Reconnaissance Energy Africa Ltd (ReconAfrica) announces an agreement with BW Energy Limited to sell 20% of its interest in Block PEL 73, located in north-east Namibia.
This agreement, which provides for an initial investment of USD 22 million, strengthens ReconAfrica’s ability to finance its multi-well exploration program.
Additional payments of USD 171 million may follow, subject to the achievement of certain development and production milestones.
This capital injection enables ReconAfrica to pursue its operations in the Damara Fold Belt, while diversifying its sources of financing.
Drilling underway at the Naingopo well
The Naingopo well, located on PEL 73, currently reaches a depth of 2,400 meters, with reservoir targets below this depth.
ReconAfrica plans to drill to 3,800 meters, targeting both oil and gas resources.
The well is designed to evaluate approximately 181 million barrels of unrisked prospective oil resources and 937 billion cubic feet of natural gas, according to Netherland, Sewell & Associates, Inc.
(NSAI).
If these resources are confirmed, Naingopo could pave the way for further drilling in this hydrocarbon-rich region.
Cost optimization and fund-raising
ReconAfrica is optimizing its operations with a significant reduction in general and administrative costs, from USD 4.2 million to USD 3.2 million in the second quarter of 2024 compared with the previous year.
This cost reduction is part of a wider strategy to reposition the company to increase its operational efficiency.
At the same time, the company raised USD 38.8 million in a tender offer subscribed in July 2024, preceded by a USD 17.5 million round in April.
This financing strengthens ReconAfrica’s ability to pursue its exploration projects in the region.
Preparatory work and future objectives
ReconAfrica is preparing to drill a second exploration well, Prospect P, on PEL 73.
Access road construction is underway, and drilling is scheduled for Q4 2024.
Prospect P is targeting approximately 309 million barrels of unrisked prospective oil resources and 1.6 trillion cubic feet of natural gas.
This work is part of ReconAfrica’s strategy to maximize the potential of its assets in Namibia, capitalizing on improved seismic data and recent seismic parameter tests.
Sustainability report and governance
ReconAfrica publishes its first sustainability report, highlighting its approach to environmental management and governance.
The report, to be published on the company’s website, details the company’s initiatives to minimize the environmental impact of its activities.
This approach is accompanied by a strengthening of governance with the appointment of new members to the Board of Directors, including the Honorable Diana McQueen as Chairman of the Board.
These appointments are aimed at improving oversight and transparency within the company.
ReconAfrica is committed to industry standards and responsible exploration in its license areas in Namibia. The results of current drilling and future work will determine the future direction of the company’s activities in the region.
