(Image via Reconnaissance Energy Africa Ltd.)
Oil and gas investors have been glued to a junior Canadian company after its stock shot up more than 115% over the past week after proving in its first drill the existence of indicators of petroleum systems in Namibia.
With oil and gas indicators also encountered, the best could be yet to come after the next two drill hole results come in, significantly de-risking this play.
Vancouver, BC-based small-cap explorer
Reconnaissance Energy Africa Ltd. (TSX-V: RECO, OTCQX: RECAF, Forum) recently released preliminary analysis of the data from its 6-2 well, the first of a three well drilling program, provides clear evidence of a working conventional petroleum system in the Kavango Basin.
A deeper look in the well:
The 6 – 2 well sample log yielded more than 200 metres of oil and natural gas indicators over three discrete intervals in a stacked sequence of reservoir and source rock. Following the extraction of oil from these samples, the company pointed to these results as an indication of an active petroleum system with multiple source intervals.
Upon the release of this news, RECO stock rallied hard and investors who bought in a week or more earlier celebrated this surge in share price.
(Reconnaissance Energy Africa Ltd. stock chart – November 2020 to April 2021. Click to enlarge.)
Speaking on this news in
a media release for investors, a member of ReconAfrica's Advisory Board Dan Jarvie, a petroleum systems chemist and explained that this data is indicative of migrated, thermogenic petroleum and it occurs over three different intervals in the 6-2 test well.
“The intervals penetrated include highly porous, permeable sediments and marine source rocks as predicted, and an extensive marine carbonate lithofacies. Mud gas results indicate a high BTU gas with the presence of light oil in numerous cutting samples. Based on these initial results, the components and processes for a working petroleum system are all present.”
Government praise:
RECO’s work has not gone unnoticed, and the company was quickly acknowledged by Namibian President Hage Geingob.
Speaking in his state of the nation address the same day that the company announced its results, he called Namibia an “attractive destination” for oil and gas investors.
As evidence of this, he pointed to ReconAfrica’s three well drilling programme in Block 1819 and 1820.
“The company is currently undertaking exploration to confirm the presence of a sedimentary basin otherwise known as a petroleum system around the general area,” he said, adding that that participants were paying “serious consideration” to environmental protection.
(Via @hagegeingob on Twitter)
The Namibian Minister of Mines and Energy, Hon. Thomas Alweendo added his voice to the chorus of praise, calling this a great period for the people of Namibia, with the results of the well confirming a big potential for a very valuable energy resource for the country and therefore a significant development for Namibia onshore exploration efforts.
“The positive results of this well have provided us with the critical information required to unlock the country's petroleum prospectivity and is the first step in the process of locating significant accumulations, we can now confidently confirm Namibia is endowed with an active onshore petroleum basin.”
Why this matters:
Reconnaissance Energy Africa has proved the existence of a working petroleum system in the Kavango basin and is set to deploy a second probe, so investors who may be worried that this ship has sailed, worry not, a “second ride” is set to take off.
Recon Africa’s rig is being mobilized to the 6-1 location, 16 kilometres north of 6-2 drill site and this second well is designed to evaluate the petroleum systems discovered in the first well in an area of maximum thickness.
This is just one indication that the oil and gas sector is heating up. Have you tailored your portfolio to capitalize on this movement? Let us know your thoughts in the comments below.