Africa-focused explorer Tower Resources says the down turn will offer it an opportunity to leverage lower seismic acquisition and drilling costs after is signed the shallow water Thali Production Sharing Contract (PSC), offshore Cameroon.
Tower says the move offers it a low-cost entry into a mature region with low-risk exploration/appraisal targets and the potential for significant upside. Tower has a 100% interest in the Thali PSC, and the terms of the PSC include three exploration phases, including the minimum work commitment of the Initial Exploration Period.
This comprises:
Tower has the option of relinquishing the PSC on completion of each Period on condition that the minimum work commitment has been met.
The Thali PSC covers 119.2sq km in 8-48m water depth in the prolific Rio del Rey basin, in the eastern part of the Niger Delta. The Rio del Rey basin has, to date, produced over 1 billion bbl and has estimated remaining reserves of 1.2 billion boe, primarily within depths of less than 2000m. The Rio del Rey is a sub-basin of the Niger Delta, an area in which over 34.5 billion bbl has been discovered, with 2.5 billion boe attributed to the Cameroonian section.
The Thali block has the potential to hold up to four distinct play systems, including the established play in which three discovery wells, two gas (Rumpi-1, Njonji-2) and one oil (Njonji-1), have already been drilled on the Block. There are 7 MMbbl already discovered on the Block. These are currently viewed as sub-commercial discoveries, but once better seismic imaging has been achieved Tower sees potential to add incremental oil reserves to achieve commerciality. There is also significant potential to develop prospects at deeper levels, in both structural and stratigraphic traps, once better imaging has been achieved. The existence of infrastructure in adjacent blocks means that the development of a 20 MMbbl field has the potential to be economically viable at current oil prices.
Tower’s initial priority will be the acquisition of 3D seismic in the first half of 2016. The seismic will be used to update the existing 24 year old data set to allow better resolution of shallow plays as well as imaging of deeper sections. Tower expects to be drilling in 2017/18.
The market downturn in the services sector presents an opportunity for the company to leverage lower seismic and drilling costs and a partner will be sought in due course to share Tower’s financial commitment and provide additional technical input.
Graeme Thomson, CEO, said: “We are delighted to be awarded the Thali PSC and look forward to working closely with SNH as we develop the prospectivity of this exciting acreage. Our entry into Cameroon marks a shift in our risk profile from frontier to proven basins and introduces an asset with existing discoveries into the Tower portfolio. The Thali Block provides Tower with lower risk exploration and appraisal potential in this shallow-water proven-producing region and provides a base from which the Company can expand its portfolio in Cameroon.”