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Tower Resources PLC (LON: TRP) share price plunged 9.1% after revealing that it expects the Cameroonian government to approve its farm-out deal with Beluga Energy.
The oil exploration company had written to the government on September 21, 2021, seeking approval of the deal under the Cameroon Petroleum Code, which gives the govt 60 days to raise its objections to the deal.
Now that the 60-day period has elapsed without any formal objection from the Cameroonian government, the company now expects to receive an approval notification from the relevant department allowing the project to proceed.
Tower issued a statement saying: “While the company waits for a formal decree, Beluga continues to work on its financing process, and the company continues to work with the intended rig provider and service companies on the schedule and terms for the NJOM-3 well,”
The company signed the farm-out deal with Beluga in August, which will see Beluga acquire a 49% stake in the Thali production sharing contract (PSC) in exchange for providing $15 million of the $16.8 million expected drilling cost for the NJOM-3 well.
The two companies are expected to spud the NJOM-3 well in Q1 2022.
Tower Resources shares are up 17.71% in the past month as the company’s shares oscillate between gains and losses. TRP shares have risen sharply twice in the past but have gone on to give up most of their gains over time.
Today’s decline indicates that investors are repricing the company’s stock price, given that the farm-out deal will lead to lower revenues for TRP once the Thali project is operations since it will have to share revenues and profits with Beluga Energy.
On the other hand, investors are excited that the project is now ready to kick-off due to the funding provided by Beluga Energy.
*This is not investment advice. Always do your due diligence before making investment decisions.
Tower Resources share price.
Tower Resources share price fell 9.09% to trade at 0.40p, falling from Friday’s closing price of 0.44p.
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