Canadian oil explorer Recon Africa has signed an agreement with Norwegian-listed BW Energy for a 20 percent working interest in its exploration license.

The exploration license to BW Energy potentially comes at a cost of US$141 million, translating to about N$2.5 billion. 

The two parties signed the agreement for a strategic farmdown of PEL 73. 

This arrangement will enable BW Energy to participate in two Damara Fold Belt exploration wells and a 3D seismic programme, with an option to take part in two Rift Basin exploration wells over a two-year period. 

BW Energy has agreed to a strategic equity investment in the company for US$16 million. 

The joint venture transaction has been structured to provide tiers of financing to cover capital requirements in each of the phases of exploration, development, and production. 

The Chief Executive Officer of ReconAfrica commented that BW Energy's offer met the  company's guidelines of ensuring strategic alignment for a multi-well exploration drilling programme while retaining significant upside exposure to success.

Brian Reinsborough added that the partnership provides ReconAfrica with a strategic partner with a high-quality technical and operational team, which complements its shared view to expand the oil and gas potential in Namibia. 

The CEO of BW Energy , Carl Arnet, said the data and insights gained through ReconAfrica's exploration campaign will further their understanding of the geology and petroleum system in Namibia and help de-risk planned exploration and development of their Kudu license. 

The first well, Naingopo, is currently being drilled with the support of the BW Energy technical team.