BW Energy pens initial deal to acquire stake in ReconAfrica
BW Energy has signed an initial agreement to acquire a stake in Canada-based Reconnaissance Energy Africa (ReconAfrica) for $16mn, it said on July 17.
The company will buy approximately 16.8mn common shares and 16.8mn warrants for $16mn in ReconAfrica’s announced equity raise. By participating in the equity raise, BW Energy will also receive a 20% non-operating interest in the onshore petroleum exploration license 73 (PEL 73) where ReconAfrica will provide BW Energy with a carry of $6.4mn based on the intended initial work programme.
BW Energy has also committed to certain contingent payments to ReconAfrica based on specific field development milestones.
PEL 73 is located in northeast Namibia, covering an area of approximately 25,341 km2. Two exploration wells are planned to be drilled in the Damara Fold Belt basin in the second half of 2024.
The wells are targeting a combined un-risked resource potential of 489mn barrels of oil based on the most recent prospective resource report by Netherland, Sewell & Associates Inc. (NSAI). After the two initial exploration wells, the partnership plans a 3D seismic survey of the Kavango Rift basin in the second half of 2025, which may result in two additional exploration wells.
“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 Carl Krogh Arnet, the CEO of BW Energy.
The completion of the transaction is subject to the parties entering into a definitive agreement and the fulfilment of customary conditions precedents. Last year, ReconAfrica received environmental clearance to start drilling activities in its PEL 73 license area.
BW Group announced strategic restructuring plans in May to separate its oil and gas exploration arm, BW Energy, from its maritime businesses. As part of the restructuring initiative, BW Group, currently holding 191.9mn shares in BW Energy, representing 74.38% of its issued and outstanding shares and voting rights, will transfer its ownership to BW Energy Holdings.
BW Energy boasts a robust portfolio of assets, including a 73.5% interest in the producing Dussafu Marine license offshore Gabon, 100% interest in the Golfinho and Camarupim fields, a 76.5% interest in the BM-ES-23 block in Brazil, a 95% interest in the Maromba field in Brazil, and a 95% interest in the Kudu field in Namibia. These assets, operated by BW Energy, contribute to a total net 2P+2C reserves and resources of 580mn barrels of oil equivalents as of the beginning of 2024.