Tower Resources narrows losses in preliminary results

Africa-focussed oil and gas company Tower Resources reported a narrowed loss before tax in its preliminary results on Wednesday, of $2.66m (£2.09m), compared to $3.82m in the prior year.

The AIM-traded firm, which remains pre-revenue, said its basic and diluted losses per share came in at 0.4 US cents for the year ended 31 December, down from 1.02 cents a year earlier.

It reported exploration and evaluation expenditure of $3.9m on the Thali production sharing contract (PSC), up from $1.2m year-on-year.

The company also said that licence payments, securing an 80% operated interest in blocks 1910A, 1911 and 1912B offshore Namibia, together with the National Petroleum Corporation of Namibia (NAMCOR), totalled $0.23m, compared to $5k in 2018.

Administrative costs, net of impairments and share-based payment charges, came in at $0.99m, rising slightly from $0.92m.

Cash at year-end totalled $39k, down from $0.33m.

Since the year ended, Tower noted that in January it was awarded an extension to the initial exploration period of the Thali licence to 15 September.

In February, the NJOM-3 appraisal well site survey was completed by the Geoquip Marine survey vessel MV Investigator.

Following that, in March, an updated Cameroon reserves report reconfirmed gross mean contingent resources of 18 million barrels of oil across the proven Njonji-1 and Njonji-2 fault blocks, with net present value at a 10% discount (NPV10) of the best estimate contingent resources of $119m, using the 10 March 2020 Brent forward curve.

Also in March, Tower completed a placing and subscription to raise £0.5m at a placing price of 0.375p per share.

Finally, also in March, the company notified the government of Cameroon of an event of force majeure over the Covid-19 pandemic, affecting the timing for completion of its work programme in the initial exploration period of the Thali PSC.

“2019 proved to be a challenging year and so far 2020 has been even more challenging, in ways which have affected everyone in our industry and in most other sectors,” said chairman and chief executive officer Jeremy Asher.

“The impact on oil demand of the Covid-19 lockdowns was dramatic and, at least in recent history, unprecedented, and the potential for a simultaneous price war among the OPEC nations and Russia initially exacerbated the problem.”

Asher said that the dramatic collapse in prompt oil prices resulted in “rapid action” to cut production by both governments and private companies.

“The potential for a second wave of Covid-19 infections remains a concern, but the market for prompt delivery is now stabilising and much improved, with Brent for August 2020 delivery now trading at around $40 per barrel as I write.”

At 1447 BST, shares in Tower Resources were down 0.75% at 0.41p.