As I've described in a recent post, investing in oil and gas explorers "ain't for the weary kind". It requires a great deal of patience and conviction.
It's hard to have conviction in something you cannot see, however... It's simply human nature to fear what we do not fully understand. Without expert guidance and counsel, it can be easy to run from an overwhelming opportunity no matter how big the potential reward might be.
Never in 600 million years did I expect this investment would lead me to develop friendships with a bunch of geologists who started their careers back when I was just space dust, but over the past several months these friendships have proved invaluable to my understanding of both the risk and potential reward of this play. These friendships have helped me build real confidence in a venture I have no professional experience in.
/////
At the beginning of August we learned a little bit more about the geology of the Kavango Basin, as described by Scot Evans in a recent interview.
We know from the 1st well Recon Africa has three "prospective pay zones" all exhibiting a variety of oil shows. The oil in these zones, as described by Recon Africa's technical team, appears migrated (not generated in place) representative of a conventional petroleum system.
-
The upper zone is sandstone / siltstone exhibiting matrix porosity.
-
The second zone is limestone and dolomite (geos refer to this as the carbonate section) with some siltstone exhibiting matrix and facture porosity.
-
The third zone is mainly limestone with low porosity.
/////
Why is porosity important?
Porosity is critical / necessary to find because it's the storage component of a reservoir. It's the tank where fluids can accumulate over millions of years. Matrix porosity is comparable to the holes in a sponge, where liquids can pass through, while natural fracture porosity is open cracks in a rock where oil can travel through. Carbonate reservoirs can have both types of porosity, sandstones tend to have just matrix.
What's the other key required to commercialize a working conventional petroleum system from a geological standpoint? Permeability. Without permeability, we can't get the oil out.
Below are some key take-a-ways from conversations with geologists (who are also long RECAF) regarding the prospective porosity and permeability of the three prospective zones discovered with the 1st stratigraphic well, and why we just might have a world-class oil field that rivals even some "giants" in the Middle East.
I look forward to learning more about the geology of the Kavango Basin as executives from Recon Africa and several high-level Namibian government officials embark on an investor roadshow over the next several months to present findings from their exploration program, starting with presentations at two industry conferences (Africa E&P Summit and PESGB and HGS Africa E&P Conference) coming up in just a few weeks.
Finally, despite only one elephant spotting on the exploration acreage to-date, it appears there could be more elephants in the Kavango.
You see, I recently learned the official terminology for "a really huge oil field" is actually not "a giant"... Geos always refer to these fields as elephants.
and everyone loves an elephant.
I am long RECAF and all opinions, take-a-ways, and interpretations above are my own. None of my analysis constitutes investment advice but please invest some time into doing your own research and forming your own opinions.