Record Resources bets on Gabon offshore oil with low-cost, high-upside joint venture

Record Resources Inc (TSX-V:REC) is betting big on West Africa’s offshore oil, securing a 20% stake in Gabon’s Ngulu block while avoiding the high-cost, high-risk first four years thanks to a carried-interest deal with ReconAfrica.

What makes the deal stand out is the structure. Record holds a 20% working interest but is fully carried by ReconAfrica through the initial four-year concession period, including the drilling of the first well. For a junior company, this eliminates the most capital-intensive and high-risk phase of exploration, materially reducing financial and shareholder risk.

Under the agreement, signed in September 2025, ReconAfrica operates the block with a 55% interest. Gabon Oil Company holds 15%, while the Republic of Gabon retains a 10% carried interest. ReconAfrica funds Record’s share of geological work, seismic reprocessing, and the initial well commitment during Phase 1.

The structure is very different from a typical farm-in agreement, Record CEO Michael Judson explained. “In traditional farm-ins, companies must make successive expenditures to earn their interest, often financed through share issuances, which creates ongoing dilution,” Judson told Proactive. “With the carried interest, we’re not under pressure to continuously fund the asset over the next four years. Dilution is a major issue for any junior, and while we haven’t eliminated it entirely, we’ve removed a significant portion through this deal.”

Judson noted that the benefit came at a cost: “We agreed to a 55% interest for our partner. In this business, every 1% matters. A few points can represent a lot of money over the life of a project. It was heavily negotiated and carefully considered.”

Ngulu spans 1,214 square kilometres in shallow waters and lies on trend with several producing fields ranging from 38 million to 250 million barrels. Crucially, it contains the Loba oil discovery, drilled in 1976 by Elf-Gabon, which encountered a 140-metre gross oil column (70 metres net pay) of 27° API oil in the Batanga Formation.

The Loba complex sits approximately 10 kilometres from existing infrastructure operated by Perenco, offering a potential low-cost tie-back should appraisal confirm commercial volumes. Based on analog fields in the region, management estimates production potential of around 20,000 barrels per day, based on historical comparisons.

Judson is confident that the project will go into production. The previous operator hit oil but walked away because majors at the time were drilling wells capable of 12,000–15,000 barrels per day with larger pay zones. “For a smaller independent, 5,000-barrel-per-day wells are transformational,” he said. “They can fundamentally change the trajectory of the company.”

The PSC covers an initial four-year term, with an option to renew for another four years. Phase 1 commitments are limited to studies, seismic reprocessing, and a single well, providing a measured, capital-efficient path to advancing the asset. If the PSC is renewed, Record would fund expenditures proportional to its 20% interest.

The deal represents a strategic pivot, positioning Record as a full-cycle offshore E&P company. Anchored by an existing discovery near infrastructure and supported by a carried exploration program, the company gains exposure to appraisal, development, and high-impact exploration without near-term balance sheet strain.

For investors, the key differentiator lies in the structure: meaningful exposure to a basin-scale offshore asset with both near-term production potential and a large exploration inventory, while the highest-risk early expenditures are funded by the operating partner — a combination rarely available to junior E&P companies.

“This project attracted capital because it’s fundamentally strong and structured correctly,” Judson said. “Right partners, right board, right backers. If any element was missing, the deal wouldn’t have happened. But when all the pieces align, it becomes remarkably straightforward. The framework is in place, and the opportunity is clear.”