Reconnaissance Energy Africa Ltd (RECAF)

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RECAF Frequently Asked Questions just updated

FAQ: Recent Technical Update from ReconAfrica

ReconAfrica issued a Press Release and subsequent posting of mudlogging data to our website on August 5, 2021. We are grateful there has been considerable interest in these results and are now providing answers to the most frequently asked questions.

There was a lot of technical data included in last week’s update. What’s the biggest takeaway?

With the data from the 6-2 well accepted by the Namibian government, ReconAfrica now can release data about the well in accordance with the terms of our Petroleum Agreement. The key takeaway is that the 6-2 well showed evidence of hydrocarbons over more than 250 meters (820 feet) in three potential reservoirs. Further, the data shows these hydrocarbons have migrated and were not generated where they were found (in situ), which provides convincing evidence of a conventional petroleum system. The data was gathered and assessed by a third-party expert, Horizon Well Logging, which has vast experience in conventional oil and gas exploration. This data fully supports the movement to our next phase in the evaluation of the Kavango Sedimentary Basin – the acquisition of 2D seismic data, which began in July.

What is the intent of the stratigraphic test wells; and has this been achieved?

The goal has always been to prove there is an active conventional petroleum system in the Kavango Sedimentary Basin. The released data analysis confirms this. In conventional oil and gas systems, petroleum migrates along faults, fractures, or porous rock from a source to a reservoir. These intervals in the 6-2 well can represent either residual oil, i.e. oil left behind in migration through a reservoir, or reservoired oil, that could be potentially produced. While we are not yet able to delineate which of these scenarios we have discovered, we are certain that we have revealed a conventional petroleum system. In an unconventional petroleum system, the source rock is also the reservoir rock, without any migration, which would call for unconventional means of extraction.

What was your rationale for not drilling to total vertical depth of 12,500 feet on the 6-2 well?

The wells were permitted to the conservative maximum depth that the drill rig could achieve. As the first wells in this basin, and with the nearest control well more than 375 km away, we wanted a permit to drill as deep as we could safely. Our well plan called for controlled drilling, at a set rate, with an overweight drilling mud, that would keep the hole stable, while also suppressing gas shows. After drilling through the major intervals of hydrocarbon shows on the 6-2 well, the frequency of potential faults began to increase; to be safe, we opted to suspend drilling at a shallower depth. The well is cemented in a state that will enable us to re-enter for potential production testing or resume drilling if needed.

What is a mud log and what information does a mud log report disclose?
‘Mud Log’ refers to the sample logging of the rocks being drilled and a continuous measuring of the gas. As the well is drilled, chips of the rocks in the well (samples) are transported to the surface by the drilling fluid system. A portable laboratory is onsite and is staffed by geologists who specialize in wellsite work; the company we used, Horizon Well Logging, has been in this business for 25 years, with extensive experience in Africa. As part of the logging process, samples are described every three meters; any samples that have evidence of oil are described, and then the oil itself is extracted and rigorously evaluated for quality on spot dishes. ‘Spot dishes’ are used for this purpose: they are laboratory-quality porcelain plates. Every test is performed in a fresh, clean spot dish. They are rigorously cleaned between uses to remove all stains and fluorescence. Removal of any remnant fluorescence is easily confirmed in the fluoroscope before each use. Solvent is regularly checked to verify lack of contamination. This process and results are documented by Horizon and the description is available. There were 52 intervals with hydrocarbon shows in this first well.

The gas is sampled directly from the flowline and sent to a chromatograph, which measures the amount of gas and some basic properties. The chromatography data shows the intervals where gas was detected, and basic trends in the composition of carbon compounds in these intervals. The trends come across quite clearly in relative strength, although absolute units are on the low side. The low absolute readings can be due to: 1) the ‘heavy’ nature of the drilling fluid (mud) used in the well to suppress the gas entering the wellbore (this does not affect the oil samples which are in the rock samples); 2) the oil itself being low in gas by its nature; and 3) the potential that this is residual oil, i.e. oil left behind in migration through a reservoir in route. Residual oil is a telltale sign of a conventional oil and gas system, and one will find this as well as trapped hydrocarbons around any conventional oil province.

What reservoir rock qualities do you expect from the Core Labs data, what do you hope to learn from them, and when do you envision receiving them?

The Core Labs data will provide specific composition and property analysis of the potential reservoir rocks in the well, both sandstone and carbonate. These are termed static rock properties. This data is critical to calibrate the wireline logs for analysis, in particular as this is the first modern well in onshore Namibia. The Core Labs data won’t affect our conclusions regarding the presence of a conventional hydrocarbon system; the well sample show data provides this, and the core data is focused on rock properties. For the 6-2 well, there were considerable logistical challenges and delays in transporting the cores from the wellsite in Namibia to Houston, Texas due to COVID-19 restrictions. We are now conducting extensive analysis, which is estimated to be completed in early September.

According to the Jarvie Report, there is clear evidence of migrated oil, not source rock? Why is this important?

We have looked at the Kavango Sedimentary Basin as a conventional oil and gas province, which is how all oil and gas basins begin their productive life. We drilled the 6-2 well as a conventional stratigraphic test well, on a structural high, expecting hydrocarbons that have migrated to this location from source rocks, either deeper or laterally some distance away. The Jarvie Report provides this conclusion and confirms our premise that the basin has a conventional hydrocarbon system.

What is the purpose of the 2D seismic program, and how will the results be used in combination with the vertical seismic profiling tools that are planned to be run in both wells?

The two stratigraphic test wells provide very detailed information at the specific locations of those wells. The seismic data provides a less detailed but broader image of the subsurface across a much larger area. The Company’s initial program comprises 450 kms of seismic lines. Results from the 2D seismic are designed to delineate traps which serve as potential hydrocarbon bearing reservoirs. More specifically, a vertical seismic profile is run in each well to provide seismic data at the wells, and bridge between these two scales of data. This will allow the seismic data to be interpreted and calibrated to the well data and provide a meaningful interpretation of the actual structure locally and across the basin, and potential trap (field) locations and extents.

Will there be more data and analysis coming from ReconAfrica?

Yes. In addition to future data results announced via news releases to the media and the public, there will be two presentations at industry forums by our technical staff in September 2021, a virtual presentation at the Petroleum Society of Great Britain/Houston Geologic Society Africa Conference September 14–15, and at the Frontier Africa E&P Summit in London September 22–23 (links will be posted when available). We look forward to presenting the exciting findings to these industry forums and answer any other questions shareholders and stakeholders may have.

https://reconafrica.com/operations/frequently-asked-questions/