ReconAfrica Expands in Gabon with New Production Sharing Contract
Strategic Expansion by ReconAfrica in Gabon
Reconnaissance Energy Africa Ltd. (the “Company”, “ReconAfrica” or “Recon”) (TSXV: RECO) (OTCQX: RECAF) (Frankfurt: 0XD) has recently announced a significant milestone in its growth strategy. The company has successfully entered into a production sharing contract (PSC) along with a joint venture agreement, aimed at unlocking substantial oil production and exploration opportunities offshore in Gabon. This development marks ReconAfrica's official entry into the Gabonese oil sector, which is renowned for its rich oil reserves and production capabilities.
Commitment to a Production Sharing Contract
The PSC, effective from the recent agreement, focuses on the exploration and development of oil and gas in Block C-7, now called Ngulu. Under this joint venture, ReconAfrica operates with a commanding 55% working interest, collaborating with Record Resources Inc. and the Gabon Oil Company. The Republic of Gabon retains a carried interest, establishing a platform for significant revenue generation and operational growth.
Highlights of the Contract
Several critical highlights of this contract underline the potential benefits for ReconAfrica. First, the company emerges as a notable operator in West Africa, with a diversified portfolio that includes low-risk appraisal and exploration assets. Furthermore, there is a promising opportunity for near-term oil production, which may facilitate cash flow needed to expand exploration initiatives. The PSC encompasses a substantial 1,214 square kilometers in shallow waters, strategically located near major contributing fields that have historically shown significant oil production.
Infrastructure and Exploration Potential
The Loba oil field, a significant existing discovery within the block, serves as a reassuring indicator of the potential opportunities. Although the Loba field has been around since 1976, it presents a unique chance for appraisal and development, with estimates suggesting potential production around 20,000 barrels per day in alignment with nearby operational fields. This aspect alleviates exploration risks and positions ReconAfrica advantageously for future growth.
Strategic Rationale Behind the Expansion
This strategic move aligns well with ReconAfrica’s overall aim of building a comprehensive exploration and production company in offshore West Africa. The company has the chance to foster a high-growth platform, capitalizing on a well-established hydrocarbon province. Moreover, the low-entry costs associated with the concession provide a financially sound foundation for the company.
Collaborative Approach for Future Development
In harnessing the region's potential, ReconAfrica plans to implement advanced seismic reprocessing techniques. This initiative aims to uncover further exploration prospects while minimizing operational risks. The company has committed to conducting detailed geological studies and drilling at least one well during the initial four-year term of the PSC, bringing the vision of successful exploratory drilling closer to reality.
A Thriving Oil Sector in Gabon
The oil and gas industry remains a vital aspect of Gabon’s economic landscape, contributing significantly to its fiscal health. With Gabon positioned as one of Africa's leading oil-producing nations, the government continually seeks to promote a regulatory environment conducive to foreign investments, underlining the vast natural resources available for development.
Future Outlook for ReconAfrica
Looking ahead, ReconAfrica’s diversification into Gabon further enhances its strategic position within the region. The company has expressed its enthusiasm about leveraging its expertise in Gulf of Mexico-style exploration to develop in Gabon’s relatively underexplored waters. Through rigorous planning and innovative technologies, ReconAfrica aims to reduce risk while enhancing the probability of successful drilling outcomes.
Brian Reinsborough, President and CEO of ReconAfrica, noted: “This strategic entry provides us with avenues for significant growth, allowing us to deploy resources not only in Gabon but also in conjunction with our other exploration programs in Namibia and Angola. We see Gabon as a land of potential, ready for exploration and development.”
Frequently Asked Questions
1. What is the significance of the PSC for ReconAfrica?
The PSC enables ReconAfrica to engage in exploration and production activities on the Ngulu block, enhancing its footprint in the oil sector.
2. How does this expansion benefit shareholders?
This expansion offers shareholders near-term production opportunities and potential cash flow for funding further exploration initiatives.
3. What are the key geological features of Ngulu Block?
Ngulu Block hosts the Loba oil field and various prospects similar to successful Gulf of Mexico plays, providing significant exploration upside.
4. How did the government of Gabon influence this opportunity?
The Gabonese government is committed to fostering an inviting regulatory environment, which contributes to attracting investments in the oil and gas sector.
5. What is the company's long-term vision in Gabon?
ReconAfrica aims to position itself as a full-cycle exploration and production company in offshore West Africa, emphasizing sustainable growth and capital efficiency.
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