NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES CALGARY, Alberta, July 16, 2024 (GLOBE NEWSWIRE) -- Reconnaissance Energy Africa Ltd. (the "Company" or "ReconAfrica") (TSXV:RECO) (OTCQX:RECAF) (Frankfurt: 0XD) announces it has signed a letter agreement ("Letter Agreement"), for a strategic farm down of Petroleum Exploration Licence 73 ("PEL 73"), onshore Namibia with BW Energy Limited ("BW Energy") (OSE: BWE), for a 20% working interest. In connection with the Letter Agreement, BW Energy has agreed to a strategic equity investment in the Company for US$16 million (approximately C$22 million), pursuant to the brokered equity offering, as defined below. The Company has also entered into an agreement with Research Capital Corporation as the lead underwriter and sole bookrunner, on behalf of a syndicate of underwriters, in connection with an overnight marketed public offering of units of the Company (the "Units") at a price of C$1.25 per Unit for gross proceeds of C$35 million (the "Offering"). Each Unit will be comprised of one common share of the Company (a "Common Share"), and one Common Share purchase warrant of the Company (a "Warrant"). Each Warrant will entitle the holder thereof to purchase one Common Share at an exercise price of C$1.75 at any time up to 24 months from closing of the Offering, subject to an acceleration provision as detailed further below. The net proceeds from the Offering will be used for exploration activities, working capital and general corporate purposes. Key Highlights of Letter Agreement: Working interest sold to BW Energy is 20% BW Energy to participate in two Damara Fold Belt exploration wells and a 3D seismic program, with an option to participate in two Rift Basin exploration wells over 2-year period US$16 million (C$22 million), equity investment supporting the exploration program US$45 million (C$62 million), bonus earned at declaration of commerciality (final investment decision), providing additional capital carry through to first production US$80 million (C$109 million), of production bonuses based on certain cash flow milestones achieved by BW Energy US$141 million (C$192 million), total potential consideration, including all incentives and production bonuses which is paid after achieving positive free cash flow The joint venture structure preserves a 70% working interest in PEL 73 for ReconAfrica, exposing shareholders to significant upside on success Provides alignment with strategic partner to explore both the Damara Fold Belt and Kavango Rift Basin with significant in country expertise on oil and gas monetization markets Brian Reinsborough, President and CEO commented: "We are delighted to welcome BW Energy as our partner in Namibia where we plan to drill a multi-well exploration program and acquire a 3D seismic program in the Rift Basin. Our farm out joint venture process was thorough and comprehensive, which attracted significant interest from high quality companies of all sizes. BW Energy's offer met our guidelines to ensure strategic alignment for a multi-well exploration drilling program while retaining significant upside exposure on success. We continue to execute our strategic priorities set out last year with the Company on track to drill a portfolio of opportunities in the Damara Fold Belt and the Kavango Rift Basin. The first well, Naingopo, is currently drilling, and is supported by BW Energy whose high-quality technical team will add significant value to the execution of our forward exploration plans. This partnership provides ReconAfrica with a strategic partner with a high-quality technical and operational team which compliments ours along with a shared view to expand the oil and gas potential in Namibia. Additionally, we look forward to continuing to work closely with NAMCOR, the Ministry of Mines and Energy in Namibia for the benefit of all parties, including Namibia and its people." Carl K. Arnet, BW Energy CEO commented: "The transaction will enable BW Energy to expand its footprint in a strategically important energy region and further our position as a leader in Namibia's development towards energy independence. The data and insights gained through ReconAfrica's exploration campaign will further our understanding of the geology and petroleum system in Namibia and help de-risk planned exploration and development of our Kudu licence." Strategic Farm Down Transaction ReconAfrica is selling a 20% working interest in PEL 73, onshore northeast Namibia, to BW Energy, in exchange for total potential consideration of US$141 million (C$193 million), including US$16 million (C$22 million), equity investment and an additional US$45 million (C$62 million) in carry payments based on achievement of commerciality (final investment decision). These payments will be paid in two installments, one at FID and the second payment one year after production. In the event of development of discoveries, production milestone payments could total an additional US$80 million (C$109 million). Three separate production payments of US$25 million (C$34 million), are made after BW Energy reaches certain free cash flow milestones. An additional first production payment of US$5 million (C$7 million), is paid sixty days after the start of commercial production. On completion of the transaction, the ownership interests in PEL 73 will be; ReconAfrica 70%, BW Energy 20%, and NAMCOR 10%. ReconAfrica remains the operator of PEL 73. Completion of the transaction is subject to the satisfaction of customary closing conditions, including entering into a definitive farm down agreement and approvals ...