LONDON — Tower Resources is close to completing a letter of intent with Shelf Drilling for drilling and testing of the NJOM-3 well offshore Cameroon in fourth-quarter 2022.
The Trident VIII jackup would drill the well on the Thali license. Tower admitted that the budget for the long-planned well is about 20% higher than its original estimate of $15 million. However, as some costs have already been incurred and all long-lead items ordered, the remaining figure should be about $14 million.
There are also uncertainties over the number of separate zones that the well might test. If the company opts to test more productive zones separately, this will be because the well prognosis is closer to the upper end of expectations.
Over the past six months, work has continued on the subsurface dataset and plans for additional wells and early production from the offshore Njonji structure, following the drilling of NJOM-3. Tower has discussed alternative platform and mobile offshore production unit (MOPU) designs with potential contractors and partners.
Cameroon’s Minister of Mines, Industry and Technological Development has sanctioned a further extension of the PSC’s first exploration period to May 11, 2023.
Although the company has still not received approval for its proposed farm-out to Beluga Energy, it has informed the Minister that, upon receiving the extension to the license period, it will no longer pursue approval of the farm-out in its current form.
This is in part due to the fact that the market environment has changed. Following discussions with local banks in Cameroon, debt financing may now be available to cover a significant part of the well cost.
That means the transaction could be restructured so less of the equity in the project would have to be conceded in return for the well funding, to the advantage of all parties.
Tower aims to finalize the well financing, the rig contract and other service contracts during the third quarter.