ReconAfrica is targeting a final investment decision on its Kavango West discovery in Namibia within about a year if upcoming horizontal testing and appraisal work establish commerciality, potentially putting the project on a path towards development and first production.
President and chief executive Brian Reinsborough said the company believes it could reach FID around this time next year, although the decision will depend on results from the next phase of work at Kavango West 1X.
“We think we could be at FID, you know, this time next year,” Reinsborough said in an interview with Smith Weekly Research.
“FID means we’ve declared commerciality and the partnership’s committing capital to develop the resources, whatever the development plan is.”
The timeline would require ReconAfrica to complete several steps over the coming months, beginning with an open-hole horizontal sidetrack at Kavango West 1X, followed by production testing and another appraisal well.
ReconAfrica expects to begin horizontal operations during the second half of September, using the existing Kavango West 1X well to drill an up-to-1,000-metre lateral through the upper Huttenberg Formation.
The company has already completed vertical production testing at the well, where it flowed hydrocarbons to the surface from the Huttenberg and the deeper Elandshoek Formation.
Appraisal well planned for Q1
The horizontal programme is intended to establish the deliverability of the Huttenberg reservoir and provide better information about the composition of the hydrocarbons.
ReconAfrica plans to kick off the sidetrack from the existing vertical well at about 2,500 metres and build the curve to the targeted reservoir interval at approximately 3,050 metres.
Senior vice-president for exploration Chris Sembritzky said the company intends to drill about 1,000 metres across the structure. However, it expects the first 100 metres of the lateral to provide an early indication of how effectively the reservoir’s natural fractures communicate with the wellbore.
The horizontal section will be completed open-hole, leaving the reservoir exposed directly to the well rather than placing casing and cement across the lateral.
ReconAfrica plans to follow the horizontal programme with another appraisal well in the first quarter of 2027.
Reinsborough said locations for the appraisal well have already been permitted, although some modifications could be required because the company is considering changes to the originally planned drilling programme.
“Everything’s tracking for that well to be sort of a first quarter event after we finish testing the horizontal well,” he said.
The company is also amending its existing permit for the horizontal sidetrack and expects to complete the process before operations begin.
Gas-to-power development considered
ReconAfrica has also started evaluating how a commercial Kavango West discovery could be developed, with gas-to-power currently emerging as its preferred preliminary option if the reservoir proves predominantly gas-bearing.
Reinsborough said the company has conducted preliminary analysis of several development concepts and found that producing electricity from gas within the concession currently offers the strongest value proposition.
An existing electricity transmission line crosses the concession and a substation is located approximately 38 kilometres north of the project, infrastructure the company believes could support a future gas-to-power development.
ReconAfrica is considering Namibia as a potential market for the electricity as well as the possibility of supplying power northwards towards Zambia and its copper mining industry.
“Everything’s preliminary, but it’s pointing towards gas to power in some phase or other,” Reinsborough said.
The eventual development route will also depend on how much liquid hydrocarbon content is established during further testing.
Sembritzky said the liquids observed so far are within the gas stream and should not yet be interpreted as confirmation of an oil accumulation. The horizontal test is expected to provide a cleaner and longer production test from which the company can establish more reliable gas and liquid ratios.
Fluid samples collected during the vertical testing have also been sent to Houston for laboratory analysis, with ReconAfrica expecting to disclose results during September.
FID triggers BW Energy payments
Reaching FID would also trigger a major funding milestone under ReconAfrica’s agreement with project partner BW Energy.
Reinsborough said BW Energy must make US$45 million in payments linked to FID and subsequent production milestones.
The first US$22.5 million would become payable when FID is reached, with the second tranche due after first production. ReconAfrica would also receive a separate US$5 million payment once production begins.
That could put about US$50 million in milestone payments around the transition from appraisal to development and production, although the payments remain dependent on achieving the required milestones.
ReconAfrica and BW Energy are currently funding the upcoming sidetrack according to their respective interests, with Reinsborough saying ReconAfrica is funding 78% and BW Energy 22%.
The company reported having approximately C$25 million in cash and equivalents at the end of the second quarter and said it is funded for the operations currently planned.
Before any FID can be reached, however, the horizontal programme will have to provide the information ReconAfrica needs to assess whether Kavango West can sustain commercial production.
Reinsborough said the two principal objectives are to determine the rate at which the Huttenberg can deliver hydrocarbons and establish its fluid content.
Horizontal operations are expected to start in the second half of September, followed by flow testing, with the next appraisal well targeted for the first quarter of 2027. Those results will underpin ReconAfrica’s assessment of whether Kavango West can advance toward the FID that management believes it can reach within about a year.
