Reconnaissance Energy Africa Ltd (TSX-V:RECO, OTCQX:RECAF) announced that it has entered into a production sharing contract and a joint venture (JV) agreement with Record Resources, the Republic of Gabon, and Gabon’s national oil and gas company, Gabon Oil Company.
The Canadian oil and gas company said the production sharing contract is for the exploration, appraisal, development and production of oil and gas on Gabon offshore Block C-7, renamed Ngulu.
“We are very pleased to be able to diversify our portfolio into an existing oil producing basin in the Republic of Gabon, complementing our exploration programs in Namibia and Angola," Reconnaissance Energy Africa CEO Brian Reinsborough said in a statement.
“This strategic entry allows the company to deploy capital to drilling options, including appraisal and development opportunities, with line of sight to near-term production and cash flow."
Reinsborough added that Gabon is sub-Saharan Africa's fourth-largest producer and exporter of crude oil and is a jurisdiction that has “attractive exploration upside.”
Under the terms of the joint venture, Reconnaissance Energy Africa will be the designated operator, with a 55% working interest, Record Resources will have a 20% working interest, the Gabon Oil Company will have a 15% working interest, and the Republic of Gabon will have a 10% working interest (carried).
Reconnaissance Energy Africa noted that the acquisition positions it as an offshore West Africa operator with near-term oil production potential that could provide cash flow to fund exploration growth.
The company said it believes there is significant exploration upside from an inventory of 28 mapped prospects that are analogous to play types found in the Gulf of Mexico.