Canada’s Renaissance Oil Enters Botswana

Canada’s Renaissance Oil has entered into a binding agreement to acquire an option for a 50% working interest in a petroleum licence comprising 2.45 million acres in the Kavango basin in Botswana, it said on June 16 in a statement.

Pursuant to the agreement, a private company controlled by Craig Steinke, CEO of Renaissance, has agreed to assign its interest in a farm-out option agreement with a subsidiary of Reconnaissance Energy Africa (ReconAfrica) for an aggregate purchase price of C$1.3mn (US$0.96mn). Upon completion of deal Steinke's stake in Renaissance will rise from 3.3% to 11.7%.

“Due to political and regulatory changes in Mexico, the board of directors of Renaissance has determined that until government policies become more favourable, it is in the best interest of shareholders for management to diversify the company’s interests outside of Mexico,” Renaissance said. The company will maintain its existing, high potential assets, within Mexico.

The option agreement will provide Renaissance with the option to acquire a 50% working interest in the licence, exercisable at any time for up to a period of 36 months upon payment of C$1mn, if exercised within 18 months, or C$1.5mn if exercised after 18 months.

The licence on the Botswana area runs for four years, with renewal options of up to 10 years. The licence holders can sign up for a 25-year production licence, if they make a discovery. By the terms of the licence the operator, ReconAfrica, is committed to a minimum work program of US$432,000 over the first four-year exploration period.

“Botswana is considered a stable, industry friendly jurisdiction which offers some of the most attractive fiscal terms worldwide. This low cost three year option provides excellent value for Renaissance shareholders,” said Ian Telfer, director of Renaissance.