Kampala — The government has granted oil-exploring company, Neptune Petroleum (Uganda) its wish and extended the firm's licence to carry out prospecting for oil in the West Nile region.

The new exploration period will run for another two years, ending on March 27, 2012, the company announced in a statement over the weekend.

This comes a month after the firm logged an application with the energy ministry, asking to continue hunting for oil in the region despite already hitting two dry wells.

The first well, Iti-1, was drilled and abandoned last June for lack of commercially viable hydrocarbons, while Avivi-1 exploration well turned out to be equally disappointing in February.

Hopes had been high for both wells, based on the findings of the seismic studies that were conducted prior to the commencement of the exploration programme.

With a renewed licence in their hands, Neptune revealed that a forward programme, expected to culminate into drilling of a third test well, is under discussion with the Government.

"The first year of activities is expected to be focused on geophysical operations to determine prospects for drilling early in the second year," the firm indicated in the statement.

The licence area, after relinquishment agreed with the Government, amounts to 2941 square kilometres and the map will shortly be published.

Peter Kingston, the Tower Resource's executive chairman, previously hinted at the "considerable" exploration potential that still exits in the area.

The London-based Tower Resources owns Neptune Petroleum Uganda.

Kingston described the disappointing results at Avivi and Iti as "typical exploration progress, with valuable information being gained from each phase of activity which suggests that there is still everything to play for."

He explained that the lack of good quality reservoir at either well location increased the emphasis on identifying structures in the deepest area of the basin, where the chances of encountering better reservoir are improved.