Oil Explorer Launches First Cased Production Test in Namibia

1. Reconnaissance Energy Africa Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$3,000 and US$6,000.
2. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Reconnaissance Energy Africa Ltd.
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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Reconnaissance Energy Africa Ltd. (RECO:TSXV; RECAF:OTCQX; 0XD:FSE), in collaboration with its partners Namcor and BW Energy Ltd., has initiated production testing operations at the Kavango West 1X well, according to a June 8 release.

This marks a significant phase in the exploration of the region, with the production test targeting multiple hydrocarbon-bearing intervals within the Huttenburg and Elandshoek formations, the company said.

"We are very excited to be conducting the first cased production test in Namibia," President and Chief Executive Officer Brian Reinsborough said. "This test is a pivotal point in unlocking the commerciality of the Damara Fold Belt and has been designed to test for hydrocarbon phase and deliverability. Our team has done a fantastic job getting operations to this stage, and now that testing has commenced, we look forward to evaluating and sharing results with everyone very soon. I want to personally thank the government of Namibia, our partners, members of the community where we operate, our investors, and our dedicated team of professionals for helping ReconAfrica get to this exciting milestone."

The testing will cover a total of six optimized intervals spanning 420 meters of hydrocarbon-bearing sections, ReconAfrica said. Specifically, the Huttenburg formation will see 75 meters of net hydrocarbon pay tested within a 400-meter gross interval characterized by highly fractured carbonate reservoirs. Meanwhile, the Elandshoek formation comprises a 560-meter hydrocarbon-saturated section in similarly fractured carbonate reservoirs, with 81 meters showing hydrocarbon fluorescence and oil indications. Notably, oil sheen and bubbles have been observed at the surface in the mud pits.

The production testing at KW1X is currently underway, following a successful cement bond log conducted before the end of May, which confirmed the well's readiness for testing without the need for additional cement work, the release noted.

Downhole perforation is being carried out by SLB and Halliburton services, after the necessary perforation equipment was delivered to the site. Despite minor delays in permitting for the transportation of downhole testing equipment from North America, ReconAfrica anticipates sharing the production test results with stakeholders by late July.

The plan includes testing three zones in the deeper Elandshoek formation and three in the shallower Huttenburg formation, with each test potentially lasting up to 10 days. Any natural gas or liquids surfaced during this phase will be flared.

Should the production test prove successful, the KW1X well will be temporarily abandoned, remaining available for future production, the company said. ReconAfrica is also advancing preparations for further appraisal drilling at the Kavango discovery. This includes specific permitting applications and site preparations for the Kavango West 2A appraisal well, which the company aims to spud before the end of the third quarter of this year, pending final permitting and regulatory approvals.

2025: A Transformational Year for Co.

In April, ReconAfrica shared a series of operational updates and achievements for the year 2025.

"2025 was another transformational year for ReconAfrica as we progressed all aspects of our strategic goals," Reinsborough said at the time.

He highlighted several key developments, including the completion of a farm-down transaction with BW Energy Ltd., entry into the shallow waters of Gabon with the signing of the Ngulu PSC, and the initiation of operations in Angola through an MOU that expands the company's presence in the Damara Fold Belt. Additionally, Reinsborough celebrated a significant discovery at the Kavango West 1X well, praising the team and partners for their efforts.

Looking ahead, ReconAfrica is preparing for an appraisal well approximately 3-4 kilometers southeast of the KW1X discovery. This next step, if successful, will aid in reserve booking and inform the final investment decision.

In Gabon, ReconAfrica has received all necessary raw seismic tapes to commence a 3D reprocessing project over the Loba oil discovery and an additional 400 square kilometers of key interest areas. The reinterpreted seismic data, expected to be finalized in the fourth quarter of 2026, will utilize advanced Pre-Stack Depth migration with Full Waveform Inversion technology to enhance imaging of salt-related exploration plays. This data will be instrumental in preparing a resource report and selecting a location for an appraisal well on the Loba oil field.

A 'Company-Maker Well'

According to an updated note by Analyst Bill Newman for Research Capital Corp. on June 8, the same day as the news, the commencement of testing follows a successful cement bond log, which verified that no additional cement work was necessary, allowing the company to proceed directly to perforation operations on the first test interval.

The testing of each interval could last up to 10 days, potentially extending the entire program to about 60 days. ReconAfrica aims to release the results of these production tests by mid-to-late July, Newman said.

"We continue to view KW1X as a potential company-maker well," Newman wrote. "Successful production testing demonstrating sustained hydrocarbon flow rates and reservoir deliverability could materially de-risk not only the KW1X structure itself, but also the broader Damara Fold Belt fairway across Namibia and Angola."

He continued, "We maintain our SPECULATIVE BUY recommendation and our CA$4.40 target price, equivalent to our risked valuation of the Kavango West discovery plus the risked valuation of the Loba Oil Field in Gabon."

In tandem with the ongoing testing operations, the company is also progressing with appraisal planning activities. Site preparation and permitting are currently underway for the Kavango West 2A appraisal well. The company expects to begin drilling this well before the end of the third quarter of 2026, pending final approvals.

'Potentially Enormous News on the Horizon'

The initiation of the well testing could lead to "potentially enormous news on the horizon," according to Ron Struthers of Struthers Resource Stock Report in a piece for Streetwise Reports on June 9.

"As I commented in a previous update, oil companies operating offshore Namibia have witnessed commercial discoveries from just one pay zone and with more narrow intervals," Struthers wrote.

Despite previous setbacks in exploration wells that have tempered market expectations, ReconAfrica's disciplined exploration strategy may soon pay off, Struthers said. The company is optimistic about achieving success in at least one of the six zones being tested. ReconAfrica plans to release the results of these production tests to all stakeholders by late July.

"ReconAfrica has followed a disciplined exploration approach and is due for success, and just needs success on one of six zones," he said.

During the testing phase, any natural gas or liquids that reach the surface will be flared. Investor interest in this project is high, with some monitoring the site via satellite for any signs of flaring, which would indicate the burning off of oil or gas — a positive sign likely to boost the company's stock value, Struthers noted.

"A stock price closing above CA$1.40 would signal a potential breakout," wrote the expert, who rated the stock a Strong Buy.

Oil Prices Decline, Reserves Are Dwindling

On Tuesday, oil prices experienced a decline following comments from U.S. Energy Secretary Chris Wright, who noted a significant increase in ship traffic through the Strait of Hormuz, according to a report by Spencer Kimball for CNBC on June 9. By early afternoon, U.S. crude oil futures had fallen by 3.9% to US$87.74 per barrel, while Brent futures, the international benchmark, dropped about 3% to US$91.40 per barrel.

Wright, speaking at the Atlantic Council Global Energy Forum in an interview with CNBC's Brian Sullivan, mentioned that oil exports through Hormuz are on the rise and expected to continue increasing, although he did not provide specific figures.

This drop in oil prices occurred despite recent geopolitical tensions, highlighted by President Donald Trump's accusation against Iran for shooting down a U.S. Apache helicopter patrolling the Strait of Hormuz. Fortunately, the two pilots involved were unharmed. President Trump emphasized on social media that the U.S. must respond to this attack.

Further insights from JPMorgan analysts suggest that more oil might be moving through Hormuz than is publicly acknowledged. Their analysis, dated June 4, indicates that approximately 2 million barrels per day could be exiting the Persian Gulf on tankers that have turned off their transponders, as the U.S. Navy has been coordinating quietly with some ships, CNBC said. Despite a naval blockade and a significant reduction in commercial traffic, substantial volumes of crude and petroleum products are still managing to transit through the Strait, according to the analysts.

The U.S. Energy Information Administration (EIA) issued a warning on Tuesday that oil reserves in the world's major economies are dwindling to their lowest levels in over two decades, primarily due to production losses caused by the ongoing conflict involving Iran, reported Cris Tolomia for Quartz on June 9.

According to the EIA's monthly Short-Term Energy Outlook, by December, oil stockpiles in OECD countries are expected to fall below 2.3 billion barrels — a level not seen since the agency began tracking this data in 2003. This significant reduction is attributed to the need to compensate for approximately 11 million barrels per day of Middle Eastern output that has been cut off, accelerating the depletion of reserves at unprecedented rates, as reported by Reuters.

The EIA's forecast assumes that maritime traffic through the Strait of Hormuz, a critical passage for about 20% of the world's oil shipments, will not resume to normal levels until early 2027. The agency predicts that oil prices will remain high until global oil flows stabilize and inventories are restored. Tolomia reported that the current spot-market average price for Brent crude is projected at around US$105 a barrel for June and July, notably higher than the recent futures settlement of approximately US$91.60.

Despite rumors of a potential U.S.-Iran agreement to reopen the strait, no deal has been finalized. "Most oil production in the region remains shut-in, and global oil inventories have continued to fall to meet demand," the EIA noted. The agency also forecasts a decline in global oil consumption in 2026, which would mark the first annual decrease since the pandemic-driven drop in 2020. This anticipated reduction contrasts sharply with earlier projections of a modest increase in consumption by 200,000 barrels per day.

Ownership and Share Structure¹

About 1% of the company is owned by insiders and management, including Reinsborough, with 0.29%. About 7% is held by BW Energy Ltd. The rest is in institutional and retail.

Other top shareholders include Senior Vice President of Drilling and Completions Nicholas Steinsberger with 0.17%, Director Joseph Davis with 0.06%, Senior Vice President of Exploration Christopher Sembritzky with 0.06%, and Director W. Derek Aylesworth with 0.05%.

ReconAfrica's market cap is CA$442.68 million with 384.94 million shares outstanding. It trades in a 52-week range of CA$0.40 and CA$1.35.