Reconnaissance Energy Africa Ltd. (the "Company" or "ReconAfrica") announces an operational update, the filing of its financial results for the quarter ended June 30, 2024 and the release of the Company's first Sustainability Report.
HIGHLIGHTS
Spud the Naingopo exploration well, which is currently drilling at a depth past 2,400 metres or 7,875 feet. All primary objectives are below the current drilling depth.
Entered into a definitive farm down agreement with BW Energy Limited ("BW Energy") (OSE:BWE), for the sale of a 20% working interest in Petroleum Exploration Licence 73 ("PEL 73"), in northeast Namibia. Under the terms of the agreement BW Energy made a $22 million strategic equity investment in the Company to support a multi-well exploration program, and additional contingent payments of $171 million, based on meeting certain development, production and cash flow milestones.
Raised gross proceeds of $38.8 million via an underwritten public offering in July 2024.
Raised gross proceeds of $17.5 million via bought deal public offering in April 2024.
Reduced General and Administration costs to $3.2 million from $4.2 million for the three months ended June 30, 2024 compared to June 30, 2023.
Increased governance structure at the Board of Directors level, adding the Honourable Diana McQueen ECA, ICD.D as Chair of the Board of Directors, and the appointment of D. Jeffrey Harder, FCPA, FCA, FCBV, ICD.D as a new independent director and Chair of the Audit Committee.
The Company is pleased to announce the Company's first Sustainability Report has been completed and will be available on the Company's website next week.
Brian Reinsborough, President and CEO of the Company stated: "Over the past few months we have improved the Company's balance sheet which enables us to execute our planned multi-well exploration drilling campaign through the completion of two equity financings and our strategic joint venture partnership with BW Energy. Through these transactions, the Company has maximized capital upfront which allows flexibility to execute our program, and positions us with significant capital available for appraisal, evaluation and development activities. We continue to deliver on our strategic objectives, including reducing our cost structure, where we are seeing the benefits of the strategic repositioning of the Company over the past year with nearly $1 million savings on G&A costs in Q1 2024 compared to the prior year. Operationally, things remain on track, with the Naingopo exploration well drilling, on time and on budget. The seismic velocities are running faster than modeled, hence reservoirs are coming in deeper than predicted, with all primary reservoir targets below the current drilling depth. We continue to progress the road construction work ahead of getting the well pad ready for the Kambundu (Prospect P) exploration well which is targeting to start drilling in the fourth quarter. Finally, I am proud to announce that we have completed our first Sustainability Report, which will be published on our website next week. This report reflects our commitment and efforts as a Company to ensure that our exploration activities are balanced with sustainable management practices and stakeholder engagement under our environmental, social and governance programs."
EXPLORATION ACTIVITIES
The Naingopo exploration well is drilling beyond a depth of 2,400 metres or 7,875 feet, with surface casing set at 350 metres and a first casing string set at 1,200 metres. We will soon be undertaking our next set of logging and coring activities and setting the second casing string targeted at approximately 2,600 metres or 8,530 feet. The well has been tracking to drilling depth and well cost estimates, on schedule and plan with the primary objectives beneath our current drilling depth.
The Naingopo well is targeting 181 million barrels of unrisked prospective light/medium oil resources(1) or 937 billion cubic feet of prospective natural gas resources(1), on a 100% working interest basis, based on the most recent prospective resources report prepared by Netherland, Sewell & Associates, Inc. ("NSAI"). The well is targeting to drill to a depth of approximately 3,800 metres or 12,500 feet and is expected to encounter four primary reservoir intervals targeting both oil and natural gas. If successful, the well would be a major play opening discovery providing access to multiple drill ready prospects.
Elsewhere on PEL 73, the Company continues to make progress in the construction of the access road for the second Damara Fold Belt exploration well, Prospect P, which is expected to start drilling in the fourth quarter of 2024. Prospect P is targeting 309 million barrels of unrisked prospective light/medium oil resources(1) or 1.6 trillion cubic feet of prospective natural gas resources(1), on a 100% working interest basis, based on the most recent prospective resources report prepared by NSAI.
We recently conducted a Vibroseis seismic parameter test to establish the best vibrator sweep parameters and number of vibrators in a fleet, and to investigate field data processed results for future seismic projects on PEL 73. The project commenced on July 30, 2024, and was completed on August 6, 2024. Six runs of a 6 km line with different vibrator and sweep configurations were completed first, to reshoot a 23 km line previously shot with an Accelerated Weight Drop ("AWD") source. The initial field data processing results from the 6 km line identified the best vibrator and sweep configuration to use on the 23 km test line. After shooting the 23 km line, the results were processed to a brute stack and compared to the previous AWD processed data which showed a marked improvement in data quality. Individual shot records from the Vibroseis and AWD were also analyzed and showed similar improvements.
FILING UPDATE
The Company has filed its quarterly financial statements and management's discussion and analysis for the three months ended June 30, 2024, on SEDAR+ at www.sedarplus.ca. Additionally, the Company has prepared its first Sustainability Report, which will be available on the Company's website next week at www.reconafrica.com.