BW sign letter agreement to acquire shares in Reconnaissance Energy Africa

BW Energy has signed a letter agreement (LA) with Reconnaissance Energy Africa Ltd (ReconAfrica) to acquire approximately 16.8 million common shares and 16.8 million warrants for a total consideration of US$ 16 million 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 US$6.4 million 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 489 million 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 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.”

The common shares are priced at CAD 1.30 per share. The warrants have a validity of 24 months and are priced at CAD 1.70 per warrant. If specific milestones are met, BW Energy has agreed to further contingent payments to ReconAfrica of up to USD 125 million as specified below:

• US$22.5 million upon final investment decision of a commercial development . • US$22.5 million 365 days after first oil.
• US$5 million 60 days after first sale of commercial hydrocarbon production.
• US$25 million upon BW Energy achieving total cumulative free cash Flow (FCF) of US$300 million.
• US$25 million upon BW Energy achieving total cumulative FCF of US$600 million.
• US$25 million upon BW Energy achieving total cumulative FCF of US$900 million.

The completion of the transaction is subject to the parties entering into a definitive agreement and the fulfilment of customary conditions precedents.

Read the article online at: https://www.oilfieldtechnology.com/offshore-and-subsea/18072024/bw-sign-letter-agreement-to-acquire-shares-in-reconnaissance-energy-africa/