Reconnaissance Energy (Africa) Ltd V.RECO

Alternate Symbol(s): V.RECO.W.A | RECWF | RECAF

Reconnaissance Energy Africa Ltd. is a Canada-based oil and gas company. The Company is engaged in the opening of Kavango Sedimentary Basin in the Kalahari Desert of northeastern Namibia and northwestern Botswana. It holds 90% interest in a petroleum exploration license in northeast Namibia and a 100% interest in petroleum exploration rights in northwest Botswana over the entire Kavango Sedimentary Basin. The Company's exploration license covers an area of approximately 25,341.33 square kilometers (6.3 million acres) and 8,990 km2 (2.2 million acres) in Botswana. The two licenses together comprise 34,325 sq km (8.5 million acres). Its conventional drilling program is focused on analyzing the rocks to determine if there is a working petroleum system in the Kavango Basin.

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Reconnaissance Energy (Africa) Ltd > Stock Price Potential

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Comment by Buyhigheatchipson May 27, 2021 10:56am

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Post# 33275375

RE:RE:Stock Price Potential

Turn, are there any junior explorers you can think of that made a big discovery that we can use as comps?

TurnToTheRight wrote:

No, Aramco is not a fair comparison. They have 12 million bbl per day of production, a downstream division, and a chemical division. Reserves are worth the least in the portfolio.

For example, 1 bbl of production may be valued (net present value) at let's say $5. 1 bbl of reserves would then be valued at something like $0.50. These numbers are made up to prove a point, and only the reservoir/exploitation engineers would know the real numbers, but production barrels are worth a lot more than a reserve barrel. Now throw in downstream with their crack spreads, and chemical profit margins (all taking into account capital expenditures adjusted for discount rates).

You see how Aramco's production and other divisions greatly increase their market cap. If you have a background in oil and gas or finance focussing on oil and gas, you get this, otherwise, people are making wild assumptions that simply aren't true, to arrive at completely unrealistic valuations.