Tower Resources announced that the Company has completed the acquisition of Comet Petroleum Ltd.
Description of Comet
Comet Petroleum is the 50% holder of two exploration licenses in the SADR originally awarded in March 2006. Other parties to the licenses are Maghreb Exploration Limited (10%) and Osceola Hydrocarbons Limited (40%).
The Guelta and Bojador Blocks are in the Aaiun basin which is essentially unexplored in modern times. This basin is one of a series of mature passive margin basins that lie along the North Atlantic margin of Northwest Africa. A well drilled by Conoco in shallow water more than 25 years ago encountered asphalt in the early Tertiary and throughout the early to late Cretaceous. A13 meter thick tar saturated sand was found in the Aptian. An extensive Lower Cretaceous deltaic sequence is present in the shallow to mid-range of water depths, and becomes progressively more marine to the west.
Triassic salt to the west provides the mechanism for the development of large tilted fault blocks, overlain by drape structures, providing multi-level prospectivity. Although seismic and well information is very sparse, it appears from the available evidence that all the ingredients for a working petroleum system are present in the Guelta and Bojador Blocks, namely, source rocks, reservoir rocks, seals and potentially large structures.
The basin is one of very few West African basins to be left essentially unexplored in modern times, and lies adjacent to the proven petroleum productive basins of Mauritania.
The Guelta License is offshore having an area of 15,760 square kilometers and water depths varying between 100 and 2,800 meters. The Bojador License is onshore having an area of 44,298 square kilometers.
Gross License Commitments are commercially confidential but are consistent with industry norms and the uncertainties surrounding the License awards. They comprise agreed geological and geophysical studies, seismic acquisition and well drilling operations over three phases of exploration each of three years duration. These become effective once the territorial dispute has been resolved (see notes below) and SADR becomes a universally acknowledged nation state.
The consideration payable for the acquisition comprises an initial consideration of 721,544 new ordinary shares at 6.542p per share (being the average mid-market closing price of the Company's shares for the 3 days prior to the date of the agreement). This equates to the verified back costs of GBP47,201 incurred by Comet in respect its interests in the assets being acquired.
Further consideration will be triggered as a consequence of the licenses becoming operative, which will occur in the event that and at an agreed date after SADR reaches agreement with Morocco to become an independent nation state. Prior to that event occurring, a state of force majeure will apply which is governed by an "Assurance Agreement" between the licensee and the SADR. The further consideration payable for Comet will be determined through an independent valuation of Comet's share of the assets at that time, subject to a minimum consideration of GBP500,000 per license and a maximum consideration of GBP1,500,000 per license. This consideration will be satisfied through the issue of shares in the Company at a price per share equivalent to the 3-day average share price immediately preceding the licenses becoming operative and payable upon the completion of the independent expert's valuation if this is later.
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