Africa-Press – Namibia. ENERGY experts have questioned the decision by the National Petroleum Corporation of Namibia (Namcor) to sell half its stake in an oil-drilling licence in the Kavango East region, thereby pushing the Canadian company’s stake up to 95%.
The deal sees ReconAfrica acquiring 5% of Namcor’s current 10% for N$30 million in cash. The rest of the amount will come from consideration shares to the value of N$379 million.
ReconAfrica CEO Scot Evans said earlier this month that the closing of the transaction is expected to occur on or about 30 March and is subject to all necessary regulatory approvals, including the acceptance of the Canadian’s TSX venture exchange to the issuance of the consideration shares.
The original deal, before drilling activities began, had seen Namcor holding a 10% stake in petroleum exploration licence 73 (PEL 73) in the Kavango basin, while ReconAfrica held a 90% working interest in a 25 500-square kilometre petroleum licence.
“Namcor wants to maximise the amount they can get from the project via cash and the inflated stock price before ReconAfrica collapses back down to a penny stock once again,” said geologist Matt Totten Jr.
Totten Jr has tracked down ReconAfrica’s dealings over the years. He told The Namibian that Namcor’s decision to sell its stake is a vote of no confidence in the ReconAfrica project after evaluating geographical tests.
The decision, which was announced on 6 February and was expected to be signed on 17 February will see Namcor’s interest in the Okavango basin licence slashed from 10% to 5%, while ReconAfrica’s interest will increase to 95%.
Namcor spokesperson Utaara Hoveka told The Namibian that the decision to liquidate 5% of the company’s 10% interest was a business decision that is favourable to Namcor in many respects.
“I wish to draw your attention to the fact that Namcor, as a result of the deal, will have direct equity in Recon, giving it the opportunity to benefit from all of Recon’s operations both here in Namibia and internationally,” he said.
Hoveka also refuted allegations that Namcor does not believe in future prospects of this project any longer.
He said they remain firm in the belief in the Kavango project and that their conviction in the project has never waned.
“Since Namcor now has shares in Recon, it will automatically benefit from any discoveries made by the company in Namibia and abroad. In the event of a discovery, the share price will in all likelihood take an upward trend, which will strengthen our equity in Recon,” he said.
CASHING IN
Environmental and energy expert Andy Gheorghiu told The Namibian last week that he suspects that Namcor wanted to cash in on the deal.
“My view is that Namcor definitely wants to cash (a bit) in before chances to cash in are gone but, at the same time, they’re keeping 5% because some still believe in Recon (or at least the hype around the licensed area),” he said.
Gheorghiu added that the most obvious reason is that Namcor finally wants to cash in too because so far, only ReconAfrica has benefited from the entire agreement.
Documents obtained from Namcor indicate that the Namibian oil and gas licence obtained by ReconAfrica has increased the Canadian company’s market value from N$141 million in 2015 to N$25 billion in 2021.
SPECULATION CRITICISED
Parliamentary standing committee on natural resources chairperson Tjekero Tweya last year blasted Namcor over the ReconAfrica partnership.
“With your 10%, they benefit but with their 90% you don’t benefit until the production phase. This is a hypothetical question that you don’t need to answer, but what if by the last well, ReconAfrica doesn’t find oil?” he asked.
Namcor is speculating that in future it will benefit at least N$1,2 billion as a result of exploration and production activities by ReconAfrica.
“Why are you even speculating when ReconAfrica is busy benefiting from their 90% while you wait for 10%? Please simplify it. From six cents to 11 dollars there is no oil but the value (of Recon) has gone up. The time of just presenting accounting figures to politicians and hoping that they accept without proper explanation is over,” Tweya said.
MUTUAL BENEFIT
Namcor managing director Immanuel Mulunga is quoted in a ReconAfrica press release dated 6 February saying they are delighted to enter into this strategic and mutually beneficial transaction with ReconAfrica.
The transaction, Mulunga says, adds strength to Namcor’s balance sheet, as well as provides the parastatal with exposure to the entire Kavango sedimentary basin in Namibia and Botswana.
“We have the utmost confidence in ReconAfrica, as the company has proven to be a responsible operator in our country with an excellent track record in the performance of its work obligation,” he said.
When contacted for comment yesterday regarding the signing of the agreement, Namcor said it will make a statement on Friday.
For More News And Analysis About Namibia Follow Africa-Press
