Reconnaissance Energy Africa enters production sharing contract, JV agreement

Reconnaissance Energy Africa (RECAF) entered into a production sharing contract and a joint venture agreement, led by Recon along with Record Resources, the Republic of Gabon and its national oil and gas company, Gabon Oil Company. The PSC is for the exploration, appraisal, development and production of oil and gas on Gabon offshore Block C-7, renamed Ngulu. Under the terms of the joint venture, Recon will be the designated operator, with a 55% working interest, Record with a 20% working interest, the Gabon Oil Company with a 15% working interest and the Republic of Gabon with a 10% working interest. Transaction and Asset Highlights: Acquisition positions Recon as an offshore West Africa operator. Diversified portfolio with low risk appraisal, development, and exploration assets. Near-term oil production potential could provide cashflow to fund exploration growth. Capital-efficient entry terms include a large concession with minimal work phased over a four-year commitment. Advanced seismic reprocessing to unlock exploration upside while de-risking prospects. PSC agreement covers 1,214 Km2 in shallow water offshore central Gabon. Ngulu is located on trend and offset to a number of sizeable producing fields, which range in size from 38 MMBbls up to 250 MMBbls. Existing oil discovery, the Loba field, was drilled in 1976 with 140 metres gross pay provides for low-risk appraisal and development opportunities and near-term production. The Loba field complex has potential production of ~20,000 Bbls/d in line with offset fields. Significant exploration upside from an inventory of 28 mapped prospects that are analogous to play types found in the Gulf of Mexico. The Company has committed during the initial four-year term to execute detailed geological and geophysical studies, advance 3D seismic reprocessing on an existing database and drill one well on the block. The PSC grants Recon a 55% working interest and operatorship in the Ngulu contract area for an initial four-year term, with the option to renew for an additional four years. The remaining interests are allocated to Record with 20%, GOC with 15% and the Republic of Gabon with a 10% carried interest. Under the terms of the PSC, the Company has committed during the initial four-year term to execute detailed geological and geophysical studies, advance 3D seismic reprocessing on an existing database and drill one well on the block. The transaction was at arm’s length with an independent third party and no finders’ fees were incurred.