Tower Resources has said that its wholly-owned subsidiary Neptune Petroleum (Uganda) has applied to the Minister of Energy and Mineral Development, the Government of Uganda, to continue exploration of License EA5 into the third exploration period.

This period extends from March 27, 2010 until March 26, 2012. The forward program will comprise geophysical activity as the next stage of operations, followed by a further exploration well, and this work program together with relinquishment obligations are being discussed with government technical specialists. Agreement to proceed with the exploration program is expected soon, the company said.

Avivi-1 encountered thick sequences of organic rich sediments, which are likely to represent good mature source rocks in the deeper areas of the basin. The thick clays should also provide effective trap sealing properties.

Wireline logs and water samples demonstrate that the Avivi structure is water bearing but mid-mature oil was entrained in the sampled water confirming that oil has been generated in the license and is currently migrating. The composition of this oil is similar to that of oil recovered from Iti-1 and surface oil samples.

Pressure data from Avivi-1, when combined with pressure data from Iti-1, is consistent with a possible oil accumulation at Iti-1 in low permeability reservoir sand. According to the company, the uncertainty related to generation and migration of oil in the Rhino Camp basin has been de-risked.

The lack of good quality reservoir at either well location increases the emphasis on identifying structures in the deepest area of the basin, where the chances of encountering better reservoir are improved. This can be achieved by substantially increasing seismic coverage in the areas of greatest interest, which will be addressed in the forward work program.

Most of the funding for the program in the third exploration period is expected to come from third parties. The company expects to have cash of about $3.5m after well costs are satisfied and this is said to be sufficient to meet costs for the immediate future.

Subject to government approval and availability of equipment, Neptune is aiming to undertake an aero-gradiometry survey over the area of greatest interest, to improve structural definition, and intends to fund this program from available cash resources.

The Namibian 3-D seismic survey is now scheduled to begin early in May but it is still expected that processing and interpretation can be completed around the end of 2010. There is no change to the estimated end 2011 date for drilling the first exploration well. There will likely be growing focus on the northern area of Namibia and the prospectivity of the 0010 license during 2010, the company said.