Tower Resources PLC Sale of Comet Petroleum Limited (8958U)
January 24 2017 - 2:00AM
UK Regulatory
TIDMTRP
RNS Number : 8958U
Tower Resources PLC
24 January 2017
24 January 2017
Tower Resources plc
Sale of Comet Petroleum Limited
Tower Resources plc (the "Company" or "Tower" (TRP.L, TRP LN)),
the AIM listed Africa focussed oil and gas exploration company, is
pleased to announce the completion of the sale of its wholly owned
subsidiary, Comet Petroleum Limited ("Comet"), to Red Rio Petroleum
Ltd ("Red Rio"), the privately held oil and gas exploration
company. Red Rio is purchasing Comet for a cash consideration of
GBP1, future contingent payments and an over-riding royalty
interest ("ORRI") of ten per cent over future production revenue
from Comet's assets in the Saharawi Arab Democratic Republic
("SADR") as set out below. Tower has also completed an amendment
agreement to eliminate the previously announced contingent payments
due to the original vendors of Comet, who will now share part of
the above consideration as further detailed below, leaving an ORRI
of between five and ten per cent net to Tower depending on the
asset.
The SADR is the democratically elected government of the
territory known as Western Sahara, but the sovereignty of the
territory remains in dispute with Morocco. As a result, the Company
believes that disposing of these assets, whilst retaining an
interest in their future development through the ORRI, is in the
best interest of shareholders. The carrying value of the assets
within the Company's latest audited accounts for the year ended 31
December 2015 was US$484,362, predominantly reflecting accrued
annual licence fees.
Tower announced the acquisition of Comet, which holds a 50%
non-operated interest the Guelta and Bojador blocks in the SADR, on
13 June 2008 from the Company's then Directors, Peter Blakey and
Peter Taylor (the "Vendors"). The Company later acquired an
interest in the Imlilli block in 2011, increasing its interests to
three blocks in the SADR. Peter Taylor continues to be a Director
of Tower while Peter Blakey resigned as a Director at the time of
the Company's AGM in April 2016.
The consideration for the 2008 acquisition included terms that
upon the entering into of a Production Sharing Agreement or the
sale or disposal of the assets, the Vendors would be entitled to a
consideration of up to GBP3 million for the Bojador and Guelta
licences. The Company does not consider that the long-term prospect
of cash generation from the assets justifies such immediate cash
expenditure, and therefore prior to the disposal to Red Rio, the
Company has agreed with the Vendors to amend the 2008 Sale and
Purchase Agreement ("SPA"). The consideration has therefore been
replaced with deferred consideration payments to the Vendors of 50
per cent of any future consideration and royalty income that the
Company receives from the Bojador and/or Guleta Licences, reducing
the ORRI attributable to Tower from those two licenses to five per
cent net.
The amendment to the SPA is deemed to be a related party
transaction under the AIM Rules for Companies. The Directors, other
than Peter Taylor, consider, having consulted with Peel Hunt LLP,
the Company's Nominated Adviser, that the terms of the amendment
are fair and reasonable insofar as the Company's shareholders are
concerned.
Jeremy Asher, Tower's Chairman and Chief Executive Officer,
commented: "The successful sale of Comet with its exploration
acreage in the SADR represents the completion of the first stage of
a portfolio review by Tower. This transaction reduces further our
financial commitments and provides flexibility to implement our
strategy and to reposition the Company for the future."
This announcement is inside information for the purposes of
Article 7 of Regulation 596/2014.
Contacts
Tower Resources plc
Jeremy Asher (Chairman and CEO)
Andrew Matharu (VP - Corporate Affairs)
+44 20 7253 6639
Peel Hunt LLP (Nominated Adviser and Broker)
Richard Crichton/Ross Allister
+44 20 7418 8900
This information is provided by RNS
The company news service from the London Stock Exchange
END
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