BW Energy has signed a letter agreement with Reconnaissance Energy Africa Ltd (ReconAfrica) to acquire approximately 16.8 million common shares and 16.8 million warrants for a total consideration of $16 million in ReconAfrica’s announced equity raise.
By participating in the equity raise, BW Energy will also receive a 20 percent non-operating interest in the onshore Petroleum Exploration License 73 (PEL 73), where ReconAfrica will provide BW Energy with a carry of $6.4 million based on the intended initial work program.
BW Energy said in a news release it has also committed to certain contingent payments to ReconAfrica based on specific field development milestones.
PEL 73 is located in northeast Namibia, covering an area of approximately 9784 square miles (25,341 square kilometers). Two exploration wells are planned to be drilled in the Damara Fold Belt Basin in the second half of 2024, according to the release.
The wells are targeting a combined unrisked resource potential of 489 million barrels of oil based on the most recent prospective resource report by Netherland, Sewell & Associates Inc. (NSAI). After the two initial exploration wells, the partnership plans a 3D seismic survey of the Kavango Rift Basin in the second half of 2025, which may result in two additional exploration wells.
“The transaction will enable BW Energy to expand its footprint in a strategically important energy region and further our position as a leader in Namibia’s development towards energy independence,” BW Energy CEO Carl Krogh Arnet said. “The data and insights gained through ReconAfrica’s exploration campaign will further our understanding of the geology and petroleum system in Namibia and help de-risk planned [the] exploration and development of our Kudu license”.
The ReconAfrica common shares are priced at CAD 1.30 per share. The warrants have a validity of 24 months and are priced at CAD 1.70 per warrant. If specific milestones are met, BW Energy has agreed to further contingent payments to ReconAfrica of up to $125 million.
The completion of the transaction is subject to the parties entering into a definitive agreement and the fulfilment of customary conditions precedents, BW Energy noted.
Earlier in the month Vancouver-based ReconAfrica and its joint venture partner NAMCOR, the state oil company of Namibia, spudded the Naingopo exploration well on PEL 73, onshore northeast Namibia.
ReconAfrica said in an earlier news release that it spud the Naingopo exploration well in the Damara Fold Belt onshore PEL 73 on July 7.
The well will be drilled to a planned total depth of approximately 12,500 feet (3,800 meters), and is expected to encounter multiple reservoir intervals targeting both oil and natural gas, according to the release. The Naingopo well is targeting 163 million barrels of unrisked prospective oil resources or 843 billion cubic feet of unrisked prospective natural gas resources, net to ReconAfrica.
ReconAfrica is a Canadian oil and gas company engaged in the opening of the newly discovered deep Kavango Sedimentary Basin in the Kalahari Desert of northeastern Namibia and northwestern Botswana, where the firm holds petroleum licenses comprising approximately eight million contiguous acres.
According to the company’s website, the firm has been granted licenses by Namibia and Botswana to explore and confirm the presence of hydrocarbon resources.
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