UD To start, can we confirm the project status of the Thali Block in Camaroon. Is it accurate to say that reprocessing of the 3D seismic is completed, preparation of the ESIA has been initiated and a reserves report is awaited from OIL?
JA Yes, that is correct.
UD The main focus is on the Njonji discovery with 39 million barrels gross contingent oil in place, of which 7 – 15 million barrels of oil are estimated to be recoverable. Do you envisage a possible increase of those numbers in the CPR?
JA We are working on the reprocessed 3D data right now and are preparing our interpretation. That will be reviewed by the OIL team who will draw their own conclusions for the CPR. Naturally, we hope that the better picture provided by the reprocessing will allow us to see more potential resources, but whether the total amount goes up or not, the important thing is that we will have much more confidence in what we see, and the volumes in place are already meaningful and attractive.
UD There are undeveloped discoveries on Thali, including Njonji, with summed Pmean gross prospective potential of over 315 million barrels of oil in place. Will these also be covered in the new reserves report?
JA Our main focus is on the fault blocks around Njonji, but we are also intending to look at the prospective resources in the North of the block near Dissoni. However, there are a number of other opportunities, including the Rumpi gas discovery, which we will leave for later.
UD The Thali Block also has significant exploration potential. Could you describe the plays, the possible resources and your future plans here?
JA We believe there is substantial potential in the deeper turbidites, especially for gas. This has been the source for projects like Alba and Etinde. We have also already talked about the possibility of a Zafira-type oil analogue in the deeper areas on the block. Exploring these deeper zones is something we look forward to doing, but we must get the shallow reservoirs that have already been identified into production first.
UD Drilling on the Thali Block is targeted for Q4 2018. Do you believe you will be able to finance this and, if so, how?
JA Yes, we have a range of financing options available, including vendor financing, bank financing, farm-in and our own equity. We will choose the best combination we can assemble, and we will also seek to minimise cost by taking advantage of the rigs we already know will be available in Cameroon in the coming months, whether in Q4 or later.
UD Tower further has a 50% interest in the Algoe-Gamtoos Block, South Africa and the acquisition of additional geophysical data is planned in 2019. Your neighbours are Total, Exxon, Shell, Anadarko and Statoil. Presumably you see some major potential here?
JA Yes. Our partner NewAge is the operator of Algoa-Gamtoos, and they have been doing quite a lot of work on the block, some of which we hope to be able to share with the market soon. We do believe the block contains some good prospects, and there has been a growing interest in the area recently. We understand that Total will be drilling a deepwater well close by to our block later this year, which is something that both we and other companies will be following closely.
UD You additionally have a 6,526 km2 (1.6 million acres) land position in Zambia with reported oil and gas seeps and where source rock, reservoir and seal appear to be present. The next major step here is likely to be an aero gravity survey. When is that planned and what are the possible resources here?
JA We are waiting for the conclusion of Zambia’s new petroleum law, before finalising the next phase of work with the government. The scale of resources is impossible to know at this early stage, but we do believe that either gas or oil could be commercially developed in this location. In particular, apart from local electricity demand, our location along Zambia’s Southern border places us close to the South African power grid.
UD There also are royalty agreements in SADR and an application for licence PEC 0010 in Namibia. Is there anything more you can tell us about these?
JA We cannot talk about applications in process. With regard to the SADR, we can say that the process for a new nation such as the SADR to emerge and to be able to assert its soveriegnty is likely to be slow; nevertheless, there does seem to be progress and the international backing for the UN resolution supporting the SADR does not seem to have flagged.
UD Directors, staff and consultants own 15.4% of the company. In addition, the directors hold warrants exercising into 8.9% of the company’s issued share capital. This is significantly more than is the norm at most oil exploration companies. What makes you all so confident?
JA I am happy that the directors own a large amount of stock relative to many other oil and gas companies. The directors have supported most of the company’s share placings, and have also accepted warrants in lieu of cash fees whenever we have been asked to do so. This is because we believe in the value of the licenses we have acquired, and the quality of our assets, and we are deeply committed to building a cash-flow generative oil production business, in which we want to participate.
UD Thank you. To finish, would you like to add any further comments which you believe might be of interest to investors?
JA After several difficult years for our industry and our company, we have reached a very exciting point where prices have recovered, but the costs of drilling and production are still far below the peak levels they hit in 2014. So this is an excellent time to be working on bringing new fields into production, and that is why we are very excited about our company’s future.
Published 23 May, 2018