ReconAfrica is raising C$15 million to fund an open-hole horizontal sidetrack and production testing programme at its Kavango West 1X discovery in Namibia, following earlier vertical tests in which hydrocarbons flowed to surface from the Huttenberg and Elandshoek formations.
The Canadian explorer announced on 1 September that it had entered into a bought-deal financing agreement under which Research Capital Corporation, acting as sole bookrunner and lead underwriter for a syndicate, will purchase 20.548 million units at C$0.73 each, raising gross proceeds of C$15 million.
ReconAfrica said it will use the net proceeds to conduct the horizontal sidetrack and production testing programme, targeting the primary reservoir in the Huttenberg formation and/or the secondary reservoir in the Elandshoek formation, as well as for general corporate purposes and working capital.
The fundraising provides additional capital for a programme ReconAfrica had already announced after completing vertical production testing at Kavango West 1X.
In its 17 August operational update, the company said natural gas and potential liquids had flowed to the surface from the upper Huttenberg, while hydrocarbons had previously flowed from the upper Elandshoek. Vertical production testing was subsequently completed, with the Huttenberg prioritised for an open-hole horizontal production test targeting up to 1,000 metres of horizontal section.
ReconAfrica said it did not measure flow rates from the Huttenberg during the vertical test because of equipment limitations. The company said it had addressed the issue for the horizontal test by procuring the necessary equipment and changing the surface operations service provider.
The horizontal programme is intended to better indicate the reservoir’s productive capacity by exposing a substantially longer section of the Huttenberg than the vertical well.
The test will be important in determining whether the hydrocarbons already demonstrated to flow to surface can be produced at rates capable of supporting further appraisal and, ultimately, consideration of commercial development.
A successful production test would, however, not establish commerciality on its own. Further work would be required to determine reservoir extent, recoverable volumes and development economics.
Under the financing, each C$0.73 unit comprises one ReconAfrica common share and half of one common share purchase warrant.
Each full warrant will allow its holder to purchase another ReconAfrica share at C$0.93 for up to 36 months after the offering closes.
The company has also granted the underwriters an over-allotment option allowing them to increase the offering by up to 15% through additional units or their components.
If the option were exercised entirely through additional units, it would represent about 3.08 million additional units and potentially increase gross proceeds by approximately C$2.25 million.
The offering is expected to close on or about 10 September 2026, subject to regulatory approvals, including acceptance by the TSX Venture Exchange.
The latest C$15 million raise follows previous financing by ReconAfrica to fund its exploration and testing programme.
In January, the company closed a C$36.8 million underwritten offering intended to advance multi-zone production testing at Kavango West 1X, accelerate follow-on appraisal drilling and support work at its Ngulu Block in Gabon.
ReconAfrica reported a C$24.2 million cash balance at 30 June 2026, while also saying it had received C$4.97 million from warrant exercises during the first six months of the year and another C$594,480 after the quarter ended.
The new financing comes despite the company entering the second half of the year with more than C$24 million in cash, with ReconAfrica directing the latest proceeds to the horizontal sidetrack and production testing programme, alongside working capital and general corporate purposes.
ReconAfrica operates the Kavango West 1X discovery with BW Energy holding a 20% working interest and NAMCOR a 10% carried working interest.
The next phase will test whether the Huttenberg can deliver sustained, measurable flow through a horizontal section of up to 1,000 metres, shifting the focus from establishing that hydrocarbons can reach the surface to determining the reservoir’s productive capability.
