Reconnaissance Energy Africa Ltd (TSX-V:RECO, OTCQX:RECAF) CEO Brian Reinsborough joined Proactive to discuss the company’s latest quarterly results.
He highlighted the spudding of the Naingopo well in Namibia and the significant prospects it holds and the company’s partnership with BW Energy.
Proactive: You recently released your financials and corporate highlights for the quarter. There’s been a lot happening within the company, particularly with another well underway and drilling going on. Can you tell me where you're at with that?
Brian Reinsborough: Yes, it’s certainly an exciting time. Just for context, I've been in this role for a full year now, and we've seen a lot of positive changes within Recon. The company is in great shape on many fronts. We've recently started drilling our highly anticipated well, Naingopo, which we spud in July. It’s about a three-month process, so we're approximately halfway through. We're really excited about this well and what it's testing. After completing this, we'll be drilling another prospect right after it, and we aim to stay active in this play for a long time.
You mentioned a potential projection of 181 million barrels, which is substantial for the company.
It absolutely is; it’s a game-changer for us and for the country. We're chasing deepwater potential prospects but with an onshore cost structure, which positions us for great returns. Being onshore also allows us to take advantage of nearby infrastructure, reducing the cycle time to first production. All of this is beneficial when you're targeting large prospects.
Absolutely. Also, in the quarter, you signed a definitive agreement with BW Energy. Can you tell us a bit about this agreement?
This was transformational for us. We started the process back in December with a virtual data room, which was well-received in the oil industry. People appreciated our new team and strategy at Recon. BW Energy emerged as the top partner choice due to their strong in-country team in Namibia and extensive local knowledge.
Financially, this was a milestone for Recon, as we sold 20% of our concession for approximately US$141 million or C$197 million. The transaction was structured to bring in money at all stages—exploration, development, and production. Additionally, BW took an equity position in Recon, which is a significant vote of confidence.
While all of this was happening, you also made some business decisions, like cleaning up the balance sheet and achieving significant savings. Could you elaborate on that?
Yes, we went through a couple of restructuring rounds. When I joined, my goal was to make Recon fit for purpose. We're a small company and need to operate like a startup. The financial results you see today reflect these changes, with the right people in the right roles. Financing was another key area. Many small-cap companies are typically undercapitalized and rely on activity-based financing. My approach was to underwrite the business with a portfolio of wells. That’s why we did two rounds of financing: one in April for about $16 to $17 million and another in July for just under $40 million. These are significant raises for a small-cap energy company, demonstrating the strength of our team, strategy, and value proposition.
Absolutely. Lastly, you released a sustainability report, and although we won’t go into detail here, people can check it out on your website soon. But looking ahead to the fall, what should people be aware of?
First, I’m glad you mentioned the sustainability report. It’s crucial because it reflects the DNA of the company—how we think about the environment, treat people, and conduct business.
Looking ahead, Recon is in the best position it’s ever been. We've improved our balance sheet, have a partner, a new team, and a new strategy. We're working on governance, so Recon is essentially a brand-new company. The activity in the fall will reflect this new strategy. We aim to have continuous operations, drilling the Naingopo well through the end of September, with results expected soon. After that, we plan to mobilize to Prospect Peak, which has about 360 million barrels of potential, double that of Naingopo. If successful, we have the equipment ready for production testing and plan to assess both discoveries.
Quotes have been lightly edited for clarity and style