Reconnaissance Energy Africa Ltd (TSX-V:RECO, OTCQX:RECAF) (ReconAfrica) earlier this week said drilling at its Naingopo exploration well in Namibia’s Damara Fold Belt had wrapped up, reaching a total depth (TD) of 4,184 meters—well beyond the initially projected 3,800 meters.
The firm will conduct an in-depth assessment of the Naingopo well, including wireline logging, coring, Vertical Seismic Profile (VSP) analysis, and Modular Formation Dynamics Tester (MDT) sampling, which are crucial for understanding reservoir characteristics, fluid properties, and potential hydrocarbon deposits, according to analysts from Research Capital Corporation.
Preliminary results are expected in the coming weeks, offering investors a near-term catalyst for potential value creation.
Research Capital Corporation noted the importance of the evaluation process, emphasizing that MDT tools are instrumental in gathering fluid samples and measuring key reservoir properties, which will aid in delineating resource potential. Following the evaluation, the well will be cased, ensuring its integrity for any future operations.
The Naingopo prospect boasts estimated unrisked best-case prospective resources of 181 million barrels (MMbbl) gross or 127 MMbbl net to ReconAfrica’s 70% interest. In a natural gas scenario, the well holds unrisked prospective resources of 937 billion cubic feet (Bcf) gross or 656 Bcf net.
Once the Naingopo analysis is complete, ReconAfrica plans to move its Jarvie-1 rig to the Kambundu (Prospect P) well location, with drilling expected to commence in January.
The Kambundu prospect offers even greater potential, with estimated unrisked resources of 309 MMbbl gross (216 MMbbl net) for oil or 1.6 trillion cubic feet (Tcf) gross (1.1 Tcf net) for natural gas.
Analysts expect the results of the Naingopo evaluation to guide strategies for the Kambundu well, with potential production testing as early as March or April 2024.
The firm highlighted the positive momentum generated by the Naingopo drilling and the near-term catalysts from both the evaluation results and the upcoming Kambundu well.
“This well could open up additional opportunities in the Damara Fold Belt play,” analysts wrote, underscoring the broader implications of a successful hydrocarbon discovery.
Research Capital Corporation reiterated its Speculative Buy rating for ReconAfrica, with a price target of $2.30, representing a projected return of 91.7% from its current price of $1.20.