Tower Resources executes two big farm-out deals
By Josh White
Date: Friday 10 Jan 2025
(Sharecast News) - Tower Resources announced on Friday that it has executed two significant farm-out agreements with Prime Global Energies, covering its Thali licence offshore Cameroon and PEL96 offshore Namibia.
The AIM-traded firm said the agreements would involve Prime acquiring minority, non-operated stakes in both assets, providing a substantial cash injection for Tower's operations and paving the way for further collaboration.
Under the terms, Prime would acquire a 42.5% non-operated interest in the Thali licence in exchange for a $15m cash contribution toward the Thali work programme and the drilling of the NJOM-3 well in 2025.
Additionally, Prime would acquire a 25% non-operated interest in PEL96 offshore Namibia, with Tower receiving $4.375m in cash on completion of both agreements, expected by the end of the first quarter.
The agreements included production-based payments from Thali, with Prime committing 10% of its after-tax share of profit oil, a portion of which would be passed on to Pegasus Petroleum under existing arrangements.
As part of the deal, Pegasus would receive over 5.65 billion ordinary shares in Tower as consideration for the retained cash.
Prime, a UK-incorporated company with extensive upstream operational experience, would bring additional technical and financial resources to the projects, the Tower board explained.
Its parent company, Prime International Oil and Gas Company, holds substantial production assets in Pakistan, enhancing its credibility as a partner.
Tower and Prime had also agreed in principle to explore further joint opportunities in Cameroon, with Prime potentially taking stakes of up to 42.5% in future projects.
"I am delighted to announce the execution of these transformational farm-out agreements for our Cameroon and Namibia licenses," said chairman and chief executive officer Jeremy Asher.
"In Prime, we have secured a partner with substantial technical and financial resources and a track record of operational success, and we are very pleased to be working closely with them on these two highly valuable projects.
"Our goal remains to achieve progress across the company's entire asset base and deliver value for all stakeholders, and the additional liquidity these transactions will generate, upon completion, should allow us to proceed with all our work programmes with greater confidence."
At 1542 GMT, shares in Tower Resources were up 10.54% at 0.04p.
Reporting by Josh White for Sharecast.com.
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