Australian company Global Petroleum Ltd. plans to acquire a 50% interest in exploration area 5 in northwestern Uganda from London-based Tower Resources Plc (London Aim: TRP) and subsidiary Neptune Petroleum (Uganda) Ltd.
Under the terms of the farm-out agreement, Global will earn a 50% interest in the license by funding the cost of drilling Iti-1, the first well of a two-well program, and a second well currently expected to be Sambia-1, when the results of Iti-1 have been interpreted. Global's funding of Iti-1 will be capped at $6.5 million in the event that drill-stem testing is not justified, and $7.5 million in the event that the presence of hydrocarbons supports the need for a drill-stem test.
Additional costs above these caps will be paid by Neptune (75%) and Global (25%). No expenditure cap levels are in place for the drilling of the second well. After the first well, Global may opt not to fund the second well and continue with a 25% interest in EA5 or withdraw from the license.