Reconnaissance Energy Africa Ltd (TSX-V:RECO, OTCQX:RECAF) (ReconAfrica) has earned a repeat ‘Buy’ rating from Haywood Capital Markets analysts following its latest update on drilling at the Naingopo well on Petroleum Exploration License 73 (PEL 73) onshore Namibia.
The company reported that exploration reached a depth of 4,184 meters, deeper than the planned depth of 3,800 meters.
It also reported that portions of Otavi, the primary interval, were deeper than expected and as such, the company elected to drill deeper. Additional samples will be collected and evaluated.
The drill rig is then expected to move on to the Kambundu (Prospect P) well location, which is set to be spud in the first quarter of 2025.
Analysts highlighted that ReconAfrica is “chasing a big prize” on PEL 73.
“Recall, on a net basis, the Naingopo well is targeting 181 million barrels of unrisked and 15 million barrels of risked prospective light/medium oil resources assuming an oil discovery, of 937 billion cubic feet of unrisked and 65 billion cubic feet of risked prospective natural gas resources assuming a gas discovery,” they wrote in a note to clients.
“On a net basis, Kambundu is targeting 309 million barrels of unrisked and 15 million pounds of risked prospective light/medium oil resources of 1.6 trillion cubic feet or risked and 64 billion cubic feet of risked prospective natural gas resources.”
Analysts see ReconAfrica as a high-risk, high-reward opportunity with visible catalysts.
They repeated their price target of $2.10, which implies a projected return of 75% from ReconAfrica’s share price at the time of writing.
“Should the team be successful in proving the presence of hydrocarbons and the economic viability of its resource, we believe the stock could be worth multiples of its current valuation,” analysts concluded.