The National Petroleum Company of Namibia (NAMCOR) has agreed to sell half of its stake in the petroleum exploration licence (PEL 73) in the Kavango Basin to Reconnaissance Energy Africa (ReconAfrica) for a total consideration of N$414 million.
NAMCOR currently holds a 10% stake in PEL73, while ReconAfrica holds a 90% working interest in a 25,500-km2 petroleum licence.
According to the signed letter of intent between the two companies, the consideration for the 5% carried interest shall comprise 5 000 000 common shares in the capital of ReconAfrica having an aggregate value of US$25 million, with a deemed price per ReconAfrica Share of CAN$6.35, and US$2 million in cash.
“The Consideration Shares will be subject to a hold period of four months and one day under Canadian securities laws as well as certain restrictions on resale as agreed to with the Company. ReconAfrica and NAMCOR shall enter into a mutually acceptable closing of the transaction is expected to occur on or about March 30, 2022, and is subject to the ReconAfrica receiving all necessary regulatory approvals, including, but not limited to,the acceptance of the TSX Venture Exchange to the issuance of the Consideration Shares,” ReconAfrica said.
NAMCOR said it received offers from the market to acquire part of its 10% carried interest, but chose the Canadian exploration firm in terms of the Joint Operating Agreement provisions for PEL 73. According to the agreement, NAMCOR is required to approach Recon Africa first to match the offer before going back to market to conclude any deal with the interested farm-in partner (“First Right of Refusal”).
“In this particular instance, the commercial offer from Recon Africa was higher than that offered by the market offer. I must state Recon Africa is also confined to the same requirements, they first need to approach NAMCOR should they wish to liquidate or sell any of its equity,” the company said, adding that the deal value had been based on the price per share.
“The commercial value of hydrocarbons will be determined once we know the amount of recoverable hydrocarbons after conducting several activities like drilling Appraisal wells,” NAMCOR said.
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 northeastern Namibia and northwestern Botswana, where the Company holds petroleum licences comprising approximately 8.5 million contiguous acres.
The development comes as NAMCOR and its partners, Shell Namibia Upstream B.V and Qatar Energy are said to have discovered a working petroleum system for light oil in the Orange Basin, 270 km from the town of Oranjemund, where drilling operations commenced in early December 2021 and were safely completed in early February 2022.
Namibia has sought to develop oil and gas fields for decades with no success and the potential oil find could prove to be a game changer for the country.
