BW Energy Limited (OB:BWE) signed a letter of intent to acquire 20% stake in Petroleum Exploration Licence 73 in the Kavango Basin from Reconnaissance Energy Africa Ltd. approximately $145 million.

BW Energy Limited (OB:BWE) signed a letter of intent to acquire 20% stake in Petroleum Exploration Licence 73 in the Kavango Basin from Reconnaissance Energy Africa Ltd. (TSXV:RECO) approximately $145 million on July 16, 2024. For total potential consideration of $141 million, including US$16 million equity investment and an additional US$45 million in carry payments based on achievement of commerciality. 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. Three separate production payments of US$25 million, are made after BW Energy reaches certain free cash flow milestones. An additional first production payment of US$5 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. This is subject to the satisfaction of customary closing conditions, including entering into a definitive farm down agreement and approvals from the state oil company of Namibia and the Ministry of Mines and Energy in Namibia.