Market Report: Tower Resources, Beluga Energy Limited Sign Farm Out Agreement for Offshore Block in Cameroon

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Africa-focused oil and gas firm Tower Resources signed an agreement to farm out some of its stake in the Thali block offshore Cameroon to Beluga Energy Limited. Under the binding Heads of Agreement, Beluga will take a 49% non-operating working interest in Thali Production Sharing Contract (PSC). The farm-out covers $15 million towards the cost of the NJOM-3 well that Tower is planning to drill on the Thali block.

Beluga will receive a 49% working interest in the PSC, subject to an overriding royalty of 10% for Tower’s subsidiary TRCSA on the contractor share of production accruing to Beluga under the PSC. Tower said the well cost is approximately $16.8 million, of which circa $3 million has already been spent. Each party will recover costs funded and recoverable under the PSC, pari-passu. Costs more than $15 million, and future costs, will be funded pro-rata for Tower’s and Beluga’s working interests.

In March 2021, Tower received an extension of the first exploration period at its Thali license offshore Cameroon. The company had, a year prior, declared Force Majeure in respect of the First Exploration Period of the PSC, considering the restrictions required to combat the COVID-19 pandemic, delaying the planned spud date of the NJOM-3 well in the license. Tower Resources is planning to drill the NJOM-3 well to test a discovery previously made by Total. The Thali PSC covers an area of 119.2 km2 with water depths ranging from 8 to 48 meters in the prolific Rio del Rey Basin, in the eastern part of the Niger Delta.

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Source: EnergyCapitalReport

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