Recon enters production-sharing contract for Ngulu

Executive Summary

• Reconnaissance Energy Africa Ltd. has entered into a Production Sharing Contract (PSC) and Joint Venture Agreement to acquire a 55% working interest and operatorship of the Ngulu offshore block (Block C-7) in Gabon, alongside partners Record Resources Inc., Gabon Oil Company, and the Republic of Gabon.
• The transaction provides immediate access to the existing Loba oil discovery, which has potential near-term production of approximately 20,000 barrels per day, offering a pathway to cash flow to fund further exploration.
• The company commits to a four-year work program including 3-D seismic reprocessing and drilling one well, while gaining access to an inventory of 28 mapped exploration prospects analogous to Gulf of Mexico plays.

Key Details

• Transaction Structure: ReconAfrica holds a 55% working interest and serves as operator. Record Resources Inc. holds 20%, Gabon Oil Company holds 15%, and the Republic of Gabon holds a 10% carried interest.
• Asset Location: Ngulu block (formerly Block C-7), located in shallow water offshore central Gabon, covering 1,214 square kilometres.
• Near-Term Production Potential: The Loba field, discovered in 1976, contains 140 metres of gross pay (70 metres net pay) with 27-degree API gravity oil. It is located approximately 10 kilometres from existing infrastructure operated by Perenco. Estimated potential production is ~20,000 bbl/d based on offset fields.
• Exploration Inventory: The block contains 28 mapped prospects analogous to Gulf of Mexico play types. Key prospects include:
  • Lepidote Deep (Postsalt): Targets stacked turbidite channels with an estimated 800 metres of gross interval.
  • Pompano Dentex Complex: Targets Batanga, Lower Anguille, and Cap Lopez reservoirs.
  • Palomite Complex: Targets multiple prospective horizons in post, sub, and presalt zones (Gamba and Dentale reservoirs).
• Work Commitment: Over the initial four-year term, ReconAfrica is committed to executing detailed geological/geophysical studies, advancing 3-D seismic reprocessing on existing data, and drilling one well on the block.
• Strategic Rationale: The entry diversifies ReconAfrica’s portfolio into a producing hydrocarbon province, providing low-risk appraisal/development assets and cash flow visibility to finance exploration growth in Namibia and Angola.
• Advisors: Research Capital Corp. acted as an adviser to ReconAfrica. No finders' fees were incurred.

Notable Quotes

• "We are very pleased to be able to diversify our portfolio into an existing oil-producing basin in the Republic of Gabon, complementing our exploration programs in Namibia and Angola... This strategic entry allows the company to deploy capital to drilling options, including appraisal and development opportunities, with line of sight to near-term production and cash flow." — Brian Reinsborough, President and CEO
• "The exploration inventory in Gabon contains play types analogous to the Gulf of Mexico deepwater plays. This is an area of expertise for both me and our team... We plan to deploy Gulf of Mexico-style exploration using state-of-the-art reprocessing to reduce risk and increase our chance of success on exploration drilling in this underexplored region of Gabon." — Brian Reinsborough, President and CEO