newly discovered kavango basin - reconafrica
TRANSCRIPT
AMERICAN PETROLEUM INSTITUTE PRESENTATION
RECO : TSXV ; RECAF : OTCQX ; 0XD : Frankfurt
www.ReconAfrica.com
| November 10, 2020
Kavango BasinNEWLY DISCOVERED
NAMIBIA & BOTSWANA
FORWARD-LOOKING INFORMATION
2
Certain information in this Presentation may constitute "forward‐looking information” within the meaning of Canadian securities legislation. Forward-looking information can be
identified by the use of forward-looking terminology such as “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “aims”, “potential”, “goal”, “objective”,
“prospective” or variations of such words and phrases or statements that certain actions, events or conditions “will”, “would”, “may”, “can”, “could” or “should” occur. All
statements other than statements of historical facts included in this Presentation constitute forward-looking information, including, but not limited to, statements with respect to
the treatment of Reconnaissance Energy Africa Ltd. (“Reconnaissance” or the “Company”) under the regulatory regimes and laws of the jurisdictions in which Reconnaissance
conducts its business; drilling and completion of wells; facilities costs and the timing and method of funding thereof; expected timing of development of undeveloped reserves;
Reconnaissance’s potential future oil and natural gas production levels; the future performance and characteristics of Reconnaissance’s oil and natural gas properties; the
estimated size of Reconnaissance’s potential oil and natural gas reserves; projections of market prices and costs; projections of supply and demand for oil and natural gas;
expectations regarding the ability to raise capital and to continually add to reserves through acquisitions, anticipated exploration and development activities; future capital
expenditure programs and the timing and method of financing thereof.
Forward-looking information is necessarily based on the beliefs, estimates, assumptions and opinions of the Company’s management on the date the forward-looking information
is made, including assumptions regarding future prices for oil and natural gas; future currency and interest rates; Reconnaissance’s ability to generate sufficient cash flow from
operations; access to debt and/or equity financing to meet its operating costs and future obligations; social, political and economic developments in jurisdictions in which
Reconnaissance conducts its business; Reconnaissance’s ability to obtain qualified staff and equipment in a timely and cost-efficient manner to meet Reconnaissance’s demand;
and assumptions related to the factors set forth below. While these factors and assumptions are considered reasonable by the Company as at the date of this Presentation in
light of management’s experience and perception of current conditions and expected developments, these statements are inherently subject to significant business, economic
and competitive contingencies and uncertainties.
Known and unknown factors and risks could cause the actual results, level of activity, performance or achievements of the Company to be materially different from those
expressed by such forward-looking information, including, but not limited to: volatility in market prices for oil and natural gas; the continuation of the recent global financial crisis
and economic downturn; liabilities inherent in oil and gas exploration activity including operational and environmental risks; uncertainties associated with estimating oil and
natural gas reserves; competition for, among other things, capital, acquisitions, undeveloped lands and skilled personnel; incorrect assessments of the value of acquisitions;
unanticipated geological, technical, drilling and processing problems; fluctuations in foreign exchange or interest rates and stock market volatility; changes in the laws or
application thereof by the governments of the jurisdictions in which Reconnaissance conducts its business; political, social and economic instability in the foreign jurisdictions in
which Reconnaissance operations; inability to execute on business plans and strategies; increases to capital expenditure programs and the timing and method of financing
thereof; the ability of Reconnaissance to achieve drilling success consistent with management's expectations; higher than expected operating costs; uncertainty with respect to
net present values of future net revenues from reserves; lower than anticipated future production levels from Reconnaissance’s assets; delays with respect to timing and the
bringing on of production; changes to expected plans and costs of drilling; drilling inventory and the presence of oil pools or gas accumulations; increased cost projections; global
supply and demand for oil and natural gas; ability and costs of increasing plant capacity; expected levels of royalty rates, operating costs, general and administrative costs, costs
of services and other costs and expenses; expectations regarding the ability to raise capital and to continually add to reserves through acquisitions, exploration and development;
risks and uncertainties related to infectious diseases or outbreaks of viruses, including the COVID-19 pandemic; and such other risks as disclosed in this Presentation, the
Company’s annual information form for the year ended December 31, 2019, which is available on SEDAR at www.sedar.com under the Company’s profile and the Company’s
continuous disclosure filings. The forward-looking information contained in this Presentation is expressly qualified by these cautionary statements. Although management of the
Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be
other factors that cause results not to be as anticipated, estimated or intended and readers are cautioned that the foregoing list is not exhaustive of all factors and assumptions
which may have been used. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those
anticipated by such statements. Readers are advised not to place undue reliance on forward-looking information.
Except as required by the securities disclosure laws and regulations applicable to the Company, the Company undertakes no obligation to update this forward-looking information
if management’s beliefs, estimates or opinions, or other factors, should change.
RECO : TSXV ; RECAF : OTCQX
NEWLY DISCOVERED KAVANGO BASIN
➢ 8.75 MM acres covers the entire basin
➢ One of the largest onshore undeveloped hydrocarbon basins in the world
➢ Stable governments - excellent fiscal terms ▪ Licence Contracts
▪ Royalties 5%
➢ Successful Technical Team ▪ In depth knowledge of the basin
➢ Just completed $C23M Capital Raise▪ Twice upsized in response to demand
▪ Fully funded drilling program
➢ Catalyst-rich near term
▪ 1st of 3 wells spuds in Dec 2020 ▪ Drilling program to confirm active petroleum system▪ Significant partnering potential
KEY CAP TABLE STATISTICS
➢ RECO:TSXV ; RECAF:OTCQX➢ Shares outstanding 106.9 MM
➢ Fully diluted 178.1 MM➢ Includes RECO.WT* 34.4 MM
➢ Current Share Price (Nov 5) C$1.07➢ Market Capitalization C$114.4 MM➢ Debt None➢ Insider Ownership** 18%
ReconAfrica controls the entire deep Kavango Basin in Namibia & Botswana
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* Warrants exercisable at C$1.00 until Aug 20, 2025. Forced conversion clause if RECO trades > C$3.00 for 20 trading days** Inclusive of Founder & Escrowed Shares
RECO : TSXV ; RECAF : OTCQX
NAMIBIA AND BOTSWANA - TWO STABLE DEMOCRACIES
Strong Adherence to Rule of Law
Namibia
Former German colony, independent from SouthAfrica since 1990
Infrastructure comparable to developed countries
Vetted by the Majors, competitive petroleum regime
Botswana
Africa's longest standing democracy, former UK colony, sovereign nation since 1966
Fourth most attractive investment destination in Africa** Source – Quantum Global Research Lab
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RECO : TSXV ; RECAF : OTCQX
NAMIBIA & BOTSWANA - LICENCE TERMS
➢ ReconAfrica owns 90% interest in Petroleum Exploration Licence 73▪ NAMCOR (Namibia state oil company) holds
10%
➢ Exploration Period:▪ Exploration period continues to January 2024
o Right to extend to January 2026
➢ 25 year Production Licence follows commercial discovery
➢ Fiscal terms:▪ 5% royalty▪ 35% corporate income tax
➢ ReconAfrica holds a 100% working interest in all petroleum rights from surface to basement▪ Subject to 50% Farm-in option
➢ Exploration Period:▪ Exploration period continues to June 2024
o Right to extend to June 2034
➢ 25 year Production Licence follows commercial discovery
➢ Fiscal terms:▪ Royalties subject to negotiation and range
from 3 to 10%▪ 22% corporate income tax
NAMIBIA BOTSWANA
Globally competitive fiscal regimes
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KAVANGO BASIN, NAMIBIA-BOTSWANASEDIMENT THICKNESS DEPTH TO BASEMENT ANALYSIS
Bill Cathey, President/Chief Geoscientist – Earthfield Technology
6RECO : TSXV ; RECAF : OTCQX
EARTHFIELD USES MAGNETIC AND GRAVITY
ANALYSIS TO MAP THE BASEMENT DEPTH & STRUCTURE
VIA
PROPRIETARY PROFILE BASED DEPTH CALCULATION
SOFTWARE
North America
Depth to Basement
Map
Based on 5000 Meter Spaced Magnetic Data
EARTHFIELD SPECIALIZES IN DEPTH TO BASEMENT ANALYSISWORLDWIDE, SINCE 1987
Earthfield Technology Has Since 1987
- Worked Virtually Every Known Petroleum Basin in
World- Extensive Repeat Client List
- Specialize in Mapping Sediment Thickness via
Magnetic Data Analysis of Basement Depth
Magnetic Data Werner Deconvolution Profile
Measured Magnetic Data
Basement Depth >40,000’
Calculates X&Y Locations, Depth, Dip, and Susceptibility for Each Solution
Very Well Established/Respected Inverse Modelling Technique For Magnetic Depth Determination
TABLE OF MAGNETIC SUSCEPTABILITIES OF ROCKS(Magnetic Mineral Content)
Sedimentary Dolomite 0-75 10
Limestones 2-280 25
Sandstones 0-1660 30
Shales 5-1480 50
Av. Var. Sed. 0-4000 75
(48)
Metamorphic
Amphibolite 60
Schist 25-240 120
Phyllite 130
Gneiss 10-2000
Quartzite 350
Serpentine 250-1400
Slate 0-3000 500
Av. Var. Met. 0-5800 350
(61)
Type Susceptibil ity
Range
106 emu
AveragexType
Susceptibil ity
Range
106 emu
Averagex
Igneous
Granite 0-4000 200
Rhyolite 20-3000
Dolerite 100-3000 1400
Augite-Syenite 2700-3600
Olivine-Diabase 2000
Diabase 80-13000 4500
Porphyry 20-16700 5000
Gabbro 80-7200 6000
Basalts 20-14500 6000
Diorite 50-10000 7000
Pyroxenite 10500
Peridotite 7600-15600 13000
Andesite 13500
Av acid Ign. 3-6530 650
Av. basic Ign. 44-9710 2600
IGNEOUS & METAMORPHIC ROCKS MUCH HIGHER
SUSCEPTIBILITY (MAGNETITE CONTENT) THAN
SEDIMENTARY ROCKS
1000
200
220
200800350
900
500
350
Cesium Vapor Magnetometer accuracy = .001nT
Magnetic Field Strength of Earth = 65,000 nT
MEASURES VERY SMALL DIFFERENCES IN MAGNETIC FIELD = MAGNETITE CONCENTRATIONS DIFFERENCES
Magnetometer Accuracy = 1/100,000,000 OerstedLateral Concentration of Magnetite
Produces Magnetic Anomalies
TOPO MAGNETICS
GRAVITY
MAGNETIC DEPTH PROFILES& LIMITED WELL CONTROL
EARTHFIELD’S BASEMENT ANALYSES
SW NE
MAGNETICS
MAGNETIC DEPTH PROFILES& LIMITED WELL CONTROL
Depth to Basement
EARTHFIELD’S BASEMENT ANALYSES
High-Resolution Namibia Magnetic Data: 200 meters
Exploration Licence 73 Area
Exploration License 73 Area
Namibia Magnetic Data Are Some of The Very Best Data We Have Ever Analyzed
In 2014, Earthfield Was Commissioned By ReconAfrica To PerformA Detailed Analysis Of High-Resolution Magnetic Data In NW Namibia
Depth to Basement250m Contour Interval
THE KAVANGO BASINDEPTH TO BASEMENT
THICKER SEDIMENTS HAVE GREATER HYDROCARBON POTENTIALIN THIS AREA, SEDIMENTS APPEAR TO REACH THICKNESSES IN EXCESS OF 25,000’
PETROLEUM GEOLOGY AND PROSPECTS, KAVANGO BASIN
Scot Evans, CEO - ReconAfrica
15RECO : TSXV ; RECAF : OTCQX
RECO : TSXV ; RECAF : OTCQX
CRUSTAL SCALE PROFILE NE NAMIBIA NW BOTSWANA
ST-1
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RECO : TSXV ; RECAF : OTCQX
PERMIAN-TRIASSIC KAROO SUPERGROUP
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RECO : TSXV ; RECAF : OTCQX
PALEOGEOGRAPHIC AND TECTONIC SETTING
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Kavango Basin Southern Trans Africa Rift and Shear System
RESULT; PLAY MAPS DEEP KAVANGO BASIN
Initial 3 Well Drilling Program
• Proves Active Permian Hydrocarbon System• Conventional and Unconventional Traps
RECO : TSXV ; RECAF : OTCQX 19
RECO : TSXV ; RECAF : OTCQX
RECONAFRICA’S COMMITMENT TO DRILLING:CROWN 750 1000 HP DRILL ING RIG
➢ ReconAfrica has acquired the Crown 750 drilling rig – never used
➢ Rig ownership is expected to reduce overall drilling costs by 60%
➢ Upgrades currently being made in Houston - on budget
➢ Shipping to Namibia in Nov 2020
➢ The right rig for the Kavango Basin - mobile and rated to drill 12,000 vertical feet
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PETROLEUM GEOCHEMISTRYDan Jarvie, President - Worldwide Geochemistry LLC
21RECO : TSXV ; RECAF : OTCQX
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PETROLEUM GENERATION
Generative
Organic Carbon
(GOCpd wt.%)
Non-Generative Organic Carbon
(NGOCpd wt.%)
Carbon in expelled
petroleum (wt.%)
TOCpd (wt.%)
Subscript “o” means original value
Subscript “pd” means present-day value
with maturation
RECO : TSXV ; RECAF : OTCQX
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Average TOC at high conversion: 3.81%Utilizing a Hydrogen Index of 358 mg/g,Average restored TOC: 5.44%
Difference in TOC is 1.63% or converted to petroleum 460 boe/af
At only 100 ft of source rock thickness, this is 29.5 mmboe/section
PERMIAN WHITEHILL, KAROO BASIN, SOUTH AFRICA
RECO : TSXV ; RECAF : OTCQX
8.1
2.2
6.0
1.5
3.51.8
11.6
2.9
8.6
2.1
5.0
2.5
ST-1 WELL , OWAMBO BASIN, ONSHORE NAMIBIA
24RECO : TSXV ; RECAF : OTCQX
ST-1wellcore
samples
1301 m
1489 m
1539 m
1000 m
2000 m
All Restricted Marine or Lacustrine
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Source Rock 1
Hydrogen Index (HI) = 335 mg/gTOC = 2.5%Petroleum Potential = 307 boe/af
Source Rock 2
Hydrogen Index (HI) = 380 mg/gTOC = 5.0%Petroleum Potential = 456 boe/af
Thermal history is constantat a conservative heating rate
Average:HI: 358 mg/gTOC: 3.75%
VERY CONSERVATIVE MIXED SOURCE ROCK PARAMETERS
RECO : TSXV ; RECAF : OTCQX
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0 1 2 3 4 5
TSI: Vitrinite-Easy Ro(%)
0
4
8
12
16
20
24
28
Cu
mu
lati
ve
HC
6+
Exp
elle
d (
mm
stb
/se
cti
on
))
Cumulative HC6+ Expelled (mmstb/section))
Cumulative HC1-5 Expelled (mmboe/section)
Oilexpulsion
PRIMARILY OIL GENERATED AND EXPELLED TO ca. 1.2%Ro
RECO : TSXV ; RECAF : OTCQX
SOURCE ROCK GEOCHEMISTRY E S T I M AT E D P E T R O L E U M G E N E R AT I O N : C O N V E N T I O N A L & U N C O N V E N T I O N A L
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* Source – Daniel Jarvie, Worldwide Geochemistry LLC.
RECO : TSXV ; RECAF : OTCQX
“Given the nature of this basin and the tremendous thickness, this is pretty much a no-brainer… It will be productive and I’m expecting high quality oil”
- Dan Jarvie, Worldwide Geochemistry, LLC -
WRAP UPCraig Steinke, Founder - ReconAfrica
RECO : TSXV ; RECAF : OTCQX 28
RECO : TSXV ; RECAF : OTCQX
MONETIZING THE HYDROCARBONS; H IGH QUA L ITY LOC A L INF RA STRUC TURE
140 miles to railroad access
ReconAfrica License AreaPaved highway runs through License Area to Windhoek
Railroad from Grootfonteinto Walvis Bay
Okavango River
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Local Facilitator:Pioneer Oil and Gas
All surface rights held by Government
RECO : TSXV ; RECAF : OTCQX
RECONAFRICA INVESTMENT CONCLUSIONS
➢ Early Mover : 8.75 million acres – Highly prospective Permian-aged
➢ Excellent fiscal terms – stable regulatory and political environment
➢ Proven technical team – in depth knowledge of the basin
➢ Just completed $C23M Capital Raise
▪ Twice upsized in response to demand
▪ Fully funded drilling program
➢ Catalyst-rich near term
▪ 1st of 3 wells spuds in Dec 2020
▪ Drilling program to confirm active petroleum system
▪ Significant partnering potential
30
2019