Placing of ?9m - Open Offer - Interim Results

RNS Number : 1006K

Tower Resources PLC

25 July 2013

 



25 July 2013

Neither this Announcement nor any part of it constitutes an offer to sell or issue or the solicitation of an offer to buy, subscribe or acquire any new ordinary shares in any jurisdiction in which any such offer or solicitation would be unlawful. The information contained herein is restricted and is not for publication, release or distribution, in whole or in part, directly or indirectly, in, or into or from the United States, Australia, Canada, Japan, the Republic of South Africa or any other jurisdiction in which such publication, release or distribution would be unlawful.

Tower Resources plc

Placing of £9.0 million and Open Offer of up to £4.1 million

 Interim Results to 30 June 2013

Tower Resources plc ("Tower Resources" or the "Company"), (TRP.L, TRP LN), the AIM listed Africa focused oil and gas exploration company, is pleased to announce a placing to raise £9.0 million (US$13.9 million) before expenses (the "Placing") and an open offer to raise up to £4.1 million (US$6.2 million) before expenses (the "Open Offer"). The proceeds of the Placing and the Open Offer will be used to fund the Company's share of the 2013 costs associated with the Welwitschia-1 well in Namibia, the cash consideration payable in respect of the acquisition of Wilton Petroleum Limited (as announced on -3 July 2013), for general working capital purposes and to enhance the Company's ability to pursue its new ventures strategy. The Placing is not conditional upon the Open Offer.

The Company has conditionally placed 802,343,266 New Ordinary Shares (the "Placing Shares") at a price of 1.125 pence per share to raise gross proceeds of £9.0 million (US$13.9 million) by means of a placing by Peel Hunt LLP and GMP Securities Europe LLP. It is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares by 8.00 a.m. on 30 July 2013. In addition, in order to provide shareholders with an opportunity to participate in the fundraising, the Company is launching a 2 for 9 Open Offer of up to 360,811,606 new Ordinary Shares at a price of 1.125 pence per share to raise up to an additional £4.1 million (US$ 6.2 million).

Summary

·     £9.0 million (US$13.9 million) to be raised by way of a Placing with certain existing and new investors at a price of 1.125 pence per Placing Share

·     Up to an additional £4.1million (US$6.2 million) to be raised by way of an Open Offer

·     Funds from the Placing and Open Offer to be used to: fund the Company's share of the 2013 costs associated with the Welwitschia-1 well in Namibia, planned to spud in February 2014; fund the cash consideration payable in respect of the acquisition of Wilton Petroleum Limited, announced on 3 July 2013; to enhance the Company's ability to pursue its new ventures strategy; and for general working capital purposes

·     Open Offer of 2 Open Offer Shares for every 9 Existing Ordinary Shares to allow Qualifying Shareholders at the Record Date of 23 July 2013 the opportunity to participate in the Company's fundraising at the same price as the Placing

·     Directors participation in the Placing, investing £1.2 million (US$1.9 million),demonstrating continued confidence in the Company and its prospects

·     Intention to farm out  a 10%  interest in Namibian licence 0010 (current interest 30%) to fund exposure to 2014 drilling costs

·     New ventures team recently announced signing of an agreement for the acquisition of Wilton Petroleum with its Madagascan licence, demonstrating their ability to identify, negotiate and execute strategic deals

·     Announcement of Interim Results for the period to 30 June 2013

The Circular concerning the Open Offer will shortly be sent to Shareholders and will also be made available on the Company's website www.towerresources.co.uk once it has been sent.

Graeme Thomson, Chief Executive Officer of Tower Resources, said:

"At this crucial time in the Company's development it is important that we have the means to fund our share of 2013 costs for the Welwitschia-1 well and to have the flexibility to enter into further new ventures. We are grateful to existing and new investors for their support, and are pleased that the Open Offer enables all shareholders to participate in this fundraising. Our high-potential 2014 drilling activity and new venture ambitions mean that these are truly exciting times for Tower."

Jeremy Asher, Chairman of Tower Resources, said:

"We are delighted with the positive response to this Placing, at a time when many E&P investors have been holding back from the AIM market. We are especially pleased that two existing shareholders have increased their holdings substantially, and that a number of new institutional investors have joined the register. We could have completed this funding without the Open Offer, and we are not depending on it for funds; but many small investors have supported the Company loyally in the past and, in view of the low price of this issue, we felt that they should also have the opportunity to subscribe for shares on the same terms as the institutions if they wish. I believe that this Placing underscores the credibility of the Company's management team and strategy, as well as the depth of the company's financial support within its own shareholder base and its ability to expand that base further in the future."

Readers are referred to the important notice that applies to this announcement. Unless otherwise stated, references to time contained in this announcement are to UK time.  This announcement has been issued by and is the sole responsibility of Tower Resources plc.

Contacts

Tower Resources

Jeremy Asher (Chairman)
Graeme Thomson (CEO)

Andrew Matharu (VP - Corporate Affairs)
[phone]

Peel Hunt LLP

(Nominated Adviser and Joint Broker)

Richard Crichton/Andy Crossley
[phone]

GMP Securities Europe LLP (Joint Broker)

Rob Collins/Liz Williamson
[phone]

Vigo Communications

Chris McMahon/Peter Reilly
[phone]

Note regarding forward-looking statements:

This announcement contains certain forward looking statements relating to the Company's future prospects, developments and business strategies. Forward looking statements are identified by their use of terms and phrases such as "targets" "estimates", "envisages", "believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expressions or the negative of those, variations or comparable expressions, including references to assumptions.

The forward looking statements in this announcement are based on current expectations and are subject to risks and uncertainties which could cause actual results to differ materially from those expressed or implied by those statements. These forward looking statements relate only to the position as at the date of this announcement. Neither the Directors nor the Company undertake any obligation to update forward looking statements or risk factors, other than as required by the AIM Rules for Companies or by the rules of any other applicable securities regulatory authority, whether as a result of the information, future events or otherwise. You are advised to read this announcement and, once available, the Circular and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Company's or the Group's future performance and the industries in which they operate.  In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks on the Company's website (or any other website) is incorporated in, or forms part of, this announcement.

Any person receiving this announcement is advised to exercise caution in relation to the Placing and the Open Offer. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.

This summary should be read in conjunction with the full text of the announcement which follows.

1. INTRODUCTION AND SUMMARY

The Board is pleased to announce that the Company has conditionally raised approximately £9.0 million (US$13.9 million) before expenses through a placing of 802,343,266 Placing Shares at a price of 1.125 pence per Share (the "Issue Price"). The Issue Price is at a discount of 15.1 per cent. to the closing price on 24 July 2013, the last trading day before the announcement of the Placing. It is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares by 8.00 a.m. on 30 July 2013.

The Placing includes 107,722,221 Placing Shares subscribed for by the Directors, as described further below. This includes 90,000,000 Placing Shares subscribed for by Jeremy Asher, the Chairman, who has invested £1.01 million in the Placing, further demonstrating his commitment and belief in the Company and its prospects.

The Board is grateful for the continued support received from Shareholders and has therefore decided to offer all Shareholders the opportunity to participate in a further issue of new equity in the Company by making an Open Offer to all Shareholders at the Issue Price. The Board proposes to raise up to £4.1 million (US$6.2 million) through the Open Offer.

In order to maximise the shares available under the Open Offer, each of the Directors who have subscribed for shares under the Placing have committed not to take up their entitlements under the Open Offer. This allows Qualifying Shareholders an increased opportunity to apply for additional Open Offer Shares above their Basic Entitlement.

Further details of the Open Offer including the Excess Application Facility are set out below.

2. BACKGROUND TO AND REASONS FOR THE PLACING AND THE OPEN OFFER

The Board's strategy is to realise the potential of the core Namibian Licence whilst continuing to capitalise on the extensive African operating experience within the Company. With minimal recourse to third party financing, the Company is executing this strategy by developing its core Namibian asset to the point of drilling, with a rig recently agreed upon by the parties to the Namibian Licence, the well location selected and certain long lead items ordered.

As announced on 31 January 2013, the Company completed the conditions to the Namibian FOA. This doubled the Company's interest in the Namibian Licence to 30 per cent., demonstrating the Board's confidence in the prospectivity of the Namibian Licence and providing external validation of the potential within the Namibian Licence from Repsol, a new entrant to the licence and now operator.

A CPR Update published in June 2013 incorporated results from recent exploration drilling at the Wingat-1 well within the Walvis Basin, confirming the extent of the prospectivity within the licence and increasing the best estimate of net risked prospective resources targeted with the Welwitschia-1 well, from 458 mmboe to 496 mmboe.

Since completion of the Namibian FOA, progress has been made towards drilling the Welwitschia-1 prospect. The well location has been selected, site surveys completed and certain long lead items ordered and which are in the process of being manufactured. In addition, as announced on 5 July 2013, the Rowan Renaissance rig has been selected by the Namibian Joint Venture with drilling scheduled to commence in mid-February 2014.

As described further below, a portion of the funds raised from the Placing will be used to fund the Company's share of budgeted 2013 costs associated with the Welwitschia-1 well. It is the Company's intention to farm out 10 per cent. of its interest in the Namibian Licence in order to reduce the Company's financial exposure in respect of these costs and the costs of drilling the well in 2014. If the Company was not to farm out 10 per cent. of its interest in the Namibian Licence, the Company expects that it would need to seek additional funding in order to meet its remaining ongoing work obligations under the Namibian Licence. In making the decision to farm out part of its interest, the Directors will seek to maximise the value of this core Namibian asset, balancing the cost of dilution of its interest in the Namibian Licence with the potential impact to Shareholders of dilution in the Company at an equity level.

In order to introduce new assets into the Company's portfolio, the Directors intend to use the extensive African operating experience within the Company to identify, appraise and negotiate transactions in order to build a high impact Pan-African exploration business around the core Namibian Licence. The Company's new venture strategy is described further below.

The Company has already started implementing this strategy. As announced on 3 July 2013, the Company has agreed to acquire a 20 per cent. carried interest in Marovoay Block 2102, onshore Madagascar through the acquisition of Wilton Petroleum for an initial consideration of US$1.75 million in cash and 120 million Ordinary Shares in the Company. At a share price of 1.6 pence per Ordinary Share (which was the price at closing the day the deal was announced) this values Wilton Petroleum at US$4.7 million compared to the cash value of the first well carry of US$4 million.  In addition to funding the US$1.75 million cash element of this transaction, the Placing proceeds will be used for working capital and to fund the Company's continuing new ventures programme.

Additional proceeds from the Open Offer are intended to be used to supplement the funds used for existing assets and new ventures, enabling the Company to identify and pursue new ventures in addition to existing opportunities.

The Board considers that an offer to existing Shareholders by way of a rights or other pre-emptive issue is not currently feasible due to the delays that would be incurred through the production and approval of a prospectus having regard in particular to the need of the Company to fund the cash element of the Madagascan acquisition and the need to finance the acquisition of long lead and other items in advance of drilling the Welwitschia-1 well. The Open Offer allows Qualifying Shareholders the opportunity to participate in the fundraising at the Issue Price and, subject to the terms of the Excess Application Facility, increase their participation beyond their Basic Entitlement.

No shareholder approvals are required for the Placing or for the Open Offer.

3. THE PLACING

The Company has entered into the Placing Agreement with Peel Hunt and GMP on customary terms and conditions pursuant to which Peel Hunt and GMP have conditionally agreed to use their reasonable endeavours to procure Placees for 802,343,266 Placing Shares at the Issue Price. The Company has received firm commitments from Placees for 802,343,266 Placing Shares in the Placing representing approximately £9.0 million (gross) (US$13.9 million).

Application has been made for the Placing Shares to be admitted to trading on AIM. It is expected that Admission of the Placing Shares will become effective and that dealings will commence in the Placing Shares at 8.00 a.m. on 30 July 2013.

The Placing is conditional on Admission of the Placing Shares and other usual conditions for a placing, but is not conditional on the Open Offer in any way.

All of the Directors, save for Philip Swatman, who is acting as the independent director for the purposes of the related party disclosure (see below),  are participating in the Placing for an aggregate of 107,722,221 Placing Shares (£1.2 million gross). Each of these Directors, save for Philip Swatman, have irrevocably undertaken not to participate in the Open Offer to allow more Open Offer Shares to be made available to other Qualifying Shareholders in the Open Offer.

The other Placees will only be entitled to participate in the Open Offer if they are Qualifying Shareholders as at the Record Date. Admission of the Placing Shares is not expected to become effective prior to or on the date of the Record Date so the Placing Shares will not be included in the calculation of a Qualifying Shareholder's entitlement, further details of which are set out below.

4. THE OPEN OFFER

The Open Offer is for up to 360,811,606 Open Offer Shares at the Issue Price (being the same as the Issue Price for the Placing) to raise up to £4.1 million (gross). Only Qualifying Shareholders on the register as at the Record Date of 23 July 2013 may participate in the Open Offer.

Subject to the fulfilment of the terms and conditions referred to in the Circular and, where relevant, set out in the Application Form, Qualifying Shareholders are being given the opportunity to apply for Open Offer Shares at a price of 1.125 pence per Open Offer Share, free of expenses, payable in full, in cash on application, on the basis of:

2 Open Offer Shares for every 9 Existing Ordinary Shares

registered in the name of each Qualifying Shareholder at the Record Date and so on in proportion for any other number of Ordinary Shares then held.

Qualifying Shareholders may apply for more or less Open Offer Shares than they are entitled to under the Open Offer and applications in excess of the Open Offer entitlements will be dealt with under the Excess Application Facility. Once subscriptions under the Open Offer Entitlements have been satisfied, the Company shall, in its absolute discretion, determine whether to meet any excess applications in full or in part, and no assurance can be given that applications by Qualifying Shareholders under the Excess Application Facility will be met in full or in part or at all. To the extent that additional Open Offer Shares are not subscribed by existing Shareholders, Open Offer entitlements will lapse. Further details of the Open Offer and the Excess Application Facility will be set out in the Open Offer Circular.

Excess applications will be rejected if and to the extent that acceptance would result in the Qualifying Shareholder, together with those acting in concert with him/her/it for the purpose of the Code, holding 30 per cent. or more of the issued share capital immediately following Admission.

If a Qualifying Shareholder has subscribed for Placing Shares these will not be included in the calculation of such Qualifying Shareholder's entitlement as the Record Date precedes the expected

date of Admission of the Placing Shares.

Application will be made for the Open Offer Shares to be admitted to trading on AIM. It is expected that Admission of the Open Offer Shares will become effective and that dealings will commence in the Open Offer Shares at 8.00 a.m. on 16 August 2013.

Further information on the Open Offer and the terms and conditions on which it is made, including the procedure for application and payment, will be set out in Part 3 of the Open Offer Circular and in the Application Form, which shareholders should read in full. Both the Circular and the Application Forms are expected to be posted to Shareholders shortly. Qualifying Shareholders who subscribe for Open Offer Shares will be required to represent, warrant, covenant, agree and acknowledge that they have reviewed the representations, warranties, covenants, agreements and acknowledgements set out in Schedule 1 of the Open Offer Circular and, in applying for Open Offer Shares, will be deemed to have given such representations, warranties, covenants, agreements and acknowledgements.

For Qualifying Ordinary Shareholders, completed Application Forms, accompanied by full payment, should be returned by post or by hand (during normal business hours only) to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham Kent, BR3 4TU so as to arrive as soon as possible and in any event so as to be received no later than 11.00 a.m. on 9 August 2013. For Qualifying CREST Holders, the relevant CREST instructions must have settled as explained in the Circular by no later than 11.00 a.m. on 9 August 2013.

The Open Offer is conditional, amongst other things, upon Admission of the Open Offer Shares becoming effective by not later than 8.00 a.m. on 16 August 2013 (or such later time and/or date as the Company may agree, not being later than 8.00 a.m. on 30 August 2013). Accordingly, if such conditions are not satisfied, or, if applicable, waived, the Open Offer will not proceed and any Open Offer Entitlements admitted to CREST will thereafter be disabled. The Open Offer is not conditional on the Placing in any way.

Dilution

The Placing and Open Offer, if fully subscribed, will result in the issue of 802,343,266 Placing Shares and 360,811,606 Open Offer Shares (representing approximately 41.7 per cent. of the issued share capital of the Company, as enlarged by the Placing and Open Offer). The Placing Shares and Open Offer Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares and will rank for all dividends or other distributions declared, made or paid after the date of issue of the Placing Shares or Open Offer Shares. No temporary documents of title will be issued.

Shareholders who do not elect to participate in the Open Offer will suffer a maximum dilution as set out in the table below:

Amount Raised through Placing and Open Offer	Number of Placing Shares and Open Offer Shares issued	Dilution to non-participating Shareholders
£13.1 million(1)	1,163,154,872	41.7%

(1) Assuming full subscription under the Open Offer.

5. USE OF PROCEEDS

The proceeds of the Placing and Open Offer will allow the Company to: strengthen its financial position, meet its costs in respect of the Welwitschia-1 well for 2013, fund the cash consideration payable in respect of the acquisition of Wilton Petroleum, for general working capital and to enhance its ability to pursue new ventures as described in the Operational Update below.

It is intended that the proceeds of the Placing will be applied as follows:

	US$ millions
Namibia - Welwitschia-1 well (YE-2013)
Well Planning & other costs	3.5
Site Survey/HSE	1.0
Consumables & Long-lead items	3.6
	8.1
New Ventures
New Ventures and Working Capital	6.0
Acquisition of interest in Madagascar Block-2102	1.9
	7.9
Corporate
Placing & Open Offer costs	0.7
Less - Cash balance at 30/6/13	(2.8)
TOTAL	13.9

The proceeds from the Open Offer will be used to supplement the funds available for existing assets and new ventures. The maximum proceeds from the Open Offer will be £4.1 million (US$6.2 million)

6. OPERATIONAL UPDATE

On 28 March 2013, the Board announced final results for the 12 months ending 31 December 2012 and provided an operational update on the Company's activities in Namibia, Uganda and the SADR, as well as a new ventures and future strategy.

Since that time, we are pleased to highlight the increased level of licencing, commercial and drilling activity offshore Namibia and specifically the announcement dated 20 May 2013 from HRT regarding the results of the Wingat-1 well, which has reported encouraging results from the Walvis Basin, offshore Namibia. The Company believes these well results offer significant encouragement for its Welwitschia-1 well, the drilling of which is scheduled to begin in mid-February 2014.

HRT announced that the Wingat-1 wildcat well was drilled to a total depth ("TD") of 5,000 metres and, whilst not encountering commercial quantities of oil, recovered four 450 cl samples of light 38 to 42 degree API oil from thin sands of undisclosed age. It drilled through two 'well-developed source rocks, which are rich in organic carbon and both are within the oil-generating window'. The principal target of the well, a carbonate reservoir in the Albian, was not as well developed as HRT had anticipated.

HRT announced on 19 July 2013 that its subsequent Murombe-1 well, spudded on 3 June 2013, has confirmed the presence of the Aptian marine source rock seen in Wingat-1.

Wingat-1 and HRT's second exploration well, Murombe-1, are located in Petroleum Exploration Licence 23 (PEL 23) in the centre of the Walvis Basin, over 200 km south of the Company's Welwitschia-1 well location.

Offshore Namibia remains under-explored, with just 14 wildcat wells drilled along a coastline of 1,570 kms and one of the key uncertainties remains the distribution of mature oil prone source rock. The Wingat-1well provides clear evidence that oil has been generated and migrated, and is especially encouraging in identifying two oil prone source intervals, both in the 'oil window'. Although little information has been released for the Murombe-1 well, the operator has confirmed that one of the source rock intervals in Wingat-1 was also present in the Murombe-1 well, and was an Aptian marine oil-prone source rock.

The Company's Welwitschia-1 well has multiple reservoir targets from the Palaeocene to the Aptian. The CPR attributed net risked recoverable resources of 496 mmboe to Tower's 30 per cent. interest in this first prospect alone, which is just one of four large dip closed prospects within the acreage. It is located close to the 1911-15/1 well drilled in 1994 by Norsk Hydro, which recovered oil from core samples in the Albian.

The Board regards the recent results as very encouraging for the future potential of the Walvis Basin and the upcoming Welwitschia-1 well. Although the chance of success at any individual prospect depends on several factors, the presence of more than one mature source rock interval significantly reduces the overall risk in the basin, and should encourage additional exploration activity. We hope that this result, along with additional evidence from seeps and other offset data, such as the Norsk Hydro well, will also dispel the myth that Namibia is solely a gas province.

CPR Update

The results of the Wingat-1 well prompted the Company's management team to commission the CPR Update with respect to the Company's 30 per cent. working interest in the Namibian Licence.

The CPR Update reflected the significance of the following exploration drilling results within the Walvis Basin, offshore Namibia, and the potential impact on the prospectivity of the Namibian Licence:

·     Tapir South-1: Drilled by Chariot Oil & Gas plc on Block-1811A between March and May 2012 and encountered over 200 metres of high quality reservoir in the Cretaceous and Carbonate sequences.

·     Wingat-1: Drilled by HRT on Block-2112A between March and May 2013 and encountered two oil generating sources rocks within the Cretaceous sequence and several poorly developed reservoir sequences from which oil samples with a gravity of 38˚ to 42˚ API were extracted.

The CPR Update highlighted the following main points:

Potential for oil versus gas

The probability of encountering light oil relative to gas in the Welwitschia prospect has increased from 50 per cent. to 65 per cent. and in the Alpha, Gamma and other inter-structural prospects has increased from 45 per cent. to 65 per cent.. This assessment is primarily driven by the discovery of light oil in the Wingat-1 well and the presence of abundant source rock.

Table 1. Revised fluid phase probabilities from the CPR Update

	CPR 2011		UPDATE to CPR (June 2013)
Fluid Type	Welwitschia (previously"Delta")	Alpha, Gamma and Inter-structural Areas	Welwitschia (previously"Delta")	Alpha, Gamma and Inter-structural Areas
Dry Gas	10%	11%	10%	11%
Gas Condensate	40%	44%	25%	24%
Volatile Oil	50%	45%	65%	65%
Total	100%	100%	100%	100%

Geological chance of success ("GCoS")

The GCoS remains unchanged as the improved probability of source rock inferred from the Wingat-1 well result is confirmation of the potential for oil generation.

Prospective Resources estimate

There is insufficient evidence from the Tapir South-1 and Wingat-1 well data to make an inference with respect to the reservoir quality of the Welwitschia prospect and therefore the volumetric estimates of the prospective resources of PEL 0010 remain unchanged.

Table 2. Net unrisked and risked resources for the Namibian Licence prospects from the CPR Update

	Net Attributable Best Estimate			Aggregate Net Best Estimate	ECoS(1)	Net Risked
Liquids phase	VO(2) mmstb	GC(3) mmstb	DG(4) mmstb	mmstb	%	mmstb
Maastrichtian	634	76	6	432	31.4	136
Palaeocene	988	71	8	661	18.7	124
Upper Campanian	125	16	1	85	8.7	7
Campanian Wedge	327	43	3	223	9.3	21
Albian	564	144	56	403	8.0	32
Total Welwitschia	2,638	350	23	1,805	-	320
Gamma Palaeocene	650	66	5	439	9.3	41
Alpha Palaeocene	213	21	2	144	11.8	17
	3,501	437	30	2,387	-	377
Gas phase	BCF	BCF	BCF	BCF	ECoS	BCF
Maastrichtian	968	2,300	2,340	1,438	31.4	452
Palaeocene	1,458	3,380	3,380	2,131	18.7	398
Upper Campanian	192	432	458	279	8.7	24
Campanian Wedge	502	1,166	1,190	737	9.3	69
Albian	1,014	2,280	2,460	1,475	8.0	118
Total Welwitschia	4,134	9,558	9,828	6,059	-	1,061
Gamma Palaeocene	1,000	2,440	2,280	1,486	9.3	138
Alpha Palaeocene	326	800	748	486	11.8	57
	5,460	12,798	12,856	8,032	-	1,256
Total Welwitschia (MMBOE)(5)	3,327	1,943	1,661	2,814	-	496
Total PEL0010 (MMBOE)	4,411	2,570	2,173	3,726	-	587

(1) ECoS is derived from the GCoS multiplied by the economic probability.

(2) Volatile oil case.

(3) Gas condensate case.

(4) Dry gas case.

(5) MMBOE denotes million barrels of oil equivalent.

(A copy of the full CPR Update and the CPR is available on the Company's website at www.towerresources.co.uk)

Namibia Licence update

The Board is also pleased to highlight that the drilling of the Welwitschia-1 well is now planned to commence in mid-February 2014 and a firm rig is in place, drilling location agreed, site survey largely completed and longest lead items are being manufactured.

·     Rig approved and spud date: After a competitive process to scour the market for the most suitable rig for this exploration well, the Namibian Joint Venture has formally approved the use of the new-build Rowan Renaissance, which an associated company of Repsol has secured on a three year contract for international work. Repsol's associate will take delivery of the rig at the end of December 2013 and it will move directly to Namibia whilst undergoing further trials and crew familiarisation activities. This rig overwhelmingly won on technical, financial and safety considerations and contractual matters within the Namibian Joint Venture and with Repsol's associate are now being completed.

·     Welwitschia-1 well location: Following the completion of a drilling hazard evaluation by the operator, Repsol, the Welwitschia-1 well location has been selected in order to evaluate primary and secondary target reservoirs in both the Maastrichtian and Aptian-Albian reservoir sequences. It is estimated that the Welwitschia-1 well will be drilled to a total depth of 3,000 m TVDSS.

·     Site survey: A site survey of the Welwitschia-1 well location has almost been completed by the MV Ocean Endeavour operated by Gardline for geotechnical and oceanographic purposes. The survey consisted of the following components which were all completed satisfactorily and indicated that the seabed conditions at the Welwitschia-1 well location do not present any obstacles to drilling:

-     Seafloor bathymetry.

-     Seabed sampling.

-     Water sampling.

-     Technical and HSE quality controls.

In addition metocean and surface wave data has been acquired at the well location, final sub-sea data is to be collected and the final report of the site survey is expected in August 2013.

·     Long-lead items: Critical components of the well design, including the wellheads, well casings and most tubulars have been ordered or are being secured from suppliers following competitive bids and tendering. Manufacturing is well underway for the longest lead items. It is estimated that these items will be delivered to Walvis Bay, Namibia, in late December 2013 for further testing and onwards transportation to the well site.

·     Budgets: The Namibian Joint Venture is progressing on track with detailed well planning. The agreed budget for 2013 for the Namibian Joint Venture is approximately US$27 million (Company share approximately US$8.1 million), all to be cash called in the second half of the year. The Company currently expects a total gross well and other costs budget of approximately US$80 million (Company share US$24.0 million) plus, approximately US$20 million for contingencies (Company share US$6.0 million).  

New Ventures

One of the Board's key strategic objectives is to diversify the Company's portfolio outside of the Namibian asset via its new ventures efforts. Several steps have been taken to rejuvenate the team since mid-2012 including the appointments of Graeme Thomson (CEO), Nigel Quinton (VP - New Ventures) and Andrew Matharu (VP - Corporate Affairs). The team has been significantly strengthened by the agreement with PDF, outlined below, which provides the Company with enhanced technical capacity to source, evaluate and complete new ventures.

The geographical focus of our initiatives will be those Atlantic Margin basins of Africa with low drilling densities and the various East African Rift systems. Two types of opportunity will be prioritised:

·     Significant equity (50-100 per cent.) in early stage acreage in relatively under-explored regions; and

·     Smaller interests (10-25 per cent.) in drill-ready opportunities.

Strategic Alliance with PDF

To assist the new ventures strategy, the Company announced on 5 July 2013 that it was entering into a long term strategic partnership agreement with PDF to provide the Outsourced Exploration Department (OExD™) tailored to the expanding exploration and new ventures needs of the Company. The appointment of PDF enables the Company to identify and evaluate new opportunities at a rate equivalent to a company much larger than the Company's current size.

PDF will earn a portion of its fees in Ordinary Shares, thereby gaining a stake in the Company and linking the success of the OExD™ to the overall performance of the Company.

PDF are a bespoke exploration geoscience group, established in 1994 and led by Dr Mark Enfield

and Edward Blunt, with extensive Africa and global exploration, operations and new ventures experience.

Acquisition of Wilton Petroleum Limited

The new ventures team have recently secured their first transaction with the signing of an agreement for the acquisition of a 20 per cent. carried interest in the Marovoay Block-2102 which was announced on 3 July 2013. The acquisition is being effected through the acquisition of Wilton Petroleum, a private English registered exploration company.

Wilton Petroleum's sole asset is a 20 per cent. carried interest in the Marovoay Block-2102, onshore Madagascar, in the Majunga Basin, which is operated by Ophir through its subsidiary Ophir Madagascar. The Marovoay Block-2102 covers an area of 8,444 km² and possesses prospectivity across multiple play types within the Jurassic and Cretaceous age sequences. The first exploration well in the Marovoay Block-2102 is due to be drilled by Q2 2014. It will target the West Anjohibe prospect with mean prospective resources of 61 mmbbls of what is expected to be light volatile oil in Jurassic and Cretaceous plays. These are the onshore equivalent of the deep-water plays being explored by ExxonMobil in the Ampasindava Block to the north. This is one of over 20 prospects identified on the Marovoay Block-2102.

Wilton Petroleum's 20 per cent. interest in the Marovoay Block-2102 is carried for up to two exploration wells by Ophir Madagascar, with each well carry capped at a net value of US$4 million.

The Company is acquiring the entire share capital of Wilton Petroleum for an initial consideration of US$1.75 million in cash and 120 million Ordinary Shares in the Company. At a share price of 1.6 pence per Ordinary Share (which was the price at closing the day the deal was announced) this values Wilton Petroleum at US$4.7 million compared to the cash value of the first well carry of US$4 million. The consideration shares are subject to a 12 month lock-in period from the date when they are issued, expected to be in August 2013.

The Company will also make a deferred additional payment to Wilton Petroleum's shareholders of US$4 million, to be paid in cash, the Company's shares or a combination of both at the Company's

discretion, on the spudding of the second carried well on the Marovoay Block-2102. The deferred consideration is equivalent to the cash value of the second carry and will only be payable if the operator drills a second carried well.

The completion of the acquisition is subject to the transfer of the beneficial ownership of Wilton

Petroleum's interest in the Marovoay Block-2102 to the Company being approved by the Madagascan Office des Mines Nationales et des Industries Stratégiques (OMNIS). Completion is also subject to a number of conditions precedent including, amongst other things, the Company raising a minimum of £4 million from the equity markets by 31 August 2013.

The acquisition of Wilton Petroleum marks a new country entry for the Company and the first transaction with the recently appointed management team who all have prior experience of exploration in Madagascar. It also demonstrates that the Company's new ventures team are actively seeking to originate and pursue new opportunities as the Company seeks to diversify its portfolio and build a high impact Pan-African explorer around our core Namibian Licence.

7. DIRECTORS' HOLDINGS

	As at the date of this announcement		Immediately following Admission of the Placing Shares and the Open Offer Shares(1) (full subscription)
	Number of Ordinary Shares	% of issued share capital	Number of Ordinary Shares	% of issued share capital
Jeremy Asher(2)	185,000,000	11.4	275,000,000	9.9
Peter Taylor	101,319,105	6.2	105,763,549	3.8
Peter Blakey	96,519,105	5.9	98,296,882	3.5
Graeme Thomson	5,000,000	0.3	16,500,000	0.6
Philip Swatman	3,500,000	0.2	3,500,000	0.1

(1) Assuming full subscription under the Open Offer.

(2) These shares are held by Agile Energy Limited, which is owned by the Asher Family Trust of which Jeremy Asher is

the lifetime beneficiary.

8. HALF YEARLY REPORT

The Company's half yearly financial report for the six months ending 30 June 2013 is included as Appendix II of this Announcement.

9. RELATED PARTY TRANSACTION

The issue of Placing Shares to Jeremy Asher is deemed a related party transaction under the AIM Rules for Companies. Philip Swatman, who is not participating in the Placing, considers, having consulted with Peel Hunt (in its capacity as the Company's Nominated Adviser), that the terms of the issue of Placing Shares to Jeremy Asher is fair and reasonable insofar as the shareholders of the Company are concerned.

10. SHARE OPTIONS AND WARRANTS

The Company has issued options and warrants to certain advisers, employees, Directors, senior management and consultants of the Group. It is intended that, in line with past practice, the Directors and senior management will be given the opportunity to sacrifice up to £30,000 each of their fees and salaries for the issue of warrants in the Company. There are currently approximately 62.8 million options and warrants outstanding. Up to a further 20 million options may be issued shortly following the Placing. This could lead to further options being issued in the coming months. The exercise of any such share options and warrants would result in a dilution of the shareholdings of other investors.

11. ACTION TO BE TAKEN

If a shareholder is a Qualifying Ordinary Shareholder, it will shortly receive an Application Form which gives details of its entitlement under the Open Offer (as shown by the number of Open Offer Entitlements allocated to it). If a shareholder wishes to apply for the number of Open Offer Shares it is entitled to under the Open Offer (as shown by the number of Open Offer Entitlements allocated

to it) or more or less Open Offer Shares than it is entitled to under the Open Offer, it should complete the Application Form enclosed with the Circular in accordance with the procedure for application which will be set out in paragraph 4(i) of Part 3 of the Circular and on the Application Form itself.

If a shareholder is a Qualifying CREST Holder, no Application Form will be enclosed with the Circular and it will receive a credit to its appropriate stock account in CREST in respect of the Open Offer Entitlements representing its entitlement under the Open Offer. Shareholders should refer to the procedure for application which will be set out in paragraph 4(ii) of Part 3 of the Circular.

The latest time for applications under the Open Offer to be received is 11.00 a.m. on 9 August 2013. The procedure for application and payment depends on whether, at the time at which application and payment is made, a shareholder has an Application Form in respect of its entitlement under the Open Offer or have Open Offer Entitlements credited to your stock account in CREST in respect of such entitlement. The procedures for application and payment are set out in Part 3 of the Open Offer Circular. Further details also appear in the Application Form which has been sent to Qualifying Ordinary Shareholders.

Qualifying CREST Holders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Open Offer Circular and the Open Offer.

12. OVERSEAS SHAREHOLDERS

Information for Shareholders who have registered addresses outside the United Kingdom will be set out in the Open Offer Circular, which sets out the restrictions applicable to such persons. If a shareholder is an Overseas Shareholder, it is important that it reads that part of that document.

13. TAXATION

Information regarding taxation in the United Kingdom in connection with the Open Offer will be set  out in the Open Offer Circular.

14. RISK FACTORS AND ADDITIONAL INFORMATION

Shareholders' attention is drawn to the risk factors which will be set out in Part 2 of the Open Offer Circular which are important and should be read in full and the additional information which will be set out in Part 4 of the Open Offer Circular.

15. RECOMMENDATION

The Board believes that the Placing and the Open Offer are in the best interests of the Company, and the Shareholders as a whole, for the following reasons:

(i)   it secures the Company's planned financing requirements at a time of challenging global economic and market conditions;

(ii)  it will help stimulate the new ventures strategy by supplementing the funds used for new ventures, enabling the Company to identify and pursue new opportunities in addition to existing opportunities; and

(iii) it provides Shareholders with the opportunity to further support the Company through the Open Offer at this exciting time.

APPENDIX I:

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Record Date for Open Offer	close of business on 23 July 2013
Expected publication and despatch of the Open Offer Circular	26 July 2013
Expected ex-entitlement date for Open Offer	7am on 26 July 2013
Open Offer Entitlements credited to CREST stock accounts of Qualifying CREST Holders	29 July 2013
Admission of the Placing Shares to trading on AIM	8am on 30 July 2013
Recommended latest time for requesting withdrawal of Open Offer Entitlements from CREST	4.30pm on 5 August 2013
Latest time for depositing Open Offer Entitlements into CREST	3pm on 6 August 2013
Latest time and date for splitting Application Forms (to satisfy bona fide market claims)	3pm on 7 August 2013
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer	11am on 9 August 2013
Latest time and date for settlement of relevant CREST instruction	11am on 9 August 2013
Expected date of announcement of results of Open Offer	12 August 2013
Admission of the Open Offer Shares to trading on AIM	8am on 16 August 2013
CREST member accounts expected to be credited for the Open Offer Shares	16 August 2013
Despatch of definitive share certificates in respect of the Open Offer Shares in certificated form	By 27 August  2013

APPENDIX II:

INTERIM RESULTS TO 30 JUNE 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2013

	Notes	Six months ended 30 June 2013 (Unaudited) $	Six months ended 30 June 2012 (Unaudited) $
Continuing operations
Revenue		-	-
Cost of sales		-	-
Gross profit		-	-
Administrative expenses before share-based payments, costs of evaluating possible prospects and impairments		(1,595,383)	(1,115,651)
Share-based payments	9	(387,047)	(180,292)
Costs of investigating and evaluating possible new exploration prospects		(422,398)	-
Impairment of exploration and evaluation assets		-	(7,314,216)
Total administrative expenses		(2,404,828)	(8,610,159)
Group operating loss		(2,404,828)	(8,610,159)
Finance costs	7(b)	(121,506)	(681,251)
Finance income		18,035	14,816
Loss before taxation		(2,508,299)	(9,276,594)
Taxation		-	-
Loss for the period		(2,508,299)	(9,276,594)
Other comprehensive income		-	-
Total comprehensive income		(2,508,299)	(9,276,594)
Attributable to:
Equity holders of the Company		(2,508,299)	(9,276,594)
Loss per share (cents):	2
Basic		(0.15) c	(0.67) c
Diluted		(0.15) c	(0.67) c

The above results relate entirely to continuing operations.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2013

	Share Capital $	Share Premium $	Share-Based Payments Reserve $	Retained Losses $	Total Equity $
Six months ended 30 June 2013
Balance at 1 January 2013	2,837,320	58,272,549	1,740,739	(47,790,465)	15,060,143
Total comprehensive income for period	-	-	387,047	(2,508,299)	(2,121,252)
Balance at 30 June 2013	2,837,320	58,272,549	2,127,786	(50,298,764)	12,938,891

Share Capital $ Share Premium $ Share-Based Payments Reserve $ Retained Losses $ Total Equity $ Six months ended 30 June 2012   Balance at 1 January 2012 2,210,304 40,290,349 1,553,077 (36,658,135) 7,395,595   Share issues less costs      318,249 9,095,124 - - 9,413,373   Total comprehensive income for period - - 180,292 (9,276,594) (9,096,302) Balance at 30 June 2012   2,528,553 49,385,473 1,733,369 (45,934,729) 7,712,666

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2013

	Notes	30 June 2013(Unaudited) $	31 December 2012(Audited) $
ASSETS
Non-Current Assets
Goodwill	4	4,033,541	4,033,541
Exploration and evaluation assets	4	8,866,634	1,157,668
		12,900,175	5,191,209
Current Assets
Trade and other receivables	5	1,284,472	1,282,975
Cash and cash equivalents		2,768,622	4,478,375
Restricted cash		-	5,600,000
		4,053,094	11,361,350
Total Assets		16,953,269	16,552,559
LIABILITIES
Current Liabilities
Trade and other payables	6	(4,014,378)	(1,492,416)
Total Liabilities		(4,014,378)	(1,492,416)
Net Assets		12,938,891	15,060,143
EQUITY
Capital and Reserves
Share capital	7(a)	2,837,320	2,837,320
Share premium	7(a)	58,272,549	58,272,549
Share-based payments reserve	9	2,127,786	1,740,739
Retained losses		(50,298,764)	(47,790,465)
Shareholders' Equity		12,938,891	15,060,143

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2013

	Notes	Six months ended  30 June 2013 (Unaudited) $	Six months ended 30 June  2012 (Unaudited) $
Cash outflow from operating activities
Group operating loss for the period		(2,404,828)	(8,610,159)
Adjustments for items not requiring an outlay of funds:
Depreciation of plant and equipment		-	148,589
Share-based payments charge	9	387,047	180,292
Impairment of exploration and evaluation       assets		-	7,314,216
Operating loss before changes in working capital		(2,017,781)	(967,062)
Increase in receivables and prepayments		(1,496)	(399,565)
Increase in trade and other payables		2,521,961	136,119
Cash arising from / (used in) operations		502,684	(1,230,508)
Interest received		18,035	14,816
Net cash from / (used in) operating activities		520,719	(1,215,692)
Investing activities
Funds used in exploration and evaluation	4	(7,708,966)	(7,335,820)
Release of restricted cash deposit		5,600,000	-
Disposal of plant and equipment		-	535
Net cash used in investing activities		(2,108,966)	(7,335,285)
Financing activities
Proceeds from issue of ordinary share capital		-	9,659,221
Share issue costs		-	(245,848)
SEDA loan received		-	3,125,000
SEDA loan repaid		-	(3,125,000)
Finance costs	7(b)	(121,506)	(681,251)
Net cash (used in) / from financing activities		(121,506)	8,732,122
(Decrease) / increase in cash and cash equivalents		(1,709,753)	181,145
Cash and cash equivalents at beginning of period		4,478,375	2,176,937
Cash and cash equivalents at end of period		2,768,622	2,358,082

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 30 JUNE 2013

1.         Basis of preparation and going concern

This half-yearly financial report, which includes a condensed set of financial statements of the Company and its subsidiary undertakings ("the Group"), has been prepared using the historical cost convention and in accordance with the International Financial Reporting Standards, as adopted by the European Union ("IFRS") including IAS 34 'Interim Financial Reporting' and IFRS 6 'Exploration for and Evaluation of Mineral Reserves'.

This condensed set of financial statements for the six months ended 30 June 2013 is unaudited and does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. They have been prepared using accounting bases and policies consistent with those used in the preparation of the audited financial statements of the Company and the Group for the year ended 31 December 2012 and those to be used for the year ending 31 December 2013.  The comparative figures for the half year ended 30 June 2012 are unaudited.  The comparative figures for the year ended 31 December 2012 are not the Company's full statutory accounts but have been extracted from the financial statements for the year ended 31 December 2012 which have been delivered to the Registrar of Companies and the auditors' report thereon was unqualified and did not contain a statement under sections 498 (2) and 498(3) of the Companies Act 2006.

This half-yearly financial report was approved by the Board of Directors on 24 July 2013.

Going concern

During the six months ended 30 June 2013, the Group made a loss of $2,508,299 after a Share-based payments charge of $387,047.  Net cash outflow during the period was $1,709,753.

The operations of the Group are currently being financed from funds which the Company has raised from private and public placings of its shares. The Group has not yet earned revenue as it is still in the exploration phase of its business.  In addition to cash balances at 30 June 2013 totalling $2.76 million the Group has additional facilities of over £28 million conditionally available under its Equity Financing Facility ("EFF") and Standby Equity Distribution Agreement ("SEDA"). It has a 30% interest in Licence 0010 in Namibia where it is now expected that its first exploration well will be spudded in February 2014.  The Directors currently estimate that the Group's share of costs related to this Licence, including the cost of the exploration well and contingencies, could total approximately $30 million. In order to fund those costs, to meet day-to-day operating expenditures and to add further exploration interests to the Group, it will need to raise further funds from the EFF, SEDA, other equity issues, or from a sale or farmout of part of its interest in Licence 0010.

The Board believes that the Group will indeed be able to raise, as required, sufficient cash or reduce its commitments to enable it to continue its operations, including the pursuit of future exploration opportunities, and to continue to meet, as and when they fall due, its liabilities for at least the next twelve months from the date of approval of these financial statements. These financial statements have, therefore, been prepared on the going concern basis.

However, there can be no guarantee that the required funds will be raised within the necessary timeframe. Consequently a material uncertainty exists that may cast significant doubt on the Group's ability to meet its funding requirement and therefore be able to meet its commitments and discharge its liabilities in the normal course of business for a period not less than twelve months from the date of that these financial statements were approved by Board. 

The financial statements do not include any adjustments that would result if the Group was unable to continue in operation.

2.         Loss per ordinary share

The basic loss per ordinary share has been calculated using the loss for the financial period of $2,508,299 (six months ended 30 June 2012: loss $9,276,594) and the weighted average number of ordinary shares in issue of 1,623,652,227 (six months ended 30 June 2012: 1,383,255,950).  The diluted loss per share is the same as the basic loss per share because the conversion of share options and share warrants decreases the basic loss per share, and is thus anti-dilutive.

3.         Segmental reporting of Loss, Assets and Liabilities

            The Group's business involves exploring for hydrocarbon liquids and gas.  There are two reportable operating segments: Africa and Head Office. Fixed assets and operating liabilities are located in Africa, whilst the majority of current assets are carried at Head Office.  Each reportable segment adopts the same accounting policies.  In compliance with IFRS 8 'Operating Segments' the tables below reconcile the operational loss, assets and liabilities of each reportable segment with the consolidated figures presented in this half-yearly financial report, together with comparative figures for the year ended 31 December 2012.

Six months ended 30 June 2013
	Africa $	Head Office $	Adjustments $	Consolidated $
Administration costs	579,420	1,015,963	-	1,595,383
Share-based payments	-	387,047	-	387,047
Interest income	-	(18,035)	-	(18,035)
Costs of investigating and evaluating  possible new exploration prospects	-	422,398	-	422,398
Financing costs - see note 7 (b)	-	121,506	-	121,506
Loss by Reportable Segment	579,420	1,928,879	-	2,508,299
Total Assets by Reportable Segment	10,103,832	6,726,878	122,561	16,953,269
Total Liabilities by Reportable Segment	(1,268,419)	(2,646,397)	(99,562)	(4,014,378)

Year ended 31 December 2012
	Africa $	Head Office $	Adjustments $	Consolidated $
Administration costs	1,560,515	1,496,437	-	3,056,952
Less Amount Capitalised as E&E costs	(1,471,678)	-	-	(1,471,678)
Included in Consolidated Statement of Comprehensive Income	88,837	1,496,437	-	1,585,274
Share-based payments	132,372	631,892	-	764,264
Depreciation of plant and equipment	82,157	1,355	-	83,512
Impairment of plant & equipment	65,768	-	-	65,768
Interest income	(14,102)	(42,014)	-	(56,116)
Financing costs - see note 7 (b)	-	681,251	-	681,251
Impairment of E&E costs	8,584,979	-	-	8,584,979
Loss by Reportable Segment	8,940,011	2,768,921	-	11,708,932
Total Assets by Reportable Segment	8,083,951	8,346,047	122,561	16,552,559
Total Liabilities by Reportable Segment	(1,270,498)	(121,275)	(100,643)	(1,492,416)
Note:  The amounts shown under 'adjustments' in the above tables represent the offsetting of inter-segmental receivables and payables upon consolidation.

4.         Intangible assets

	Exploration & evaluation assets $	Goodwill $	Total $
Cost
At 1 January 2013	34,797,767	8,023,292	42,821,059
Additions during the period	7,708,966	-	7,708,966
At 30 June 2013	42,506,733	8,023,292	50,530,025
Amortisation and impairment
At 1 January 2013	(33,640,099)	(3,989,751)	(37,629,850)
Impairment during period	-	-	-
At 30 June 2013	(33,640,099)	(3,989,751)	(37,629,850)
Net book value
At 30 June 2013	8,866,634	4,033,541	12,900,175
At 31 December 2012	1,157,668	4,033,541	5,191,209

            Goodwill is the difference between the amount paid on the acquisition of the subsidiary undertaking and the aggregate fair value of its separable net assets - of which oil and gas exploration expenditure is the primary asset.  It is capitalised as an intangible fixed asset and in accordance with IFRS 3 'Business Combinations' is not amortised but tested for impairment annually or when there are any indications that its carrying value is not recoverable. As such, goodwill is stated at cost less any provision for impairment in value. If a subsidiary undertaking is subsequently sold, goodwill arising on acquisition is taken into account in determining the profit and loss on sale.

            Goodwill arose on the acquisition of the Company's subsidiary undertakings in prior years.  It was impaired in the audited accounts for the year ended 31 December 2011 by $3,989,751 which represents the proportion allocated to the goodwill of Neptune Petroleum (Uganda) Limited.  The remaining balance is applicable to Neptune Petroleum (Namibia) Limited and Comet Petroleum Limited. 

Under the terms of the agreement for the purchase of Comet Petroleum Limited in 2008 additional consideration may be payable in the future depending upon the success of its evaluation and exploration activities in the Saharawi Arab Democratic Republic ("SADR") in the Western Sahara through its wholly owned subsidiary Comet Petroleum (SADR) Limited.  It is not possible to quantify with any accuracy such additional prospective consideration.

The Company's Uganda exploration licence expired on 26 March 2012.  Full provision for impairment of all exploration and evaluation ("E&E") expenditure incurred in relation to that licence was provided in the audited financial statements for the year ended 31 December 2012.

Of the remaining amount of intangible E&E assets $8,641,520 represents expenditure incurred in relation to the Group's Namibian licence and $225,114 is in relation to its SADR licence.  The outcome of ongoing exploration and evaluation is inherently uncertain. These amounts will be written off to the income statement unless commercial reserves are established or the determination process is not completed and there are no indicators of impairment.  The Directors have assessed the value of this expenditure and in their opinion no provision for impairment is currently necessary.

5.         Trade and other receivables

	30 June 2013 $	31 Dec 2012 $
Other receivables	1,284,472	1,282,975

            Included in the above figure is an amount of $1,249,221 in respect of VAT repayable by the Government of Uganda to the subsidiary, Neptune Petroleum (Uganda) Limited. Discussions are continuing between local management and the Ugandan Government regarding repayment of this amount and the Company is optimistic that a successful outcome will be reached and so no provision for impairment has been made.

6.         Trade and other payables

	30 June 2013 $	31 Dec 2012 $
Payables and accruals	4,014,378		1,492,416

            Included in the above figure are the following items:

(i) $1,200,000 in respect of potential liability for withholding tax in Uganda of the Group's subsidiary, Neptune Petroleum (Uganda) Limited. No formal assessment from the Ugandan Government has been received by the Group and discussions are continuing between local management and the Ugandan Government regarding the potential liability;

(ii) $2,262,870 in respect of monies payable to Repsol, the Operator of the Group's Namibia Joint Venture.  This amount was paid on 5 July 2013.

            The remaining payables balance represents liabilities incurred by the Group in the course of its normal commercial activities and are payable within a period of approximately 45 days.

7 (a).    Share capital and options

	30 June 2013 $	31Dec 2012 $
Allotted, called up and fully paid
1,623,652,227 (2012: 1,623,652,227) ordinary shares of 0.1p each	2,837,320	2,837,320

            No share capital was issued during the period.

Details of share options outstanding at 30 June 2013 are as follows:

			Number in issue
At 1 January 2013			33,500,000
Granted during the period			4,000,000
At 30 June 2013			37,500,000
Date of grant	Latest exercisable date	Option price	Number in issue
3 May 2007	03/05/14	2.25p	2,000,000
20 September 2007	20/09/14	2.75p	1,000,000
1 July 2008	01/07/15	4.75p	1,000,000
1 October 2008	01/10/15	3.88p	1,000,000
28 May 2010	28/05/17	1.325p	1,000,000
19 May 2011	19/05/18	5.475p	6,000,000
27 April 2012	27/04/17  see note (1) below	2.85p	1,500,000
1 June 2012	01/07/17  see note (2) below	3.025p	20,000,000
11 March 2013	11/03/18  see note (3) below	2.10p	4,000,000
			37,500,000

 (1)     Of these options 500,000 do not vest until 27 April 2014 and 500,000 do not vest until 27 April 2015.  All expire, if not previously exercised, on 27 April 2017.

(2)     Of these options 6,666,666 do not vest until 1 June 2014 and 6,666,667 do not vest until 1 June 2015.  All will expire, if not previously exercised, on 1 June 2017.

(3)     These options vest in equal tranches on 11 March 2014, 11 March 2015 and 11 March 2016 and all expire, if not previously exercised, on 11 March 2018.

The company's share price during the period covered by these financial statements ranged between 1.25p and 2.70p and the closing share price on 28 June 2013 was 1.60p per share.

The average exercise price of the outstanding options at 30 June 2013 was 2.92p and the weighted average exercise price was 3.29p.  The remaining average contractual life of the options was 3.1 years.

7 (b).    Finance costs

During the period covered by these financial statements the Company incurred costs of $121,506 associated with the Standby Equity Distribution Agreement ("SEDA") and related Loan Agreement with YA Global Master SPV Ltd., an investment fund managed by Yorkville Advisors LLC.  These costs have been shown separately as Finance Costs in the Consolidated Statement of Comprehensive Income.

The comparative figure for the year ended 31 December 2012 of $681,251 related to the same arrangements.

8.         Share warrants

No share warrants were issued during the period covered by this financial information.

Details of the warrants outstanding at 30 June 2013 are as follows:

	Number of warrants
At 1 January 2013 and 30 June 2013	25,319,199

Date of grant	Latest exercise date	Warrant price	Number of warrants
20/04/2009	20/04/2014	3.00p	4,300,001
15/12/2009	15/12/2014	2.55p	2,235,318
28/05/2010	28/05/2015	1.325p	6,339,622
14/10/2010	14/10/2015	3.72p	712,784
19/05/2011	19/05/2016	5.48p	1,716,893
30/07/2012 (* see note below)	30/7/2019	3.225p	10,014,581
			25,319,199

            (*) These do not vest in the beneficiaries until 30 July 2013.

The following table shows the interests of the Directors in the share warrants in issue.

		30 June 2013		31 Dec 2012
Jeremy Asher		6,913,213		6,913,213
Graeme Thomson		1,458,434		1,458,434
Peter Blakey		4,656,698		4,656,698
Philip Swatman		486,144		486,144
Peter Taylor		4,656,698		4,656,698
		18,171,187		18,171,187

 9.        Share based payments

	Year ended 30 June 2013 $	Year ended 31 Dec 2012 $
In the Statement of Comprehensive Income  the Company  recognised the following charge in respect of its share based payment plan:	387,047	764,264

In compliance with the requirements of IFRS 2 'Share based payments', the fair value of options or warrants granted during the period or which were granted in previous periods but had an extended period before vesting is calculated either using the Black Scholes option pricing model or on the basis of the fair value of remuneration waived in consideration for the grant.   For this purpose the expected volatility applied in respect of the Black Scholes formula was 72.81% and the dividend rate 0.40%.

10.       Material events subsequent to the end of the reporting period

(i)         On 3 July 2013 Tower announced that it has conditionally acquired of a 20% carried interest in Marovoay Block-2102, onshore Madagascar through the acquisition of Wilton Petroleum Limited ("Wilton Petroleum"), a private UK registered exploration company, for an initial consideration of $1.75 million in cash plus the issue of 120 million ordinary shares, equivalent to approximately 7% of Tower's enlarged issued share capital post completion.  On the basis of Tower's share price on 2 July 2013 of 1.60p this values Wilton Petroleum at $4.7 million.  Wilton Petroleum's interest is carried for up to two exploration wells with each well carry being capped at a net value of $4 million.  The licence is operated by Ophir Energy plc.  Block-2102 covers an area of 8,444 square kilometres and possesses prospectivity across multiple play types within the Jurassic and Cretaceous age sequences. The first exploration well is due to be drilled by mid-2014.

The agreement also provides that Tower will make a deferred additional payment to Wilton Petroleum's shareholders of $4.0 million either in cash, Tower shares or a combination of both at Tower's discretion, on the spudding of the second carried well. The deferred consideration is equivalent to the cash value of the second carry and will only be payable if the operator drills a second well.

Completion of this agreement is also subject to Tower raising a minimum of £4.0 million from the equity markets by 31 August 2013 and other pre-conditions.

(ii)       On 5 July 2013 Tower announced that spudding of the Welwitschia-1well in the Walvis Basin (Offshore Namibia) Licence 0010 is scheduled to commence in mid-February 2014.  A firm drilling rig is now in place, the drilling location agreed, site survey largely completed and certain long-lead items ordered or being ordered and in manufacture.

An update to the 2011 CPR prepared by Oilfield International announced on 2 July 2013 shows that the probability of encountering light oil relative to gas in the Welwitschia prospect has increased from 50% to 65% and in the Alpha, Gamma and other inter-structural prospects has increased from 45% to 65%. This assessment is primarily driven by the discovery of light oil in the Wingat-1 well in the first half of 2013 and the presence of abundant source rock found therein.

(iii)       On 5 July 2013 Tower announced that it has entered into a long term strategic partnership agreement with P.D.F. Limited ("PDF"), an international oil and gas exploration advisory group, to provide the Outsourced Exploration Department tailored to the expanding exploration and new ventures needs of the Company.   Under this agreement Tower will secure access to an excellent integrated exploration team including long-term safeguards for corporate memory and data management. PDF will earn a portion of its fees in Tower shares, thereby enabling it to participate in the future performance of the Company. As at the end of June 2013 the amount of fees involved amounted to approximately $34,000 and the necessary shares are in the process of being issued.

(iv)       On 25 July 2013, Tower announced a Placing to raise £9.0 million and an Open Offer to raise up to £4.1 million. The proceeds of the Placing and the Open Offer will be used to fund the Company's share of the 2013 costs associated with the Welwitschia-1 well in Namibia, the cash consideration payable in respect of the acquisition of Wilton Petroleum Limited (as announced on -3 July 2013), and to enhance the Company's ability to pursue its new ventures strategy and for general working capital purposes.

APPENDIX III:

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

"Admission"	admission of the Placing Shares or the Open Offer Shares (as the case may be) to trading on AIM and such admission becoming effective in accordance with the AIM Rules
"AIM"	the market known as "AIM" operated by the London Stock Exchange
"AIM Rules" or "AIM Rules for Companies"	the rules applicable to companies whose securities are traded on AIM and their advisers, together with the guidance note for mining and oil and gas companies, as published by the London Stock Exchange from time to time
"Application Form"	the application form accompanying the Circular to be used by Qualifying Shareholders in connection with the Open Offer
"Arcadia"	means Arcadia Expro Namibia (Pty) Ltd
"Articles"	The articles of association of the Company, in force from time to time
"Basic Entitlement"	means the total Open Offer Entitlement per Qualifying Shareholder
"Board"	the board of Directors of the Company
"Blocks"	means the Namibian Blocks and the SADR Blocks and, subject to Completion of the Malagasy SPA, the Malagasy Block
"Capita Registrars"	a trading name of Capita Registrars Limited
"certificated" or "certificated form" "Code"	not in uncertificated form the City Code on Takeovers and Mergers
"Company" or "Issuer"	Tower Resources plc, a company incorporated in England and Wales with registered number 05305345 whose registered office is at 1 America Square, Crosswall, London EC3N 2SG
"CPR"	means the competent persons report by Oilfield International dated 29 June 2011
"CPR Update"	means the update to the CPR dated 29 June 2013
"CREST"	the relevant system for the paperless settlement of trades and the holding of uncertificated securities operated by Euroclear Limited in accordance with the Regulations
"CREST member"	a person who has been admitted by Euroclear as a system-member (as defined in the Regulations)
"CREST participant"	a person who is, in relation to CREST, a system- participant (as defined in the Regulations)
"CREST Payment"	shall have the meaning given in the CREST Manual issued by Euroclear
"CREST sponsor"	a CREST participant admitted to CREST as a CREST sponsor
"CREST sponsored member"	a CREST member admitted to CREST as a sponsored member (which includes all CREST Personal Members)
"Directors"	the directors of the Company at the date of this announcement whose names are set out in the "Directors, Secretary and Advisers" section of the Circular
"enabled for settlement"	in relation to Open Offer Entitlements, enabled for the limited purpose of settlement of claim transactions and unmatched stock event transactions (each as described in the CREST Manual issued by Euroclear)
"Euroclear"	Euroclear UK & Ireland Limited, the operator of CREST
"Excess Application Facility"	to the extent that the Open Offer Entitlements to Open Offer Shares are not subscribed for in full by Qualifying Shareholders, the facility for Qualifying Shareholders to apply for additional Open Offer Shares over and above their Open Offer Entitlements subject to the terms and conditions
"Existing Ordinary Shares"	the 1,623,652,227 Ordinary Shares in issue as at the date of this announcement
"FCA"	the Financial Conduct Authority
"FSMA" "GMP"	the Financial Services and Markets Act 2000 (as amended) of the UK including any regulations made pursuant thereto GMP Securities Europe LLP
"Group"	the Company and its subsidiary undertakings
"HRT"	means HRT Participações em Petróleo S.A.
"Issue Price"	1.125 pence per Ordinary Share
"London Stock Exchange"	London Stock Exchange plc
"Malagasy Block"	means the Marovoay Block-2102
"Malagasy FOA"	means the farm-out agreement dated 8 July 2010 (as amended) between Wilton and Ophir  pursuant to which Wilton farmed-out an 80% interest in the Malagasy Block to Ophir
"Malagasy JOA"	means the joint operating agreement dated 8 July 2010 (as amended) between Wilton and Ophir, pursuant to which Ophir is operator of the Malagasy Block
"Malagasy PSA"	means the production sharing agreement in respect of the Malagasy Block dated 20 October 2006 between the Government of Madagascar, Wilton and Ophir  (as amended)
"Malagasy SPA"	means the conditional agreement regarding the sale and purchase of Wilton between the Company and the current shareholders of Wilton dated 2 July 2013
"Member Account ID"	the identification code or number attached to any member account in CREST
"mmboe"	millions of barrels of oil equivalent
"Money Laundering Regulations"	the Money Laundering Regulations 2007 and obligations in connection with money laundering under the Criminal Justice Act 1993 and the Proceeds of Crime Act 2002
"Namibian Blocks"	blocks 1910A, 1911 and 2011A covered by the Licence and the Petroleum Agreement representing an area of approximately 23,000 sq km offshore Namibia
"Namibian FOA"	means the farm out agreement in respect of the Namibian Blocks dated 27 July 2012 between Arcadia Petroleum Limited, Neptune Petroleum (Namibia) Ltd and Repsol
"Namibian JOA"	means the joint operating agreement in respect of the Namibian Blocks dated 15 August 2007 between Arcadia Petroleum Limited and Neptune Petroleum (Namibia) Ltd, as amended and novated from time to time including by a deed of novation dated 30 January 2013 between them and Repsol
"Namibian Joint Venture"	means the joint venture between Arcadia Petroleum Limited, Neptune Petroleum (Namibia) Ltd. and Repsol
"Namibian Licence"	Petroleum Exploration Licence 0010 in respect of the Namibian Blocks, issued by the Ministry of Mines and Energy of the Republic of Namibia on 23 August 2005 and reissued from time to time, in which the Group holds a 30% working interest
"Namibian Petroleum Agreement"	the Petroleum Agreement in respect of the Namibian Blocks dated 23 August 2005 between the Government of Namibia and Neptune Petroleum (Namibia) Ltd, a subsidiary of the Company, as amended and novated from time to time
"Official List"	the Official List of the UK Listing Authority
"Open Offer"	the invitation to Qualifying Shareholders to subscribe for Open Offer Shares at the Issue Price on the terms and subject to the conditions set out or referred to in Part 3 of the circular and, where relevant, in the Application Form
"Open Offer Circular" or "Circular"	the circular issued to shareholders in connection with the Open Offer
"Open Offer Entitlement"	an entitlement to apply to subscribe for one Open Offer Share, allocated to a Qualifying Shareholder pursuant to the Open Offer
"Open Offer Shares"	the up to 360,811,606 Ordinary Shares which are to be made available for subscription by Qualifying Shareholders under the Open Offer
"Ophir"	means Ophir Energy plc
"Ophir Madagascar"	means Ophir Madagascar Limited
"Ordinary Shares"	ordinary shares of 0.1 pence each in the capital of the Company
"Overseas Shareholders"	qualifying Shareholders who are resident in, or who are citizens of, or who have registered addresses in, territories other than the United Kingdom
"Participant ID"	the identification code or membership number used in CREST to identify a particular CREST member or other CREST participant
"PDF"	Means P.D.F. Limited
"Peel Hunt"	Peel Hunt LLP
"Placees"	persons procured by Peel Hunt or GMP (as the case may be) to purchase or subscribe for Placing Shares under the Placing;
"Placing"	the conditional placing by Peel Hunt and GMP on behalf of the Company of the Placing Shares at the Issue Price pursuant to the Placing Agreement
"Placing Agreement"	the agreement dated 25 July 2013 between the Company, Peel Hunt and GMP relating to the Placing
"Placing Shares"	the 802,343,266 Ordinary Shares in respect of which the Company has received firm subscriptions from Placees in the Placing
"Qualifying CREST Holders"	holders of Ordinary Shares in uncertificated form on the register of members of the Company at the close of business on the Record Date
"Qualifying Ordinary Shareholders"	holders of Ordinary Shares in certificated form on the register of members of the Company at the close of business on the Record Date
"Qualifying Shareholders"	Qualifying Ordinary Shareholders and Qualifying CREST Holders (other than certain Overseas Shareholders)
"Record Date"	close of business on 23 July 2013
"Registrar"	means Capita Registrars Limited
"Regulation D"	Regulation D under the Securities Act
"Regulations"	the Uncertificated Securities Regulations 2001, as amended from time to time
"Regulatory Information Service"	has the meaning given to it in the AIM Rules
"Restricted Jurisdiction"	United States, Canada, the Republic of South Africa, Australia or Japan
"SADR"	means the Saharawi Arab Democratic Republic
"SADR Blocks"	Guelta block, Imlili block and Bojador block covered by the SADR PSCs
"SADR PSCs"	means the production sharing contract between the government of SADR and Comet Petroleum (SADR) Limited and the production sharing contract between the government of SADR, Wessex Exloration Plc and Tower Resources Limited  dated 27 October 2011 as amended from time to time, and related assurance agreement covering the Guelta block dated 16 March 2006 as amended from time to time and related assurance agreement
"Securities Act" or "US Securities Act"	US Securities Act of 1933, as amended
"Shareholders"	holders of Ordinary Shares
"stock account"	an account within a member account in CREST to which a holding of a particular share or other security in CREST is credited
"TVDSS"	Total vertical depth sub-sea
"uncertificated" or "uncertificated form"	recorded on the relevant register or other record of the share or other security concerned as being held in uncertificated form in CREST, and title to which, by virtue of the Regulations, may be transferred by means of CREST
"United Kingdom" or "UK"	the United Kingdom of Great Britain and Northern Ireland
"United States" or "US"	the United States of America, its territories and possessions and any state of the United States and the District of Columbia
"Wilton"	means Wilton Petroleum Limited

IMPORTANT NOTICE

This announcement does not constitute or form part of any offer or invitation to purchase, or otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. 

The information contained in this announcement is not to be released, published, distributed or transmitted by any means or media, directly or indirectly, in whole or in part, in or into the United States or to any US Person.  This announcement does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any US Person. Securities may not be offered or sold in the United States absent: (i) registration under the Securities Act; or (ii) an available exemption from registration under the Securities Act. The securities mentioned herein have not been, and will not be, registered under the Securities Act and will not be offered to the public in the United States.

This announcement does not constitute an offer to buy or to subscribe for, or the solicitation of an offer to buy or subscribe for, New Ordinary Shares or any other security in any jurisdiction in which such offer or solicitation is unlawful. The securities mentioned herein have not been, and the New Ordinary Shares will not be, qualified for sale under the laws of any of Canada, Australia, the Republic of South Africa or Japan and may not be offered or sold in Canada, Australia, the Republic of South Africa or Japan or to any national, resident or citizen of Canada, Australia, the Republic of South Africa or Japan. Neither this announcement nor any copy of it may be sent to or taken into the United States, Canada, Australia, the Republic of South Africa or Japan. In addition, the securities to which this announcement relates must not be marketed into any jurisdiction where to do so would be unlawful.

This announcement has been issued by and is the sole responsibility of the Company.

Peel Hunt LLP is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing and Open Offer (whether or not a recipient of this announcement). Peel Hunt will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of Peel Hunt nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it. The responsibilities of Peel Hunt, as nominated adviser under the AIM Rules for Nominated Advisers, are owed solely to London Stock Exchange and are not owed to the Company or to any Director or Shareholder or to any other person in respect of their decision to acquire New Ordinary Shares in reliance on any part of this announcement.

GMP Securities Europe LLP ("GMP") is authorised and regulated in the UK by the Financial Conduct Authority and is advising the Company and no one else in connection with the Placing and Open Offer (whether or not a recipient of this announcement). GMP will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to customers of GMP nor for providing advice in relation to the contents of this announcement or any matter, transaction or arrangement referred to in it.

This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

 

END

 

 

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