Tower Resources is nearing the point where it will begin drilling in Cameroon, but the company has other opportunities it is also pursuing, chairman and CEO Jeremy Asher has highlighted.
Cameroon’s Ministry of Mines, Industry and Technological Development approved Tower’s request for an extension on its Thali licence last week. The first exploration period will now expire in February 2025.
Asher explained that the extension provided surety to financiers working on the project. “The rig should be ready between June and August, that’s what Borr [Drilling] is telling us. We need to sort out the financing next.”
Tower also has acreage in the Walvis Bay, in Namibia, and off South Africa. Asher described Cameroon as critical for the company, though.
“It’s the closest to first oil. We want to achieve first oil in 2025,” he explained.
Financing challenge
Crucial to delivering progress in Cameroon – and other parts of the portfolio – is financing. “AIM unfortunately doesn’t seem to be working as a source of growth capital,” Asher said. “Those institutions that were involved in small caps have all had their wings clipped and pulled out.”
Private investors can play a part, Asher noted.
Tower recently announced plans to raise cash through a subscription offering. The money will go to funding working capital and repaying a facility it raised in 2023.
Companies can raise working capital sums, Asher explained, “but it’s difficult to raise cash for a well. You have to look to industry. They’re under pressure from shareholders to focus on cash flow and dividends.”
Ultimately, raising cash is about timing, he said. “You need to pick a good deal and the timing has to work, for a partner to make a strategic decision. It’s not impossible, but it’s not as easy as it was a decade ago.”
Political risk
Tower has been operating in Cameroon for a substantial amount of time, with the government showing a strong commitment to the company.
“Political risk is not just confined to Africa,” Tower’s Asher said. “In the UK, one horrifying thing is that, at the drop of a hat, the economics of an agreement can be turned upside down. In Africa, we have seen some cases of expropriation but it’s pretty rare and can be contested through international courts – and done so successfully. I’d argue there’s less political risk in Africa than in the UK.”
More of a challenge in African states is the amount of capacity a ministry or regulator may have. Namibia, for instance, is undergoing a boom in its offshore, driven largely by finds in the Orange Basin.
Walvis Basin
Tower holds acreage in the Walvis Basin, which Asher said was somewhat neglected by industry. ExxonMobil has operations in the Namibe, in the north, although not revealed many insights into the area.
“The Walvis has not been well modelled in the past and is not well understood by the industry at large. We see that, in addition to the Kudu shale, which is the main source rock in the Orange Basin, there’s a deeper source in the synrift. The current feeling is that, whereas a decade ago we had focused on the massive anticlines, the stratigraphic traps may be of more interest.”
Asher noted that an old well, drilled by Norsk Hydro in the Dolphin graben, had found oil from a lacustrine source. “We know there is a working petroleum system which has been productive, but where’s the oil gone? There are only so many opportunities in the Orange Basin, then companies will start to look north – and we think the Walvis is the place to be.”
Tower began lead and prospect work in Namibia in 2023, which it aims to complete in the first half of this year. The company aims to acquire 3D seismic in the area, perhaps in 2025.
Slow but working
The minnow is also working on an area offshore South Africa. Progress in the country has been held up as the government works on the petroleum code, while environmental issues have also caused some problems for companies.
Asher said South Africa was making progress. “The political arguments are being funnelled into sensible solutions. The idea of having local partners, for instance, this is not unique. The political process is slow – but working.”
For Tower to make progress, it must show it can accomplish what it sets out to do. Cameroon is the test of the company’s ambitions and the company is reaching a crunch point. Tower has been forced to push back work before, but it may finally be able to test its hypothesis. Success could be transformational.
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