Tower Resources announced Neptune Petroleum (Uganda), has applied to the Minister of Energy and Mineral Development, the Government of Uganda, to continue exploration of Licence EA5 into the Third Exploration Period. This period extends from March 27th 2010 until March 26th 2012. The forward programme will comprise geophysical activity as the next stage of operations, followed by a further exploration well, and this work programme together with relinquishment obligations are being discussed with government technical specialists. Agreement to proceed with the exploration program is expected soon.
The Tower Board has concluded that the information from the first two exploration wells on EA5 demonstrates considerable exploration potential still exists in the License.
Avivi-1 encountered thick sequences of organic rich sediments which are likely to represent good mature source rocks in the deeper areas of the basin. The thick clays should also provide very effective trap sealing properties. Wireline logs and water samples demonstrate that the Avivi structure is water bearing but mid-mature oil was entrained in the sampled water confirming that oil has been generated in the License and is currently migrating. The composition of this oil is similar to that of oil recovered from Iti-1 and surface oil samples. Pressure data from Avivi-1, when combined with pressure data from Iti-1, is consistent with a possible oil accumulation at Iti-1 in low permeability reservoir sand. The uncertainty related to generation and migration of oil in the Rhino Camp Basin has, therefore, been significantly de-risked.
The lack of good quality reservoir at either well location increases the emphasis on identifying structures in the deepest area of the basin, where the chances of encountering better reservoir are improved. This can only be achieved by substantially increasing seismic coverage in the areas of greatest interest, which will be addressed in the forward work program.
Most of the funding for the program in the Third Exploration Period is expected to come from third parties and the Board is confident that this can be achieved. The company expects to have cash of about $3.5 million after well costs are satisfied and this is sufficient to meet costs for the immediate future. Subject to Government approval and availability of equipment, Neptune is aiming to undertake an aero-gradiometry survey over the area of greatest interest as soon as possible, to improve structural definition, and intends to fund this program from available cash resources.
Peter Kingston, Tower's Executive Chairman commented, "The Tower Board has had no hesitation in deciding to continue with its exploration program in Uganda for another two years. In particular, it is pleased that there is growing evidence of the presence of mature oil in the EA5 License. This is typical exploration progress, with valuable information being gained from each phase of activity which suggests that there is still everything to play for."
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