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Jambo1 on Aug 05, 2021 9:05pm
Recon Africa De-Risks The World's Most Exciting Oil Find
Recon Africa De-Risks The World's Most Exciting Oil Find By James Stafford - Aug 05, 2021, 7:00 PM CDT Trade Oil Futures And Energy Stocks Namibia has every right to celebrate. Its never produced a barrel, but now, its Kavango Basin test wells have hit hundreds of meters of oil. And the junior exploration company behind it all thinks it might be sitting on a potential mammoth conventional oil play. On August 5th, Reconnaissance Energy Africa (TSXV:RECO, OTC:RECAF) and its partner, NAMCOR, Namibias state oil company, released their most stunning results yetwith lab tests comprehensively confirming an active petroleum system and results from a second test well hitting 350 meters of hydrocarbon showings. Thats on top of the first test wells showings of 250 meters of hydrocarbons. This is a huge showing for this junior companys maiden drills. In fact, its so huge that optimism is growing that they might have actually test-drilled right into a reservoir on the first shot. Referring to Jarvies graph below, in zone 2 where the oil saturation exceeds 100, theyve drilled into a very thick zone of potential production or reservoir. Its the primary target for potential production testing. If that doesnt get investors excited I dont know what will. The first well (6-2) hit over 250 meters of hydrocarbon shows after drilling to a depth of 2,294 meters. The second test well returned 350 meters of hydrocarbon shows after drilling to a depth of 2,780 meters. Sample logging data and analysis was conducted by Horizon Well Logging Inc, whose CEO, Doug Milham, described the play as an exciting oil and gas exploration project with world-class potential. The presence and quality of oil and gas shows encountered while drilling the 6-2 and 6-1 wells was remarkable, with many positive indicators of hydrocarbons encountered throughout both wells, Milham said. Our sample logging data and analysis has identified significant intervals of oil and natural gas in each of the two wells drilled, with varying characteristics from multiple zones. The results mean that RECO and NAMCOR have met all the drilling program requirements to extend the exploration period on this play. Exploration now advances to the next phase, with an ambitious 450-kilometer 2D seismic acquisition already underway, contracted to world-class Polaris. The first two wells and the Q4/21 drilling program will be the bases for mapping the entire 6.3-million-acre basin for recoverable commercial hydrocarbons and another 2.2 million acres in neighboring Botswana. The goal of the stratigraphic test well program, approved by the Namibian government, was to establish the presence of a working conventional hydrocarbon system in this new basin. The results we have achieved from these first two wells have significantly exceeded our expectations, Recon Africa CEO Scot Evans said in a press release on August 5th. RECO hasnt just encountered significant oil and gas shows over multiple zones in their first two test well, but those showings are associated with zones of fracture and matrix porosity, which means that the 450-km 2D seismic program just got some very strong support and a huge boost of confidence in what comes next. Africas Potential Middle East-Style Play Previously, big names like Wood Mackenzie and world-class geochemist Daniel Jarvie had compared Kavangos oil potential to the Texas Permian, with Jarvie estimating conservatively the basin could have generated billions of barrels of oil (after only considering 12% of RECOs license area). That was more than good enough for early-in investors who feel theyve stumbled upon a once-in-a-lifetime thing. And so far, indications continue to show positive signs. . Some people think this could possibly be a Zagros Belt-style geologythe same geology that has created the worlds biggest oil producers in the Middle East. The immense productivity in Saudi Arabia, Iraq, and Iran (especially the Zagros belt) is based on multiple stacked source rocks and several carbonate reservoirs which are involved in many types of traps, Jim Granath, RECOs leading geologist, told us in July, right before the results of the second drill were released. This is not to say we have discovered a new Middle East, but some of those are in structures --the Zagros in particular in Iran and Iraqthat are similar to what we suspect we have drilled into. So, the Kavango rocks may have similar reservoir properties to some of those, he said. What Recon Africa (TSXV:RECO, OTC:RECAF) has found so far is what geologists dream of at this early stage in the exploration game: The 6-2 well in Kawe, Namibia, was drilled to a final depth of 2,294 meters, encountering over 250 meters of conventional migrated light oil, natural gas and natural gas liquids. Three hydrocarbon-bearing zones, fluid types, hydrocarbon migration, characteristics and potential for production testing are illustrated in this chart and with more information explaining the findings here. Source: Dan Jarvie, Worldwide Geochemistry, Houston Texas Mr. Jarvie is a member of the ReconAfrica Technical Advisory Board. This diagram is used to confirm the presence of an active petroleum system, not a definable resource. The 6-2 well has been left in a state that allows it to be re-entered to run a Vertical Seismic Profile (VSP) and test potential zones of interest. The data from this well, combined with the multi-zone potential significantly increases the chances that ReconAfrica has encountered a productive reservoir to be tested in its very first drill. Now, the VSP and the 2D data will further delineate potential structures in and around the well. The 6-1 well in Mbambi, Namibia (only 16 kilometers from the first well), was drilled to a final depth of 2,780 meters, encountering 350 meters of oil and natural gas shows over 7 potential zones. RECO will still get more results from the logging data, cuttings and cores, which are now being prepared and shipped to the United States for further analysis. The casing on this well was set to total depth. The Final Verdict: Kavango Is Being De-Risked for Exploration Recon Africa and NAMCOR have now significantly reduced a big part of the geologic risk in the Kavango Basin. This is an active petroleum system. And theyve accomplished this in only 2 wells and they might have even found a reservoir with the first well. Thats a remarkable anomaly in the industry. Offshore Norway, it took 30 wells to get to the point that Kavango is already. What we find astounding here is that the first two wells are similar in terms of the distribution of the oil and gas shows running up and down the stratigraphy. And according to RECOs geologists, this is decidedly a conventional play because the hydrocarbons are in rocks into which they have migrated. We think this is a huge leap forward for this junior explorer. The giant Kavango Basin has an active petroleum system proven by testing. And the ability to now move on to the next phase of exploration is the first big step in the potential success of this company. So, what comes next on this path towards production? ReconAfrica (TSXV:RECO, OTC:RECAF) and NAMCOR will now be using drilling and 2D seismic data to determine the planning and execution of future drilling locations. We can also potentially expect production testing results from the 6-2 and 6-1 wells. Future drilling locations will probably target potential hydrocarbon-bearing structures from the seismic program with the aim of achieving commercial levels of oil and gas production. Once the seismic acquisition is complete, ReconAfrica is likely to drill one or two more wells this year, with an additional two to four wells in the first half of next year. Most importantly for investors, the 2D seismic acquisition could facilitate a farm-out JV process for ReconAfrica, with the aim to significantly boost exploration and development of this giant, 8.5-million-acre play. We think that no opportunity in the oil patch has come close to this in decades. And we doubt any opportunity like this is likely to surface again for some timeif ever. With geologic risk mostly eliminated, short-sellers could now find themselves in an impossible position of loss as early-in investors enjoy the victory of RECOs success to date.