds Institute of Applied Geoscience to undertake a fault seal analysis, adding that Dr Needham was “widely acknowledged” as a leading expert in the field.

The company said it currently expected that the additional work would be completed around the end of August, with the results made available to Oilfield International for incorporation into its reserves report, which they were now targeting for completion during September.

It added that the reserves report would also contain risked volumetric and financial evaluations of the other main oil prospects that Tower identified on the Thali licence, including the fault blocks on Thali to the south of Perenco's producing Dissoni North field, and also prospects identified in the Idenao East structure in the north east of the licence area, which were said to be “substantial”.

The reprocessed 3D seismic data had also provided the board with a “clearer view” of the deeper prospectivity of the block, which it was also now analysing, but it said that would not form part of the reserves report.

Whilst the geological and geophysical work was being completed, the company said it was also in the process of negotiating rig and associated service contracts for the upcoming Njonji well, having selected a provisional well location and conducted initial preparatory work including well engineering.

“We are happy with the progress being made on the Njonji well,” said chairman and chief executive officer of Tower, Jeremy Asher.

“The board would like to see the reserves report as soon as possible, but we felt that this additional work was required to inform the best decision regarding the final well location, and should also positively impact the quality of the reserves report when complete.”