Did The Majors Miss The Last Great Onshore Oil Discovery?

By Patricia Miller


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The Overlooked Play of the Decade


The pace is picking up as we could be on the verge of the biggest onshore oil discovery in decades.

And it’s coming from an unexplored basin the majors completely overlooked.

While billion dollar majors like Exxon and Shell stormed onto the scene in Africa, setting their sights on the last stretches of unexplored land in the world…

Massive discoveries are putting countries like Suriname and Guyana on the map when nobody thought to look there.

But as they made their way miles off the shores of Namibia, one oil junior snuck in and picked up what is likely the biggest untapped onshore sedimentary basin in the world.

ReconAfrica used a high quality aeromagnetic survey held by the Namibian government – a document that nobody had ever laid eyes on…

And in a flash, they claimed exclusive rights to the entire Kavango Basin, covering a massive 8.5 million acres of land.

To put that in context, that’s roughly the size of the entire country of Switzerland.

This spells extraordinary potential for an oil exploration company valued at just $436 million market cap.

Compare that to their neighbor offshore, Exxon Mobil with a market cap of $192 billion, and you can see why a notable discovery could be a game-changer for this little-known company.

And Wood McKenzie, one of the top oil and gas consultancies in the world, made a bold comparison that gives a glimpse into just how much potential this play holds.

After examining the data, they’ve put the closest comparison as the world-renowned Midland Permian Basin in Texas, valued at an incredible $540 billion.

And while the Midland Basin has delivered massive profits to a number of producers splitting their share of the pie.

ReconAfrica (90%) and the Namibian government through Namcor (10%) hold exclusive rights to the Kavango Basin in Namibia.

Which is why shares have already jumped over an incredible 714% over the last 9 months… even before drilling began.

But now that results of their first drill program are just around the corner, the story is heating up for what could soon become the biggest onshore oil discovery of the last decade.

And they’re getting validation from some of the biggest names in the oil industry.

Bill Cathey, the renowned new basin expert the majors call on, has been with the team from the beginning and likes what he’s seeing.

He’s said the data for this basin was among the best he’s seen and that it measures to depths of up to 30,000 feet.

That would make the Kavango Basin comparable in depth to the Permian Basin in Texas, which is estimated to have produced 46.3 billion barrels of oil.

Cathey says, “Nowhere in the world is there a sedimentary basin this deep that does not produce commercial hydrocarbons.“

To get a handle on just how much oil may be sitting in the Kavango Basin, they added Dan Jarvie to their exploration team.

Jarvie’s name is a familiar one to those in the oil industry, having been called the best geochemist in the world by many.

And his assessment has the ReconAfrica team even more excited as they drill deep into this basin.

Jarvie stated, “Given the nature of the basin and the tremendous thickness, this is petty much a no-brainer… it will be productive and I’m expecting high-quality oil.”

He’s put what he believes is a conservative estimate at around 100 billion barrels of oil generated… And that’s based on only 12% of ReconAfrica‘s licence area.

With the majority of the basin not even counted in that estimate, the true amount of oil they’re likely sitting on could be even greater..

World-class experts like Cathey and Jarvie wouldn’t join up with a small company like this unless they were really onto something special…

And if all goes well for ReconAfrica, we are on the verge of breaking news that could shake the entire oil industry.


Major News Approaching


The team has begun drilling of the first well, but with so many respected names already a part of ReconAfrica, another major player will be leading the way during the drill program.

Nick Steinsberger has been involved in over 1,500 drill programs, and now he’s also joined the ReconAfrica team as the Senior Vice President of Drilling and Completions.

And with his wealth of experience, he’s seeing several similarities between the Kavango and the Permian basin in Texas, which produces nearly 5 million barrels per day.

He stated, “It’s the same setting, the same geological time frame, and it looks like the same type of thickness.”

“The permian section of Kavango will be 6,000-8,000 feet in depth, which is similar to the permian in Texas.”

And we are talking about the low cost conventional reservoirs which powered the Permian since the 1930’s, not the unconventional shale of the last decade.

Now, with drilling news approaching, analysts are upping their projections for ReconAfrica.

Haywood Securities previously put their short-term price target at C$2.50 per share, but with the great potential they’re seeing, they bumped that up to $4 per share and now all the way up to C$7 per share.

That would deliver a quick win to investors in the weeks to come if they receive the positive results the experts are expecting…

But with the incredible potential involved, analysts are estimating their net asset values per share could soar to many, many times higher.

Now, after delivering their company-owned rig to the Kavango Basin, they’ve already started drilling, and we won’t have to wait long on the news, as they’re expected to hear results over the next quarter.

With 3 wells to be drilled in their fully-funded campaign, this could deliver a stream of steady news coming from ReconAfrica…

And each crucial update may serve as another potential catalyst.

But perhaps the most important part which could draw eyes from the majors is the economics of this play.

The team at ReconAfrica had a keen eye on the numbers when pinpointing the opportunity in Namibia.

That is because with only 5% royalties owed to the government on the oil recovered, that puts rates among the lowest in the world…

That means the potential for an extremely lucrative discovery if drilling results are positive, particularly with Brent crude prices jumping up to over $50 per barrel.

With an untapped basin roughly the size of Switzerland owned by a fast-acting crafty junior like ReconAfrica, this could be the last major onshore oil play.

That’s why CEO Scott Evans says, “I have never seen a play like this in my career. It’s like something the majors would have.”

The majors may have missed it at first glance, but if ReconAfrica announces positive drilling results, it could make them a prime target for partnering or even a potential acquisition target.

Given how quickly the story is unfolding with major news expected just weeks after these first three wells, this is the most exciting time for investors eyeing the Kavango Basin.




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Author: Patricia Miller

This article does not provide any financial advice and is not a recommendation to deal in any securities or product. Investments may fall in value and an investor may lose some or all of their investment. Past performance is not an indicator of future performance.

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