Tower Resources (LON:TRP), the AIM listed oil and gas explorer with licences in Uganda and Namibia, has agreed a new deal with its partner Global Petroleum (LON:GBP) over how future drilling work in Uganda licence EA5 will be funded. Tower and Global have been working together on the licence since December 2008, when Tower gave Global the right to earn a 50% interest in the licence by funding two exploration wells. The wells that followed at Iti-1 and Avivi-1 were both unsuccessful, although Tower said the latest well information demonstrated that “considerable exploration potential still exists in the licence”.

Under the terms of the new agreement, Tower said that Global, which is listed on AIM and the ASX, will have a continuing option to participate in the Uganda project whilst having no current obligation to contribute to ongoing expenditure. The agreement provides Global with a continuing right to convert its investment in the project to date into a 25% legal and beneficial interest in Uganda Licence EA5. Global will have the right to elect to participate until Tower has obtained a firm offer of funds, either from a third party or through its own fundraising efforts, to fund any material operation on the licence. Global will be required to reimburse Tower for 25% of ongoing costs during the option period should it elect to participate and, in the event of third party funding, Global will dilute proportionately with Tower.

The current operational status on EA5 is that a aero gravity gradiometry survey is nearly 30% complete and interpreted data should be available within a month - planning for the follow up seismic survey has begun. A number of third parties are reviewing the data with a view to proposing funding of the future seismic programme and the commitment well.

Peter Kingston, the executive chairman of Tower Resources, said: “This agreement with Global recognises the considerable value of Global's past investment and a shared view that there remains future potential in the EA5 licence. I welcome their continued involvement in future activities.”

In late April Tower was formally issued with a renewal of its licence covering EA5, which lies at the northern end of the Albertine Graben in north western Uganda. The Ugandan Minister of Energy and Mineral Development accepted the application, which followed the two disappointing…

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