Reconnaissance Energy Africa Ltd. (the "Company" or "ReconAfrica") announces that it has entered into an agreement with Research Capital Corporation as the lead underwriter and sole bookrunner, on behalf of a syndicate of underwriters, including Canaccord Genuity Corp. and Haywood Securities Inc. (collectively, the "Underwriters"), for an overnight marketed public offering of units of the Company (the "Units") at a price of C$0.50? per Unit for aggregate gross proceeds to the Company of C$10,000,000 (the "Offering").
In connection with the Offering, indications of lead orders have been received from BW Energy Limited ("BW Energy"), directors and management members of ReconAfrica, and certain other investors, expecting to purchase over C$4,000,000 of Units. BW Energy has agreed to a follow-on strategic equity investment in the Company of approximately C$2,000,000 under the Offering, reaffirming it's previously announced strategic partnership with ReconAfrica. BW Energy's additional investment represents approximately 20% of the Offering, increasing BW Energy's share ownership position in ReconAfrica from approximately 6.5% prior to the Offering to approximately 7.6% after the Offering. The Units purchased by BW Energy under the Offering will be subject to a six-month lock-up agreement.
Each Unit will be comprised of one common share of the Company ("Common Share") and one Common Share purchase warrant of the Company ("Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at an exercise price of C$0.60? at any time up to 24 months from closing of the Offering. In addition, the Company will use commercial reasonable efforts to obtain the necessary approvals to list the Warrants on the TSX Venture Exchange (the "Exchange").
The net proceeds from the Offering will be used for exploration activities, working capital and general corporate purposes. The primary exploration activity to be funded with net proceeds from the Offering will be the drilling of Prospect I, which has been named the Kavango West 1X well. Work on the access road and drill site is currently being completed while the Company awaits receipt of the remaining requisite permits. The rig move to the Kavango West 1X well drilling location is scheduled in late June, with drilling to begin thereafter.
Brian Reinsborough, President and CEO of ReconAfrica stated: "We are excited to spud one of the Company's largest and most attractive prospects, Kavango West 1X. The results of the Naingopo exploration well announced in January 2025 increased our confidence in the potential for this well. Our teams remain very engaged with local communities and authorities to ensure a safe and efficient operation of this well."
Carl K. Arnet, BW Energy CEO commented: "Our technical and operational teams at BW Energy are delighted to be participating in the high potential Kavango West 1X exploration well. BW Energy is well positioned in this strategically important energy region and further our position as a leader in Namibia's development towards energy independence. 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 exploration and development of our Kudu licence."
Kavango West 1X (Prospect I) - High Potential Exploration well
The Kavango West 1X exploration well will be the second test in the expansive Damara Fold Belt play. The prospect is a large fold identified on modern 2D seismic data which extends over 20 kilometers long by 5 kilometers wide, and is expected to penetrate a thick Otavi carbonate reservoir section, which is the primary target in the play. The Kavango West 1X well will be drilled to a planned total depth of approximately 3,800 metres (12,500 feet) and is targeting 346 million barrels of gross unrisked (30 million barrels of gross risked) prospective light/medium crude oil resources on a 100% working interest basis (312 million barrels(1,2) net unrisked (27 million barrels net risked) to ReconAfrica's 90% working interest as at the date of the NSAI report) or 1,839 billion cubic feet of gross unrisked (133 Bcf risked) prospective natural gas resources on 100% working interest basis (1,655 billion cubic feet(1,2) unrisked net (120 Bcf risked net) to ReconAfrica's 90% working interest as at the date of the NSAI report), based on the most recent prospective resources report prepared by Netherland, Sewell & Associates, Inc. ("NSAI") as at December 31, 2024, filed on SEDAR+ at www.sedarplus.ca (the "NSAI Report")(1).
Damara Fold Belt Play Across 11.5 Million Acres in Namibia and Angola
The Damara fold belt trend is identified in the subsurface by a grid of 2D seismic data, and the Company has mapped 19 prospects and 4 leads on the Namibia side of the play. The Namibia area is estimated to hold 2.6 billion barrels(1,2) of unrisked prospective light/medium crude oil resources and 157 million barrels(1,2) of risked prospective light/medium crude oil resources from the Damara Fold Belt play prospects on PEL 73.
(1) There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Prospective resources are those quantities of oil estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. Prospective resources are the arithmetic sum of multiple probability distributions. Unrisked prospective resources are estimates of the volumes that could reasonably be expected to be recovered in the event of the discovery and development of these prospects.
(2) Not reflective of ReconAfrica's current working interest of 70% of PEL 73.
Recently, the company has entered a Memorandum of Understanding (MOU) with National Agency for Petroleum, Gas and Biofuels of Angola (ANPG) ?for a joint exploration project in the Etosha-Okavango basin, located onshore in southeastern Angola. This agreement is a strategic addition to the company's asset portfolio, which creates an opportunity for early entry into onshore Angola at a low cost, with minimal work commitments. It complements ReconAfrica's activities in Namibia and highlights the potential of the Damara Fold Belt and Rift Basin by adding 5.2 million contiguous acres in Angola to the existing 6.3 million acres in Namibia in the Damara Fold Belt and Rift Basin exploration plays.
Additional Details on the Offering
The Company has granted to the Underwriters an option (the "Over-Allotment Option"), exercisable, in whole or in part, in the sole discretion of the Underwriters, to purchase up to an additional number of Units, and/or the components thereof, that in aggregate would be equal to 15% of the total number of Units to be issued under the Offering, to cover over-allotments, if any, and for market stabilization purposes, exercisable at any time and from time to time up to 30 days following the closing of the Offering.
The closing of the Offering is expected to occur on or about the week of June 16, 2025 (the "Closing"), or such other earlier or later date as the Underwriters may determine. Closing is subject to the Company receiving all necessary regulatory approvals, including the acceptance of the Exchange to list, on the date of Closing, the Common Shares, and the Common Shares issuable upon exercise of the Warrants and the Underwriters' broker warrants, on the Exchange.
The Offering is expected to be completed pursuant to an underwriting agreement to be entered into by the Company and the Underwriters. In connection with the Offering, the Company intends to file a prospectus supplement within two business days, to the Company's short form base shelf prospectus dated February 29, 2024, with the securities regulatory authorities in each of the provinces of Canada (except Québec). Copies of the base shelf prospectus and any supplement thereto to be filed in connection with the Offering, are and will be available under the Company's profile on SEDAR+ at www.sedarplus.ca. The Units are being offered in each of the provinces of Canada (except Québec) and may be offered in the United States to "qualified institutional buyers" (as defined in Rule 144A under the United States Securities Act of 1933, as amended (the "U.S. Securities Act")) or "accredited investors" (as defined in Regulation D promulgated under the U.S. Securities Act) on a private placement basis pursuant to an appropriate exemption from the registration requirements under applicable U.S. law, and outside of Canada and the United States on a private placement or equivalent basis.