Canadian explorer ReconAfrica completes farm-down with BW Energy for PEL73 in Namibia

Africa-focused Canadian oil and gas explorer Reconnaissance Energy Africa (ReconAfrica) has completed a farm-down agreement with Oslo-listed E&P firm BW Energy onshore Namibia.

The Namibian Ministry of Mines and Energy (MME) and NAMCOR Exploration and Production, a wholly owned subsidiary of the National Petroleum Corporation of Namibia (NAMCOR), have approved the sale of a 20% working interest in Petroleum Exploration Licence 073 (PEL73) in northeastern Namibia.

The TSXV-listed explorer is the operator with a 70% working interest in PEL 73, BW Energy holds a 20% working interest and NAMCOR has a 10% working interest, according to ReconAfrica’s media statement on January 29.

“We are pleased to have received all the necessary approvals for the completion of our strategic farm-down agreement with BW Energy on PEL 73. We look forward to working with BW Energy as we continue to explore the Damara Fold Belt and Rift Basin plays,” Brian Reinsborough, ReconAfrica’s president and CEO said in the statement.

ReconAfrica completed drilling operations on the onshore Naingopo exploration well in PEL73 in November 2024, reaching a total depth of 4,184 metres. The Naingopo well is the company’s first well in the Damara Fold Belt and targets approximately 181mn barrels of unrisked and 15mn barrels of risked prospective light-to-medium oil resources.

“The results of the Naingopo exploration well will be released shortly following third party analysis of our extensive evaluation programme, which was undertaken after the completion of drilling operations on the well,” Reinsborough said. “Results have been delayed due to transportation of side wall cores and fluid samples over the holiday period. All samples have now arrived with our third parties and are being analysed.”

As per ReconAfrica’s initial announcement of the farm-out in July 2024, the deal with BW Energy is in exchange for a total potential consideration of $141mn, including a $16mn equity investment and an additional $45mn in carry payments based on achievement of commerciality.

The payments will be made in two instalments: the first at the final investment decision (FID) and the second one year after production begins. If discoveries are developed, additional production milestone payments could amount to $80mn. Three separate payments of $25mn each will be issued once BW Energy reaches specific free cash flow targets. Additionally, an initial production payment of $5mn will be made 60 days after commercial production starts.

“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 journey 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,” said BW Energy’s CEO Carl Krogh Arnet.

BW Energy is a growth-focused E&P company specialising in low-risk, phased offshore oil and gas developments. It leverages existing production facilities to accelerate first oil and reduce investment costs.

In addition to its newly acquired 20% non-operating interest in Namibia’s onshore PEL73, the company holds a 73.5% stake in the producing Dussafu Marine licence offshore Gabon; a100% interest in the Golfinho and Camarupim fields, a 76.5% interest in the BM-ES-23 Block, a 95% interest in the Maromba field in Brazil; and a 95% interest in the Kudu field in Namibia, all operated by BW Energy.

As of early 2024, its total net 2P+2C reserves and resources stood at 580mn barrels of oil equivalent (boe).