Tower Resources is pleased to advise its shareholders that the program of seismic interpretation and geochemical sampling has been completed in Uganda and, on the basis of the subsequent interpretation, two well locations, one to be drilled to about 1000 meters and the second to about 500 meters, have been selected. The well locations have been approved by the Uganda Government. Formal enquiries are now being made to acquire a drilling rig to drill two wells on License Exploration Area 5 (EA5) beginning as soon as practical after November 1, 2008. A drilling manager has been appointed to coordinate the drilling program.
Seismic interpretation has confirmed the similarity of EA5 to EA1, operated by Heritage, and the northern part of EA2, operated by Tullow, with prospects identified down to about 1000 metres. The geochemical survey involved sampling for heavy and light hydrocarbons at depths down to 1.8 metres. Field readings, particularly for heavy components were very encouraging. Independent laboratory analyses have confirmed the presence of natural hydrocarbons and the existence of an active oil source and migration system within the Block. To quote from the independent conclusions:
This substantially resolves the remaining area of uncertainty for exploration in EA5.
Tower notes Orca's announcement today that the EA5 project exceeds Orca's appetite for risk and its decision to allocate its own capital to other projects. Serious discussion with Orca's executive management recently took place to explore Orca's future participation at a reduced 25% level but agreement could not be reached on a participation structure which met Orca's commercial objectives. Tower has now been advised by Orca that it does not wish to take up its Option. Orca's interest in EA5 will now lapse and 100 per cent ownership of the project reverts to Tower. Tower has made significant progress in achieving alternative funding and discussions are well advanced with a well funded oil and gas exploration company to meet the cost of 50% of the well commitments.
"I am disappointed that Orca is not continuing as Tower's partner in future exploration on Uganda EA5, but I am confident that alternative funding from Industry sources can be put in place in good time. I am delighted, however, that the latest geochemical survey results have confirmed an active oil source and migration system within the Licence - this was always the greatest area of uncertainty with respect to exploration prospectivity in the Licence. The Tower Board is now looking forward to the start of drilling before the end of the year."
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