ReconAfrica Signs PSC for Asset Offshore Gabon

Reconnaissance Energy Africa Ltd. said it has entered into a production sharing contract (PSC) and a joint venture agreement for the exploration, appraisal, development, and production of oil and gas on Gabon offshore Block C-7, renamed Ngulu.

Under the terms of the joint venture, ReconAfrica will be the designated operator, with a 55 percent working interest, Record Resources Inc. will have a 20 percent working interest, the Gabon Oil Company (GOC) with 15 percent, and the Republic of Gabon with 10 percent.

For the initial four-year term of the PSC, ReconAfrica plans to execute detailed geological and geophysical studies, advance 3D seismic reprocessing on an existing database, and drill one well on the block, the company said in a news release.

The PSC covers 468.7 square miles (1,214 square kilometers) and is located in shallow water offshore central Gabon. The Ngulu block is near several sizeable producing fields that range in size from 38 million barrels to up to 250 million barrels, ReconAfrica said.

The key aspects of the Ngulu Block include the Loba oil field discovery and over 28 seismically identified prospects in the Pre-salt Gamba / Dentale and Post-salt play, according to the release.

According to ReconAfrica, the entry terms are attractive for a large concession secured at a low-entry cost with a minimal work program over the initial four-year period. Ngulu contains near-term oil production potential with the development of the Loba field and access to existing infrastructure within 6.2 miles (10 kilometers), which provides a low-cost production tie-back. The block also adds an extensive inventory of high-impact exploration projects for future drilling, in addition to exposure to a large pipeline of brownfield opportunities across Gabon, the company noted.

The transaction advances ReconAfrica’s strategy of “becoming an offshore West Africa exploration and production company with an expanded footprint and a de-risked diversified corporate profile,” the company said.

ReconAfrica President and CEO Brian Reinsborough said, “We are very pleased to be able to diversify our portfolio into an existing oil producing basin in the Republic of Gabon, complementing our exploration programs in Namibia and Angola. Gabon is sub-Saharan Africa’s fourth largest producer and exporter of crude oil and is a jurisdiction that has attractive exploration upside. This strategic entry allows the company to deploy capital to drilling options, including appraisal and development opportunities, with line of sight to near-term production and cash flow”.

“The exploration inventory in Gabon contains play types analogous to the Gulf of Mexico deep water plays. This is an area of expertise for both me and our team, which has extensive experience and success in finding many significant fields. We plan to deploy Gulf of Mexico style exploration using state-of-the-art reprocessing to reduce risk and increase our chance of success on exploration drilling in this underexplored region of Gabon,” Reinsborough continued.

“This transaction, in addition to our high potential exploration program in Namibia, including the current drilling of the Kavango West 1X well, positions ReconAfrica shareholders with significant near-term growth potential,” he concluded.

ReconAfrica describes itself as a Canadian oil and gas company engaged in the exploration of the Damara Fold Belt and Kavango Rift Basin in the Kalahari Desert of northeastern Namibia, southeastern Angola and northwestern Botswana, where the company holds petroleum licenses and access to approximately 13 million contiguous acres.

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