you tell me?, page-23

From the iii thread on Tower this morning.

From Watshot at 6am this morning.

http://watshot.com/shop/page-article/action-article.show/id-130003193

Buy Tower Resources (TRP) at 4.08p
Tower Resources shares took a hammering in the middle of 2009 when its Iti-1 well came in dry, putting a dampener on its hopes of emulating the Success of the likes of Heritage Oil and Tullow Oil in Uganda. However, it now has a chance to redeem itself having recently commenced drilling on the Avivi-1 well (also in Uganda) which has unrisked potential of 15p per share (according to broker Westhouse). Further down the line, there is also massive upside potential (multi-billion barrel) from the firm's prospects in Namibia. Following a recent placing, the firm is financially sound through to early 2011 at the very least. However, with no existing production in place or due to be brought on-stream in the foreseeable future, the shares are a strictly speculative buy.

Background
Tower Resources listed on AIM in 2005 and completed the acquisition of its core Ugandan and Namibian licences through the purchase of Neptune Petroleum Limited for ?4 million in January 2006. Tower is led by executive chairman Peter Kingston who is supported by non-executive directors Peter Blakey and Peter Taylor. Kingston is 40-year veteran of the oil industry while Blakey and Taylor both have a penchant for founding successful oil companies (not least of which, Dana Petroleum).

Uganda - second time lucky?
In Uganda, Tower holds a 100% stake in Exploration Area 5 (EA5), comprising 6,040 square kilometres at the northern end of the Albertine Graben, which is in turn situated at at the northern end of the western arm of the East African Rift system. A regional aero-magnetic study has identified five basins within the Albertine Graben, including the Rhino Camp Basin which is located in EA5.

After acquiring EA5, Tower identified two prospects each thought to contain 100 million barrel potential: Iti-1 and Sambia-1. Tower drilled Iti-1 in June 2009, but the fluvial reservoir sands found in successful discoveries in Blocks 1 and 2 were not present; the shares tanked from around 7p to around 2p (pretty strange given that brokers estimate the vast majority of the firm's potential to lie in its Namibian prospects). However, subsequent independent analysis indicated 'significant' oil potential just above the basement between 540 metres and 575 metres. The well will need to be re-evaluated at some point but for now this has been put on a back-burner.

Instead of following the original plan to drill the Sambia-1 well, Tower now plans to drill the Avivi-1 well, located 3 kilometres northwest of Rhino Camp. Tower estimates prospective resources targeted by the well at between 75 and 100 million barrels recoverable. Due to the relatively shallow depth (665-795 metres), drilling should take about three weeks with initial drilling results due in early March. Global Petroleum, Tower's original partner on the EA5 block, will fund 25% of the well's estimated $7.5 million cost, with an option to acquire a 25% interest. I have it on good information that the chances of success at Avivi-1 are pretty good.

Ugandan acreage is hot stuff at the moment given the recent drilling success of Heritage Oil and Tullow Oil on Blocks 1, 2 and 3a immediately to the south of Tower's acreage. In total, over 700 million barrels of oil resources have been discovered to date according to Heritage and Tullow, with the potential to rise over 2 billion barrels. Tullow is in the process of purchasing Heritage's stakes in Block 1 and 3a for $1.35 billion in cash and deferred consideration of up to $150 million. With net contingent resources of 350 million barrels, this implies a per barrel valuation of around $4.30, which gives some indication of what a commercial success might mean for Tower. Moreover, the development of Tullow and Heritage's acreage means that if and when Tower comes to develop its prospects to the north, they could