The proposal by the National Petroleum Corporation of Namibia to sell half of its 10% carried participating interest in the approximately 24 000 square kilometres’ petroleum exploration licence (PEL 73) in the Kavango Basin, is expected to be concluded this month.
Earlier this week, international news agency Yahoo Finance quoted Namcor managing director Immanuel Mulunga as saying: “We are delighted to enter into this strategic and mutually beneficial transaction with ReconAfrica. The transaction is not only less onerous, but adds significant strength to Namcor’s balance-sheet as well as provides Namcor with exposure to the entire Kavango sedimentary basin in Namibia and Botswana. We have the utmost confidence in ReconAfrica, as the company has proven to be a responsible operator in our country, with an excellent track record in the performance of its work obligations.” According to Namcor, commercial terms have already been agreed with the Canadian oil and gas company ReconAfrica, with the purchase and sales agreement envisaged to be signed on 17 February 2022.
The proposal by Namcor to sell 5% of its interest in the project originally stems from offers received from other market players. However, the agreement between ReconAfrica and Namcor stipulates that should either party plan to sell their share in the project, they should give the other party first right of refusal.
“In terms of the joint operating agreement provisions for PEL 73, Namcor is required to approach ReconAfrica first to match the offer before going back to market to conclude any deal with the interested farm-in partner (first right of refusal). In this particular instance, the commercial offer from ReconAfrica was higher than that offered by the market.
I must state that ReconAfrica is also confined to the same requirements. They first need to approach Namcor should they wish to liquidate or sell any of its equity,” explained Namcor spokesperson Utaara Hoveka.
He added that the consideration for the 5% carried interest shall comprise five million common shares in the capital of ReconAfrica having an aggregate value of approximately N$382 million (C$31 750 000) with a deemed price per ReconAfrica share of N$76.43 (C$6.35) and N$30.5 million (US$2 million) in cash.
Responding to questions from New Era, Hoveka explained that for this transaction, the parties used the price per share of the company to determine the value of the exploration asset.
“The commercial value of hydrocarbons will be determined once we know the amount of recoverable hydrocarbons after conducting several activities like drilling appraisal wells,” he added. ReconAfrica has been accused of drilling in ecologically sensitive areas without proper permission, while it is also being sued in the USA for misleading regulators and investors about its work.