13th Jun 2014 08:18
LONDON (Alliance News) - Tower Resources PLC's shares slumped on Friday after saying it has failed to find hydrocarbons in early targets at the Welwitschia-1A well on the PEL0010 licence, offshore Namibia, and has had to stop drilling deeper at the well due to spiralling costs.
Tower Resources shares were down 64% to 1.05 pence, making it the worst AIM ALL-Share faller during early trading on Friday.
The company has a 30% working interest on the site while Repsol Exploration Ltd is the operator and owns 44% of the site.
The AIM-listed Africa-focussed oil and gas exploration company said the well reached its total depth of 2,454 metres and logging evaluations have shown that the Palaeocene, Maastrichtian and upper Campanian section reservoirs were less well-developed than expected, and no hydrocarbons were encountered at the site.
The company said that due to late rig-delivery and operational issues during drilling and logging, including the onset of winter weather conditions, Repsol's current expectations are that costs will now be around 10% higher than the previously expected USD91 million gross well budget.
Tower Resources said that the estimated cost of the company continuing to drill the well to test deeper, large potential targets, now appears to be as much as a further USD40 million gross.
The company and its partners on the site have now agreed not to drill the the site further and are currently evaluating the information and its implications for the block as a whole. The Welwitschia-1A well is being plugged and abandoned.
"The well emphasises the risk of exploration and the wisdom of having moved to diversify our portfolio," Chief Executive Graeme Thompson said in a statement. "We expect much activity in the coming months on and in the areas surrounding our assets.
By Tom McIvor; [email protected]; @TomMcIvor1
Copyright 2014 Alliance News Limited. All Rights Reserved.
Related Shares:
Tower Resources