CAMEROON: Tower Resources Completes Thali PSC Farm-out to Beluga Energy

Tower Resources has executed a binding Heads of Agreement (HoA) in respect of a farm-out to Beluga Energy Limited (Beluga) of a 49% non-operating working interest in its Thali Production Sharing Contract (PSC) in Cameroon, conducted through its wholly-owned subsidiary Tower Resources Cameroon S.A (TRCSA).

The key economic elements of the transaction set out in the HoA are:

·    The farm-out covers US$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;

·    The well cost is currently expected to be approximately US$16.8 million, of which approximately US$3 million has already been spent;

·    Each party will recover costs actually funded and recoverable under the PSC, pari-passu;

·    Tower will effectively contribute its non-recoverable costs in consideration of the 10% overriding royalty on the contractor share of production referred to above;

·    Costs in excess of U$15 million, and future costs, will be funded pro-rata with respect to Tower’s and Beluga’s working interests.

The HoA are binding subject only to final documentation, a financing contingency requiring Beluga’s shareholders’ approval, and approval of the Minister of Mines, Industry and Technological Development (MINMID”). The draft Joint Operating Agreement (“JOA”) between Tower and Beluga has already been prepared, and together with the draft farm-out agreement will shortly be submitted to MINMIDT for approval, which is expected to occur within 60 days of submission of the file according to the Petroleum Code. Tower and Beluga intend to complete the transaction by 30th September 2021, subject to any delays in completing the conditions precedent.

Tower, through TRCSA, will remain Operator of the Thali PSC under the JOA, and in the event the formal farm-in agreement and approvals cannot be completed in good time then Beluga will instead receive an appropriate share of the Operator’s share capital and Tower’s intercompany loans to the Operator, subject to a shareholder agreement, in order to reflect the intended farm-in economics and JOA terms.

Tower has been advised by Envoi Limited and Powerline Consulting during the recent farm-out process.

Tower is presently negotiating a contract for a rig to drill the NJOM-3 well, and will announce when this and other major service contracts in respect of the NJOM-3 well are concluded, though this is not expected to be until after completion of the farm-out agreement. Tower is also in discussions regarding an option agreement over a Mobile Oil Production Unit suitable for the Thali project.

Beluga Energy Limited is a privately-held energy commodity trading house with operations in Africa and the international oil market. Beluga engages in proprietary trading: sourcing crude oil and refined products including LNG, LPG, natural gas condensate, naphtha, gasoline, jet fuel, gas oil, fuel oil and bitumen and their transportation from lower demand to higher demand regions. Beluga is pursuing a strategy of expanding vertically in the sector through investment in its dedicated exploration and production subsidiary. More information can be found on Beluga’s website at

Warebibo Soroh, the CEO of Beluga, commented:

“We are pleased to be associated with Tower’s management team in the development of the Thali block in Cameroon. This investment fits perfectly with our strategy to invest in de-risked upstream assets, and supports the integration of our services from downstream to upstream. Our technical team has extensive experience in developing assets in the Gulf of Guinea and will collaborate with Tower in bringing the Thali block to first oil.”

Jeremy Asher, Tower’s Chairman and CEO, added:

“We are delighted to have the opportunity to work with Warebibo Soroh and his colleagues at Beluga, and to fulfil our shared ambition to move this project forward to oil production in Cameroon. Short-cycle oil and gas development projects such as this have excellent economics, which reflect their importance to Africa’s overall energy balance. The Njonji structure on which we are drilling the NJOM-3 well is one of several attractive structures on the Thali block, and we are looking forward to a great future developing these resources together.”

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