RECONAFRICA ANNOUNCES ANNUAL FILINGS AND CORPORATE UPDATE

CALGARY, AB, July 30, 2024 /PRNewswire/ – Reconnaissance Energy Africa Ltd. (the “Company” or “ReconAfrica”) (TSXV: RECO) (OTCQX: RECAF) (Frankfurt: 0XD) announces the filing of annual disclosure documents for the year ended March 31, 2024, including audited annual consolidated financial statements, management’s discussion and analysis (“MD&A”), annual information form (“AIF”), annual statement of reserves data and other oil and gas information under National Instrument 51-101 (“NI 51-101 Report”) and estimates of prospective resources to the Reconnaissance Energy Africa Ltd. interest in certain prospects and leads located in Petroleum Exploration Licence 73 (“PEL 73”), Kavango Basin, Namibia as of March 31, 2024 (the “NSAI Report”). 

ANNUAL HIGHLIGHTS

Corporate

• Sold Renaissance Oil Corporation, holder of the Mexican assets, for gross proceeds of approximately C$10.3 million (US$7.5 million), and discharged approximately C$100 million of related liabilities.
• Granted approval for the Second Renewal Exploration Period by the Ministry of Mines and Energy (“MME”) in Namibia, covering the period from January 30, 2024 to January 29, 2026.
• Handed over an additional 10 solar powered community water wells drilled and completed by the Company to the Ministry of Agriculture, Water and Land Reform (“MAWLR”), in Namibia, bringing the total number of 36 water wells handed over to date.
• Increased technical capabilities of the Company by hiring Chris Sembritzky as Senior Vice President of Exploration and a team of former Anadarko Petroleum explorationists.
• Enhanced internal controls and legal capabilities by hiring Adam Rubin as General Counsel, reducing third party legal expenses.
• Increased governance structure at the Board of Directors level, adding the Honourable Diana McQueen ECA, ICD.D as Chair of the Board of Directors, the appointment of D. Jeffrey Harder, FCPA, FCA, FCBV, ICD.D as a new independent director and Chair of the Audit Committee and the appointment of Iman Hill as a new independent director.
• Streamlined organization and relocated head office to Calgary, reducing G&A.

Operational

• Completed the acquisition of enhanced full tensor gravity surveys totaling over 5,000 km² and phase 2 extension of the 2D seismic program bringing the total acquired 2D seismic to 2,767 km.
• Received an Environmental Clearance Certificate (“ECC”), from the Environmental Commissioner, Ministry of the Environment, Forestry and Tourism, covering PEL 73, for the drilling of 12 exploration and appraisal wells.
• Completed the technical evaluation of the entire exploration inventory to understand the potential of the Damara Fold Belt and Kavango Rift Basin plays.
• Re-opened the virtual data room which included a comprehensive assessment of the entire exploration inventory, including drill ready prospects and an integration of that work into the farm out joint venture process.
• Selected the first two drilling locations and began the process required for well site preparation and procurement for operations.
• Spud the Naingopo exploration well in the Damara Fold Belt on July 7, 2024. The Naingopo well is targeting 181 million barrels of unrisked prospective oil resources on a 100% working interest basis, based on the NSAI Report⁽¹⁾.
• Civil works associated with Prospect P continue, including debushing, demining and road construction activities. Prospect P is expected to spud in the fourth quarter of 2024, following the completion of the Naingopo exploration well.
• NSAI Report highlighting over 19.6 billion barrels of undiscovered original oil-in-place, consisting of 3.4 billion barrels of unrisked prospective oil resources in the Damara Fold Belt basin from 19 prospects on a 100% working interest basis and 0.5 billion barrels of unrisked prospective oil resources in the Kavango Rift Basin from 6 prospects on a 100% working interest basis ⁽¹⁾.

Financial

• Raised gross proceeds of C$8.7 million from equity offerings in 2023.
• Raised gross proceeds of C$17.3 million via bought deal public offering in April 2024.
• Announced an underwritten public offering of C$35.0 million in July 2024.
• Entered into a memorandum of understanding (“MOU”) with BW Energy Limited (“BW Energy”) (OSE:BWE), for a 20% working interest in PEL 73, including a US$16 million (C$22 million), equity investment to support a multi-well exploration program, and additional contingent payments of up to US$125 million (C$171 million), based on certain development, production and cash flow milestones. Total potential exposure of the deal is US$141 million (C$193 million).
• Net income of C$41 million, C$0.20 per share, for the year ended March 31, 2024, driven by the sale of Renaissance Oil Corporation in the fourth quarter of 2023.

Brian Reinsborough, President and CEO of the Company stated: “2023 marked a turning point for ReconAfrica. Since I joined the Company a year ago, we have delivered on several major strategic objectives that I set out last fall. One of those objectives was to generate a portfolio of high impact drill ready prospects. This goal was achieved and has led us to the recent spud of the highly anticipated Naingopo exploration well, the first well in our multi-well exploration to test the Damara Fold Belt. Operationally, the well is drilling as expected with results anticipated in October. We recently executed a MOU from our farm-out joint venture process with BW Energy. The MOU provided for BW Energy to make a strategic equity investment into ReconAfrica for US$16 million while also investing directly at the asset level, with a 20% working interest in PEL 73 in exchange for US$125 million in payments based on achieving certain milestones with respect to commerciality, first production and cash flow milestones. This transaction maximizes cash up front for exploration drilling and provides significant cash for development expenditures on success, while still retaining a high level of working interest for ReconAfrica and its shareholders. Our financing strategy has been executed as planned with two successful equity financings undertaken in 2024 positioning us to execute our fully funded planned exploration program. We streamlined our portfolio with the sale of the Mexican assets and are now positioned as an onshore pure play in West Africa. Additionally, we have executed on some of our corporate objectives by streamlining our organization to be fit for purpose and we have welcomed new members to the Board of Directors who add a more diversified skill and competency set. Overall, I am very pleased with the performance of the Company over the past 12 months.”

FILING UPDATE

The Company has filed its annual audited consolidated financial statements, MD&A, AIF, and NI 51-101 Report for the year ended March 31, 2024, as well as estimates of prospective resources to the Reconnaissance Energy Africa Ltd. interest in certain prospects and leads located in PEL 73, Kavango Basin, Namibia as of March 31, 2024, available on SEDAR+ at www.sedarplus.ca.

About ReconAfrica

ReconAfrica is a Canadian oil and gas company engaged in the exploration of the Damara Fold Belt and Kavango Rift Basin in the Kalahari Desert of northeastern Namibia and northwestern Botswana, where the Company holds petroleum licences comprising ~8 million contiguous acres. In all aspects of its operations ReconAfrica is committed to minimal disturbance of habitat in line with international standards and will implement environmental and social best practices in all of its project areas.

Neither the TSXV nor its Regulation Services Provider (as that term is defined in policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.

Cautionary Note Regarding Forward-Looking Statements:

Certain statements contained in this press release constitute forward-looking information under applicable Canadian, United States and other applicable securities laws, rules and regulations, including, without limitation, statements with respect to enhanced internal controls, reducing third party legal fees, the drilling of 12 exploration and appraisal wells, the potential of the Damara Fold Belt and Kavango Rift Basin plays, estimates of unrisked prospective oil resources, the timing of the spud of Prospect P, estimates contained in the NI 51-101 Report, estimates of original oil-in-place, completion of the underwritten financing announced in July 2024, completion of the MOU with BW Energy, the Company’s commitment to minimal disturbance of habitat, in line with best international standards and its implementation of environmental and social best practices in all of its project areas. These statements relate to future events or future performance. The use of any of the words “could”, “intend”, “expect”, “believe”, “will”, “projected”, “estimated” and similar expressions and statements relating to matters that are not historical facts are intended to identify forward-looking information and are based on ReconAfrica’s current belief or assumptions as to the outcome and timing of such future events. There can be no assurance that such statements will prove to be accurate, as the Company’s actual results and future events could differ materially from those anticipated in these forward-looking statements as a result of the factors discussed in the “Risk Factors” section in the Company’s annual information form dated July 29, 2024, available under the Company’s profile at www.sedarplus.ca. Actual future results may differ materially. Various assumptions or factors are typically applied in drawing conclusions or making the forecasts or projections set out in forward-looking information. Those assumptions and factors are based on information currently available to ReconAfrica. The forward-looking information contained in this release is made as of the date hereof and ReconAfrica undertakes no obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. Because of the risks, uncertainties and assumptions contained herein, investors should not place undue reliance on forward-looking information. The foregoing statements expressly qualify any forward-looking information contained herein.

Disclosure of Oil and Gas Information:

The report of Netherland, Sewell & Associates, Inc. (“NSAI”) entitled “Estimates of Prospective Resources to the Reconnaissance Energy Africa Ltd. Interest in Certain Prospects and Leads located in PEL 73, Kavango Basin, Namibia as of March 31, 2024” (the “NSAI Report”) and the prospective resource estimates contained therein and in this press release were prepared by NSAI, an independent qualified reserves evaluator, with an effective date of March 31, 2024. The NSAI Report was prepared in accordance with the definitions and guidelines of the Canadian Oil and Gas Evaluation Handbook prepared jointly by the Society of Petroleum and Engineers (Calgary Chapter) (the “COGE Handbook”) and the Canadian Institute of Mining, Metallurgy & Petroleum and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). For additional information concerning the risks and the level of uncertainty associated with recovery of the prospective resources detailed herein and in the NSAI Report, the significant positive and negative factors relevant to the prospective resources estimates detailed herein and in the NSAI Report and a description of the project to which the prospective resources estimates detailed herein and in the NSAI Report applies are contained within the NSAI Report, a copy of which has been filed with the Canadian Securities Administrators and is available under the Company’s issued profile on SEDAR+ at www.sedarplus.ca.

The prospective resources shown in the NSAI Report have been estimated using probabilistic methods and are dependent on a petroleum discovery being made. If a discovery is made and development is undertaken, the probability that the recoverable volumes will equal or exceed the unrisked estimated amounts is 90 percent for the low estimate, 50 percent for the best estimate, and 10 percent for the high estimate. Low estimate and high estimate prospective resources have not been included in the NSAI Report. For the purposes of the NSAI Report, the volumes and parameters associated with the best estimate scenario of prospective resources are referred to as 2U. The 2U prospective resources have been aggregated beyond the prospect and lead level by arithmetic summation; therefore, these totals do not include the portfolio effect that might result from statistical aggregation. Statistical principles indicate that the arithmetic sums of multiple estimates may be misleading as to the volumes that may actually be recovered.

SOURCE Reconnaissance Energy Africa Ltd.