reserves resources valuation report tower resources ......in accordance with your instructions,...

Tower Resources Cameroon, Thali PSC of 21

October31st,2018TowerResourcesPLC140BuckinghamPalaceRoadLondonSW1W9SAUnitedKingdom

TowerResourcesCameroonSABuilding626,4thFloorRue1239,DoualaBonaprisoPOBox536Douala,Cameroon

DearSirs

RESERVES/RESOURCESREPORT&VALUATIONOFTOWERRESOURCES’CAMEROONASSETS

SummaryIn accordancewith your instructions,Oilfield International (“OIL”) has valued thepetroleuminterestsheldandoperatedbyTowerResourcesplc,namelya100%working interest in theThaliPSC,RiodelReyBasin,Cameroon.Thevaluationdateis30thSeptember2018,therebeingnomaterialchangeon31stOctober2018.

OILconducted itsassessment incompliancewiththeSPEPetroleumResourcesManagementSystem(SPE-PRMS)sponsoredbytheSocietyofPetroleumEngineers/AmericanAssociationofPetroleum Geologists/World Petroleum Council/Society of Petroleum Evaluation Engineers(SPE/AAPG/WPC/SPEE)in2007andthePRMSGuidelines2011.

OIL has attributed Contingent and Prospective Resources to the Thali Block, using the SPEPRMSdefinitionbelow.

ContingentResourcesarethosequantitiesofpetroleumestimated,asofagivendate, tobepotentially recoverable from known accumulations by application of development projects,butwhich arenot currently considered tobe commercially recoverabledue tooneormorecontingencies. Contingent Resourcesmay include, for example, projects forwhich there arecurrentlynoviablemarkets,orwherecommercialrecoveryisdependentontechnologyunderdevelopment, or where evaluation of the accumulation is insufficient to clearly assesscommerciality. Contingent Resources are further categorized in accordancewith the level ofcertainty associated with the estimates and may be sub-classified based on project maturityand/orcharacterizedbytheireconomicstatus.

• Development Pending is a discovered accumulation where project activities areongoing to justifycommercialdevelopment in the foreseeable future. Theproject isseen to have reasonable potential for eventual commercial development, to theextentthatfurtherdataacquisition(e.g.drilling,seismicdata)and/orevaluationsarecurrentlyongoingwithaviewtoconfirmingthattheprojectiscommerciallyviableandproviding the basis for selection of an appropriate development plan. The criticalcontingencieshavebeenidentifiedandarereasonablyexpectedtoberesolvedwithina reasonable time frame. Note that disappointing appraisal/evaluation results couldlead to a re-classification of the project to “On Hold” or “Not Viable” status. Theproject “decision gate” is the decision to undertake further data acquisition and/orstudiesdesignedtomovetheprojecttoaleveloftechnicalandcommercialmaturityatwhichadecisioncanbemadetoproceedwithdevelopmentandproduction.

• Development Unclarified or on Hold is a discovered accumulation where projectactivitiesareonholdand/orwherejustificationasacommercialdevelopmentmaybesubject to significant delay. The project is seen to have potential for eventualcommercial development, but further appraisal/evaluation activities are on holdpendingtheremovalofsignificantcontingenciesexternaltotheproject,orsubstantial

Tower Resources Cameroon. Thali PSC of 21

furtherappraisal/evaluationactivitiesarerequiredtoclarifythepotentialforeventualcommercial development. Development may be subject to a significant time delay.Note that a change in circumstances, such that there is no longer a reasonableexpectationthatacriticalcontingencycanberemoved intheforeseeable future, forexample, could Lead to a reclassification of the project to “Not Viable” status. Theproject “decision gate” is the decision to either proceed with additional evaluationdesigned to clarify the potential for eventual commercial development or totemporarily suspend or delay further activities pending resolution of externalcontingencies.

Projects are considered Unclarified if they are still under evaluation (e.g. a recentdiscovery) or require significant further appraisal to clarify the potential fordevelopment,orwhere thecontingencieshaveyet tobe fullydefined. In suchcasesthechanceofcommercialitymaybedifficulttoassesswithanyconfidence1.

• DevelopmentNotViableisadiscoveredaccumulationforwhichtherearenocurrentplans todevelopor toacquireadditionaldataat the timedue to limitedproductionpotential. The project is not seen to have potential for eventual commercialdevelopmentatthetimeofreporting,butthetheoreticallyrecoverablequantitiesarerecordedsothatthepotentialopportunitywillberecognizedintheeventofamajorchange in technology or commercial conditions. The project “decision gate” is thedecisionnottoundertakeanyfurtherdataacquisitionorstudiesontheprojectfortheforeseeablefuture.

ProspectiveResourcesarethosequantitiesofpetroleumestimated,asofagivendate,tobepotentially recoverable from undiscovered accumulations by application of futuredevelopmentprojects.ProspectiveResourceshavebothanassociatedchanceofdiscoveryanda chance of development. Prospective Resources are further subdivided in accordancewiththe level of certainty associated with recoverable estimates assuming their discovery anddevelopment and may be sub-classified based on project maturity. The subdivisions areProspect,LeadandPlay:-

• AProspectisaprojectassociatedwithapotentialaccumulationthatissufficientlywelldefinedtorepresentaviabledrillingtarget.Projectactivitiesarefocusedonassessingthe chanceofdiscovery and, assumingdiscovery, the rangeofpotential recoverablequantitiesunderacommercialdevelopmentprogram.

• ALead is a project associatedwith apotential accumulation that is currently poorlydefinedandrequiresmoredataacquisitionand/orevaluationinordertobeclassifiedas a prospect. Project activities are focused on acquiring additional data and/orundertaking further evaluation designed to confirmwhether or not the lead can bematured into a prospect. Such evaluation includes the assessment of the chance ofdiscovery and, assuming discovery, the range of potential recovery under feasibledevelopmentscenario.

• A Play is a project associated with a prospective trend of potential prospects, butwhich requires more data acquisition and/or evaluation to define specific leads orprospects.

1 untilthefurtherappraisaliscompleteorcontingenciesresolved.


The Thali Production Sharing Contract (“PSC”) was granted on 15th September 2015 toTowerResourcesCameroonSA,awhollyownedsubsidiaryofTowerResourcesplc.(TowerResourcesanditsCamerooncompanyareherinafterreferredtoas“Tower”).Figure1andFigure2showitslocationoffshoreCameroon.Thewaterdepthrangesfrom8mto48m.

Figure1GeographicSettingofThaliPSC,courtesyGoogleEarth

Figure2LocationMapoftheThaliPSC,courtesyTower


Table0-1summarisethelicenceinformationfortheThaliPSC.

On26thSept2018theinitialperiodoftheExplorationPhasewasextendedbyoneyearto15thSeptember 2019 on condition that the rig contract for the first well be finalised by 15thDecember2018.TheBoardhasadvisedusthatthiswillbeachieved.TheobligationsforthisinitialperiodincludeG&Gstudies,3Dsesimicacquisitionandonewelldrillingwithaminimumtotaldepthof1100meters,withaminimumexpenditureof$13m.

Towerhastherighttotwofurtherexplorationperiodsoftwoyearssolongasitfulfillsallpriorworkandothercontractualobligations.ThewholeContractArea is retaineduntil theendofthefinalexplorationperiodwhenitisallrelinquishedsaveanyareaforwhichanExploitationAuthorisation(ofupto35years)hasbeengranted.

Figure3ThaliLicenseCoordinates,fromthePSC


Table0-1SummaryoftheThaliProductionSharingContract

ThaliPSC PSCsigned15thSeptember2015100%interestheldbyTowerResourcesCameroonSA

Location

OffshoreRiodelReyBasin,CameroonSurfacearea:119.2km2Waterdepth:8-48m

LicenceHistory Blockpreviouslycalled‘Dissoni’TotalsoldallofitsCameroonassetstoPerencoin2010Perenco was required to relinquish the remainder of the license whenputtingtheDissonifieldintoproduction.Includedin2013LicenceRoundwhenTowerapplied

CurrentStatus Initial exploration period (3 years plus 1 year agreed extension)commencedSeptember2015toincludeG&Gstudiesandonewelldrilledto a minimum total depth of 1100m, with a minimum expenditure of$13m.3DseismicreprocessingcompletedJune2018Drillingenvironmentalassessment“ESIA”completedinJune2018Rigevaluationcompleted,negotiationsongoingScheduledspuddate:April2019TheStatehasagreed todeferTower’sobligation toacquire100km23Dseismicuntilalaterperiod.

Explorationrenewalperiods

Optional2x2yearrenewalperiodsasfollows:-Minimumexpenditure for the first2-year renewalperiod:$15m for thedrillingofonewellMinimum expenditure for the second 2-year renewal period: $15m forthedrillingofonewellRelinquishment is only required once a development area has receivedFullExploitationAuthorisation.

ProvisionalExploitationAuthorisation

ThePSCpermitsafast-trackprovisionalauthorisationtoproduceandsellhydrocarbonsfortwoyearsforthepurposesofobtainingtheinformationrequired for the full field development plan submission for FullExploitation Authorisation. Tower’s exploration and development plantakesadvantageofthistoexploreasmuchoftheblockaspossiblewithinthetwoyears.

Back-in Rights:Participation oftheState

UponContractor’ssubmissionofadevelopmentplanforanExploitationAuthorisation,theStateshallnotifyContractorwithin60dayswhetheritis exercising its right to a paying participation in the development of aminimumof5%andmaximumof25%share.TheStatewillcontributeitsparticipatingshareofallfuturecostsexcludingbonusesandtrainingfeesitemisedbelow).Tower has advised us to assume the Statewill exercise its rights in fullandtakea25%share.


OILhas identified the followingresourcesandchanceofdevelopment in theThaliBlock,Riodel Rey Basin, Cameroon. Figure 4 and Table 0-2 refer. OIL has only evaluated the keyprospects and leads over the Njonji fault blocks, and the shallow Dissoni South andIdenaofault blocks. Multiple additional leads have been identified by Tower in both shallow anddeeperplays,whichhavenotbeenevaluatedaspartofthisReport.

Table0-2ResourcestructuresidentifiedontheThaliPSC

NameofFaultBlock/Structure Reservoirs

ContingentResources

DevelopmentUnclarified

Njonji1 PS.9andPS3

NjonjiSouth PS.9

Njonji-2 PS.9Superior,PS.9,S1Inferior,PS3

ProspectiveResources

Prospects

Njonji-SouthFaultBlock,Reservoir:PS3 PS3

Njonji-SW,Reservoirs:PS9andPS3 PS.9andPS3

Leads

DissoniSouthFaultBlockA S5

DissoniSouthFaultBlockB S5

IdenaoEast FOI-2andFOI-1

Figure5-Figure8illustratetheelevationandreliefoftheprincipaloil-bearingreservoirsthatcomprisetheContingentResources.

Table0-3andTable0-4presenttheContingentOilandGasresourcesattributabletoTower.

OIL has assigned all the Contingent Oil and Liquids Resources to the “The DevelopmentUnclarified”category2.Akey reason fornotassigningContingentResources toDevelopmentPendingisthatnoflowteststosurfacewereconductedonanyofthethreewellsdrilledbythepreviousoperator,andsothereisnodirectevidenceofNjonjiwellsproducingatcommerciallyviablerates.TheflowrateassumptionsinthisreportandTower’sinitialdevelopmentplansareinstead based on wireline modular formation tests (“MDT”). The MDT tool measuredpermeabilityonlyashortdistancefromthewellbore(within,orjustoutside,theinvadedzone) 2 Strictly,theSPEPRMS2007categoryis“DevelopmentUnclarified/OnHold”butforclaritywehaveabbreviatedthistofocusontherelevantofthetwoparts:”DevelopmentUnclarified”.SPEPRMS2018splitsthecategoriesthisway.


andisnotprimaryevidenceofcommercialflowrates.Anumberofsamplesfrom10ccto250cc,andtwooffivelitres,wererecovered.Tower intends to conduct a drill stem test on the first well it drills. Depending on thesustainableoil flowratesachieved,someorall thePhase1ContingentResources (asdefinedbelow)maythenbereclassifiedasReservessubjecttomeetingtheusualcriteriaatthattime.OIL has assigned all the Contingent Gas Resources to Development Not Viable. There is nopipeline infrastructure to a developed local market for the gas and we estimate that thevolumes,afterfuelgasusage,wouldbetoosmallforstand-alonemonetisation.Thevolumeswouldalsobetoosmalltomateriallybenefitoilrecoverybyreinjectionintothereservoirs,andsoourassumptionisthegaswouldbeflared.The Cameroon legislation regarding flaring is covered in general in the EnvironmentalStandards and Guidelines for the Inspections of Industrial and Commercial Installations inCameroon(2007),especiallyAnnexVI.FlaringandtheuseofgasarealsothesubjectofArticle27oftheCameroonPetroleumCode1999(99/13)whichrequirestheContractortoincludeinhissubmissionforaTemporaryOperatingLicenseitsproposalforhowassociatednaturalgasshallbeused.FurthermoreArticle91(3)states“….TheContractorisrequiredtocommercializethe natural gas at the best price.…”; and Article 70 requires the Contractor to submit anEnvironmentalImpactStudywhichincludesa.o.Contractor’sproposalsforhandlingAssociatedGas.Tower is working with the State to ensure its development plan provides an acceptablecompromise between the economic benefit to the State from producing oil and theenvironmental consequences of flaring small volumes of gas. Tower has already addressedflaring forwell testing in its June2018Environmental andSocial ImpactAssessmentReport,approved by the State. Tower believes that consent for Njonji field development may besecuredprovidedthevolumesareaslimitedascurrentlyanticipated.”

Table 0-5 and Table 0-6 present the Prospective Oil and Deltaic resources attributable toTower.We estimate that the volumes of gas, after fuel gas usage, for the two undrilled Njonjistructures (the Prospects) would be too small to bemonetised or reinjected and again ourassumptionisthegaswouldbeflared.Incontrast,weestimatethatthevolumesofgas,afterfuelgasusage,fromthefourDissoniSouthandIdenaoEastLeadscouldbematerialandourassumptionisagascompressionandreinjectionfacilitywouldbeinstalled.


Figure4StructuresidentifiedbyseismicinterpretationandmappinginThaliPSC

Figure5Elevation:TopNjonjiPS.9_R1andPS3_R1Reservoirs


Figure6Relief:TopNjonjiPS.9_R1Reservoir

Figure7Relief:TopNjonjiPS3_R1Reservoir


Figure8Relief:TopS1_InferiorReservoir(NjonjiFaultBlock2only)


Table0-3OilandLiquidsContingentResourcesThaliLicenceCameroon:Gross,andNetAttributabletoTower

EffectiveDate:30September2018Source:OilfieldInternationalCommasareusedtoseparatethousands.Underthe2009AIMNotesforMiningandOil&GasCompanies,theactualtitleofthecategoryisDevelopmentUnclarified/OnHoldinaccordancewithSPEPRMS2007,butwehaveabbreviateditforclaritybecausethelatterpartofthedescriptionisnotrelevanthere.SPEPRMS2018splitsthecategoriesbutAIMRulesarecurrentlybasedonSPEPRMS2007.

ThaliLicenceChanceof

DevelopmentPd

Operator

LowEstimate

BestEstimate

HighEstimate

MeanEstimate

LowEstimate

BestEstimate

HighEstimate

OilandLiquidsContingentResources

MSTB MSTB MSTB MSTB MSTB MSTB MSTB

NjonjiFaultBlocks1,2andSouth

DevelopmentUnclarified

Phase1 5,033 11,821 19,597 3,112 6,910 9,998 80% Tower

Phase2 0 3,385 14,804 0 1,961 7,121 70% Tower

TotalforOilandLiquids 5,033 15,206 34,401 17,927 3,112 8,870 17,119

NetAttributabletoTowerGross

17,927


Table0-4GasContingentResourcesThaliLicenceCameroon:Gross,andNetAttributabletoTower

EffectiveDate:30September2018Source:OilfieldInternational


DevelopmentPd

Operator

LowEstimate

BestEstimate

HighEstimate

MeanEstimate

LowEstimate

BestEstimate

HighEstimate

GasContingentResourcesNetofFuelGas

BCF BCF BCF BCF BCF BCF BCF


DevelopmentNotViable

Phase1 2.1 6.8 11.6 1.3 4.0 5.9 0% Tower

Phase2 0 1.7 8.8 0 1.0 4.2 0% Tower

TotalforGas 2 9 20 11 1 5 10

10.5



Table0-5OilandLiquidsProspectiveResourcesThaliLicenceCameroon:Gross,andNetAttributabletoTower

EffectiveDate:30September2018Source:OilfieldInternationalCommasareusedtoseparatethousands.

ThaliLicenceChanceofDiscovery

Pg

ChanceofCommercialSuccess

Pc

ChanceofDevelopment

PdOperator

LowEstimate

BestEstimate

HighEstimate

MeanEstimate

LowEstimate

BestEstimate

HighEstimate

OilandLiquidsProspectiveResources

MSTB MSTB MSTB MSTB MSTB MSTB MSTB

Prospects

NjonjiSouthFaultBlockPS3_R1R2 4,675 14,940 35,403 18,169 2,465 7,181 15,871 42% 70% 30% Tower

NjonjiSouthWestFaultBlock 249 1,107 3,556 1,598 106 713 1,915 32% 50% 16% Tower

Leads

DissoniSouthFaultBlockA 8,328 30,864 76,211 37,807 5,193 16,305 34,689 24% 80% 19% Tower

DissoniSouthFaultBlockB 1,340 5,622 16,819 7,844 774 2,701 7,770 17% 80% 13% Tower

IdenaoEastFOI-2 5,101 21,217 61,956 28,561 2,884 9,957 27,224 18% 80% 14% Tower

IdenaoEastFOI-1 6,444 26,582 82,129 37,124 3,435 11,602 33,879 18% 80% 14% Tower

TotalforOilandLiquids 26,138 100,333 276,073 131,103 14,857 48,460 121,347



Table0-6GasProspectiveResourcesThaliLicenceCameroon:Gross,andNetAttributabletoTower


ThaliLicenceChanceofDiscovery

Pg

ChanceofCommercialSuccess

Pc

ChanceofDevelopment

PdOperator

LowEstimate

BestEstimate

HighEstimate

MeanEstimate

LowEstimate

BestEstimate

HighEstimate

GasProspectiveResourcesNetofFuelGas

BCF BCF BCF BCF BCF BCF BCF

Prospects

NjonjiSouthFaultBlockPS3_R1R2 2.3 9.1 23.9 11.8 1.2 4.4 10.7 42% 5% 2% Tower

NjonjiSouthWestFaultBlock 0.0 0.5 2.2 1.0 0.0 0.3 1.2 32% 0% 0% Tower

Leads

DissoniSouthFaultBlockA 2.4 12.7 36.6 17.4 1.5 6.7 16.7 24% 10% 2% Tower

DissoniSouthFaultBlockB 0.1 2.2 7.1 3.4 0.0 1.0 3.3 17% 0% 0% Tower

IdenaoEastFOI-2 1.0 9.3 29.9 13.8 0.6 4.3 13.1 18% 5% 1% Tower

IdenaoEastFOI-1 4.9 26.6 87.1 39.5 2.6 11.6 35.9 18% 20% 4% Tower

TotalforGas 11 60 187 87 6 28 81



InitialDevelopmentPlansPhase1TowerplanstodrillfourwellsfromasinglelocationintotheNjonji-1,2andSouthFaultBlocksin 2019,with the first, NjonjiMarine #3 onNjonji 1 Fault Block, scheduled to spud in April2019. Inourview there isa90%chance that thiswellwillbecommercially successful.Onewell into the Njoni South Block will be deepened to explore for oil in the PS3 reservoir, apotentiallymajorupsidethatcouldinfluencethedevelopmentplanandimmediatelyreclassifysomeProspectiveResourcesasReserves,subjecttomeetingtheusualcriteriaatthattime.Towerwill apply for a Provisional Exploitation Licence under Art 35 of the Petroleum Code(Law99/013)inordertoputthefirstwellandthenallfourwells,astheyarecompleted,onatwo-year extendedproduction testwith scheduled first oil inDecember2019 froma leasedMobile Offshore Production Unit (“MOPU”), using its ballast tanks for dead oil storage. Ashuttletankerofupto20,000tonneswillofftakethestoredcrudeviaaSinglePointMooringSystemanddeliver it to theMassongoFloatingOil terminal, 25kmdistant. Thewellswill bedrilledthroughconductorsstandingabovesea-level,usingajackupdrillingrig.Theconductorfor the firstwellwillbe setapart fromtheother three toallowthe firstwell tocontinue toflow whilst the other three wells are being drilled. The rig will install two light-weightsuperstructures(“workdecks”)ontheconductor-legstoenableeasyaccesstotheChristmasTrees and simplemanifolding. The rigwill also install two short bridges to connect the twowork-decks to theMOPU inorder to transfer raw fluids, and toprovidepower, control andwalk-onaccess.ThemodestvolumeofthegasresourcesnetoffuelgasfromtheContingentResourcesdoesnotjustifyagassalesorreinjectiondevelopmentandsothegaswillbeflared.Atpresentthereisnoviablemarketforgasinthisregion.Wehave reviewedTower’s costestimatesand inour view the initial four-well developmentincludingthecompletionsandplatformswouldcostapproximately$80m,incurredin2019.

Phase2Dependingontheresultsofthetwo-yearwelltest,furtherwellswouldbedrilledthroughthefour unused conductors on themicrowellhead platforms and from a similar facility located1kmdistantontheNjonjiSouthBlock.AtthattimeapipelinetotheFSOwouldalsobelaid.Duringthistwoyeartimeframetheprospectsandleadswillbedrilledandappraised.OILhasassumedasimilardevelopmentphilosophyinitsanalysisoftheseresourcesDependingonthefindingsattheendofthetwoyearperiod,TowermayapplytotheStatefora fullproduction licencecoveringall the immediateareasaround the resources itwished toexploit.Atthispointitwouldhavetorelinquishallotherareas.


DISCOUNTEDCASHFLOWVALUATIONBased on these development plans Oil has estimated discounted net present values andexpected monetary values at 10% discount factor for the Contingent and ProspectiveResources.Table0-7andTable0-8refer.


Table0-7ContingentResourcesThaliLicenceCameroon:NPV10andEMV10AttributabletoTower–ForecastCase

Swanson’sRule:40%P50+30%P90+30%P10EffectiveDate:30September2018Source:OilfieldInternational

ThaliLicence

Chanceof

Development

Pd

Costof

FailureEMV10

Low

Estimate

Best

Estimate

High

Estimate

Swanson's

Rule

$mMOD $mMOD $mMOD % $mMOD $mMODContingentResources


DevelopmentUnclarified/OnHold

Phase1 $4 $139 $206 80% $17 $91

Phase2 $0 $19 $114 70% $9 $27

Total $4 $158 $320 $118

AfterTaxNPV10AttributabletoTower


Table0-8ProspectiveResourcesThaliLicenceCameroon:NPV10andEMV10AttributabletoTower–ForecastCase



DevelopmentPd

CostofFailure

EMV10

LowEstimate

BestEstimate

HighEstimate

Swanson'sRule

ProspectiveResources $mMOD $mMOD $mMOD % $mMOD $mMOD

Prospects

NjonjiSouthFaultBlockPS3_R1R2 $31 $117 $262 30% $13 $30NjonjiSouthWestFaultBlock -$3 $7 $29 16% $11 -$8

Leads

DissoniSouthFaultBlockA $33 $204 $467 19% $14 $33DissoniSouthFaultBlockB $10 $37 $110 13% $12 -$3IdenaoEastFOI-2 $35 $138 $381 14% $13 $14IdenaoEastFOI-1 $39 $142 $390 14% $12 $16

TotalforProspectiveResources $145 $646 $1,639Sumincludingnegatives

$82

AfterTaxNPV10AttributabletoTower


KeyRisksThevolumetricanalysisisintrinsicallyuncertain

1. Thequalityoftheseismicdataisvariableand,insomeareas,poorwithlowverticalresolutionandlackofcontinuityinreflectors.

2. Theareaisstructurallycomplexandfaultinterpretationisuncertain.3. Depthconversion isuncertainbecauseof thecomplexgeologyand lateralchanges

ofvelocity.4. Attributeanalysismaybemeaninglessbecauseofthequalityoftheseismicdata.5. TheSpectralBlueingtechniquemayhaveintroducedfalsegeology.6. There is ambiguity in the interpretation of the logs – four analysts reported

somewhatdifferentresults(wehavetakenthemallintoaccount).Depthmigrationoftheseismicdatacouldreducetheuncertaintyofthedepthmaps.Towerhas considered this but noted the calendar time required to complete itwould reduce itsutility.Remaininguncertaintyaboutgascapsandfaults

1. Thereisapossibilityofagascapovertheoilreservoirssincethethreewellsdonotpenetrate the crests of the structures. This hasbeen reflected to anextent in thevolumetriccalculationsbutinanarbitrarywaysincethereisnoconcreteevidence.

2. The fault between theNjonji 1 andNjonji South fault blocksmightbe sealing (weestimateaprobabilityof15%).Ifitweretosealthecontingentresourceswouldbeatthelowendoftherangethatwehavereported.

Remaininguncertaintyaboutreservoirqualityandperformance

1. NowellflowtestshavebeenconductedandsothereisnodirectevidencethattheNjonjiwellswillproduceatcommerciallyviablerates.Theflowrateassumptions inthis report are instead based on modular formation tests (“MDT”) that showedviable localised permeabilities in some of the reservoirs. TheMDT toolmeasuredpermeabilityonlyashortdistancefromthewellbore(within,orjustoutsideof,theinvadedzone)andsocannotbeusedasprimaryevidenceofcommercialflowrates.

2. Theremaybesub-seismicresolutionbafflestoproduction.3. The flowrates per well may not justify field development and if there are flow

baffles,maydeclinemorequickly.4. Theremay bematerial sand production fromwells, as reported elsewhere in the

basin, which could constrainmaximum production rates or increasemaintenancecostsanddowntime.

ProvisionalExploitationAuthorisationandStateParticipationTowerhasadvisedOILthatitwillapplyforatwo-yearProvisionalExploitationAuthorisationperiodforthePhase1four-wellextendedwelltest(hereinafter“EWT”).ItwillsubmittotheStatethatitneedstwoyearstofullyunderstandtheNjonjireservoirsandtodrilltheotherprospectsandleadssoitcanproposeadevelopmentplanforthewholeblock.Thecostsofthese exploration wells would be cost recoverable from the revenue of the EWT. TheseassumptionsareincludedinTable0-7andTable0-8.


However,theStatemayproposeashorterProvisionalExploitationAuthorisationperiodfortheEWTthanthetwoyearsproposedbyTower.ProjectExecution

1. Arigcontractmustbesignedby15thDecember2018tocomplywiththeone-yearextension.

2. ScheduleslippagetofirstoilofDec2019arisingfrom(amongstother):a. Delay to permissions required from the State for Provisional Exploitation

Authorisationb. LatedeliveryofMOPU.

3. LateavailabilityofrigstodrillthethreefurtherwellsinNjonjithatcompletePhase1.Thiscoulddelayshort-termcashflow.

Exogenous

1. The valuation is based on the Brent Forward Curve dated 28th September 2018,escalated afterMarch 2025 by 2% pa. Realised Brent oil pricesmay be higher orlower.

2. Well costs subject to negotiation on day rates and mob/demob, and rigperformance.

3. Surfacefacilitiescostssubjecttofirmquotationsandmoredetailedengineering.4. Leasing,tankertariffandFSOchargessubjecttofirmquotations.5. ThediscountorpremiumtoBrentof theNjonji crude is subject to firmquotation.

TheassumptiononthequalityofDissoniSouthcrudeisspeculative.6. Uncertaintyovertheequityanddebtmarkets.

QualificationsOILisaprivately-ownedenergyconsultancyfoundedin1990thathasadvisedonoilandgasprojects in over 40 countries. OIL’s shareholders, management and staff are, and alwayshavebeen,independentofshareholders,managementandstaffofTowerResourcesPlcandTowerResourcesCameroonSA.ThisCPRwasproducedbythreeearthscientists:MrDavidCuria,DrKanadKulkarniandMrTimLines.Allholdadvanceddegreesingeoscienceorpetroleumengineering.MrDavidCuriahas28years’experienceingeophysicalinterpretationand3Dmodelling.HeholdsaM.Sc.inGeology,aM.Sc.inMathematicsfromtheUniversityofBuenosAires,anda“Post-Degree”inGeophysics(12geophysicalsubjectsexaminedover18months,withoutadoctoral thesis) from the University of Mendoza. He has held lectureships in NumericalAnalysis and in Geostatistics. He is the author of over 20 papers for a.o. the EuropeanAssociation of Geoscientists and Engineers and the American Association of PetroleumGeologists.


DrKanadKulkarnihas7years’experience inPetrophysicsand log interpretation.HeholdsPh.D. in Petroleum Engineering from University of Portsmouth, M.Sc. in PetroleumEngineeringfromLondonSouthBankUniversity,aM.Sc.inGeologyfromUniversityofPune.HehasheldalectureshipinFormationandWellLoggingattheUniversityofPortsmouthfor7 years. He has co- authored 7 papers in various publications. HewasUniversity SectionDirectorattheSPELondonSectionfrom2013–2018.HeisanAssociatememberofEnergyInstitute,(AMEI),theLondonPetrophysicalSociety.MrTimLineshas35years’experience inpetroleumengineeringandeconomicevaluation.HeholdsaB.Sc.inChemistryfromBristolUniversity,aM.Sc.inPetroleumEngineeringfromImperial College and an MBA from Cranfield University. He is a Chartered Engineerregisteredwith theUK Engineering Council since 1990 and he holds theVice Chair of theDistinguishedLecturerCommitteefortheSocietyofPetroleumEngineersWorldwide.Hehasbeen Programme Director for the Society of Petroleum Engineers London since 2000. HeteachesacourseontheSPEPRMS2007and2018.HeisamemberoftheInstitutionofGasEngineers(M.IGEM)andtheEnergyInstitute(M.EI),theInstituteofMaterials,MineralsandMiningUK,andFellowoftheGeologicalSocietyofLondon(FGS).HehastheFreedomoftheCityofLondonasaLiverymanoftheWorshipfulCompanyofFuellers.BasisofOpinion

TheNPVsandEMVspresentedarebasedonOIL’sunderstandingofthecurrentpetroleumlegislation, taxation and other regulations pertaining to Cameroon. It is also based on aforecastofoilprices.It isemphasisedthat legislation,taxationandcommodity-priceforecastscanbesubjecttosignificant change even in the short term and that any of these could have a significanteffectontheNPVsandEMVspresentedinthisCPR.The reported hydrocarbon volumes and values are estimates based on professionaljudgement and are subject to future revisions, upward or downward, as additionalinformationbecomesavailable.TheNPVsandEMVspresentedinthisCPRdonotrepresentOIL’s opinionof theopenmarket valueof Tower’s CameroonPetroleumAssets.OIL doesnot confirmTower’s legal right to title to theThaliPSC; thedetailor theenforceabilityofTower’slegaltitle;andtheabsenceornatureofanyliensorotherencumbrancesthatmightaffectTower’srightsto,orvaluein,ThaliPSC.Yourssincerely

TimLinesManagingPartner,OilfieldInternational

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