BW Energy has entered into a N$2,6 billion (U$141 million) partnership with ReconAfrica, securing a 20% working interest in the latter’s Namibian exploration license (PEL 73).
As part of the agreement, an upfront equity investment of N$289 million (US$16 million) by BW Energy will be made in ReconAfrica.
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.
“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 development towards energy independence,” said BW Energy CEO Carl Arnet.
“The data and insights gained through ReconAfrica’s exploration campaign will further our understanding of the geology and petroleum system in Namibia and help de-risk planned exploration and development of our Kudu license.”
As part of the agreement, ReconAfrica will retain a 70% working interest in PEL 73, allowing it to maintain control over the exploration efforts.
BW Energy’s participation brings not only capital but expertise in oil and gas development, which will be valuable as ReconAfrica progresses in exploration activities.
On completion of the transaction, the ownership interests in PEL 73 will be ReconAfrica at 70%, BW Energy at 20%, and NAMCOR at 10%. ReconAfrica remains the operator of PEL 73.
“We are delighted to welcome BW Energy as our partner in Namibia where we plan to drill a multi-well exploration program and acquire a 3D seismic program in the Rift Basin. Our farm out joint venture process was thorough and comprehensive, which attracted significant interest from high quality companies of all sizes,” said ReconAfrica President and CEO Brian Reinsborough.
Meanwhile, ReconAfrica is also undertaking a concurrent equity offering to raise N$463 million (C$35 million).
The proceeds from this offering and the capital secured from BW Energy will be used to fund exploration activities, working capital, and general corporate purposes.
ReconAfrica is a Canadian oil and gas company engaged in the opening of the newly discovered deep Kavango Sedimentary Basin in the Kalahari Desert of north-eastern Namibia and north-western Botswana, where it holds petroleum licences comprising 8 million contiguous acres.
BW Energy is a growth E&P company with a differentiated strategy targeting proven offshore oil and gas reservoirs through low-risk phased developments.
The company has access to existing production facilities to reduce time to first oil and cash flow with lower investments than traditional offshore developments.
