Reconnaissance Energy Africa Ltd. (ReconAfrica) has successfully closed its public offering, exceeding its target by raising approximately C$38.8 million (N$514 million).
This was achieved through a C$35 million underwritten public offering and the partial exercise of the over-allotment option.
BW Energy Limited participated in the offering with a strategic equity investment of C$22 million (N$290 million).
This funding follows BW Energy’s N$2.6 billion (US$141 million) partnership with ReconAfrica, including the upfront equity investment of N$290 million (US$16 million) in ReconAfrica’s Namibian exploration licence (PEL 73).
The offering, priced at C$1.25 per unit, was led by Research Capital Corporation, with Canaccord Genuity Corp. and Haywood Securities Inc. also participating.
The offering resulted in the issuance of 30,944,000 common shares and 31,844,600 warrants.
“The warrants will commence trading on the TSX Venture Exchange under the symbol “RECO.WT” on or about August 6, 2024. Each Warrant entitles the holder to acquire one Common Share at C$1.75 until July 31, 2026,” ReconAfrica said.
The net proceeds are expected to be used for drilling activities, mobilisation and site costs, geology and geophysics, 3D seismic planning, and working capital.
“The net proceeds from the Offering are expected to be used for drilling activities, mobilisation/demobilisation and site costs, geology and geophysics, 3D seismic planning and acquisition, and working capital,” the company noted.
Meanwhile, underwriters received a 6% cash commission on the offering proceeds, with a lower commission for strategic purchasers and a higher commission for certain placements.
Directors of ReconAfrica participated in the offering, receiving 26,000 units. The company clarified, “Such participation in the Offering constitutes a ‘related party transaction’ as defined in Multilateral Instrument 61-101.”
Meanwhile, in terms of the agreement with BW, additional payments tied to achieving commerciality and production milestones include a N$407 million (US$22.5 million) payment when a commercial development decision is made and another N$407 million (US$22.5 million) payment one year after oil production starts.
The deal also includes a N$90 million (US$5 million) payment 60 days after the first oil is sold commercially and three potential payments of N$452 million (US$25 million) each, tied to BW Energy reaching specific total cash flow targets.
Additionally, BW Energy will contribute to drilling two wells targeting the Damara Fold Belt and a comprehensive 3D seismic program to gather geological data and has the flexibility to participate in drilling two more wells in the Rift Basin over the next 24 months.
As part of the agreement, ReconAfrica will retain a 70% working interest in PEL 73, allowing it to maintain control over the exploration efforts.
