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Dec. 22, 2020, 6:46 a.m. EST

Could This Be The Top Oil Play For 2021?

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Dec 22, 2020 (Baystreet.ca via COMTEX) -- n an age where there's not much oil left to discover on land and the supermajors have gone out to sea where development takes decades and costs are often prohibitive, there's nothing more exciting than getting a sneak peek at what could to be one of the last giant onshore oil plays.

Africa is the industry's final frontier, and the final, final frontier is a geological system running from Namibia to Botswana.

And while there are a lot of supermajors circulating around this underexplored part of Africa, the last major onshore play is shaping up to be the massive Kavango Basin, where one small junior explorer is shaking up tradition in a supermajor way.

One of the world's most renowned geochemists, Dan Jarvie, the driving exploration force behind the Barnett gas play and former chief geochemist for EOG Resources, revealed Recon Africa's oil potential in an astounding report.

Jarvie sees 120 billion barrels of petroleum generated potential on just 12% of Recon Africa's holdings.

Recon Energy Africa (tsx.v:RECO)(otcmkts:RECAF) owns the entire Kavango basin In Northeastern Namibia and Northwestern Botswana. That's over 8.75 million acres that is as deep as the prolific Texas Permian basin.

With nods of confidence coming in from all sides--geologists, geochemists, and investors--Recon bought more.

Their land position is now almost the size of Switzerland.

This could be the play that transforms this region of Africa forever. That would be a massive feat for a $140M market cap company that's punching above its weight and so far winning.

The Pure Play of the Decade

Jarvie believes Kavango even has the potential to rival the wildly prolific Permian Basin in Texas.

Recon Africa has now acquired all the long-term rights over the entire Kavango basin In Northeastern Namibia and Northwestern Botswana.

That's over 8.75 million acres as deep as the Permian, one of the world's most prolific basins.

And Kavango appears to be analogous to the Main Karoo in South Africa and the Permian Basin in Texas, where Shell will be standing by and paying close attention as Recon Africa tries to prove up Kavango and build it out.

All the while, the numbers just keep climbing ...

First up was reservoir engineering firm Sproule, which earlier assessed oil potential in the Namibian portion of the Kavango Basin in 2018. At the time, Sproule estimated the basin could contain as much as 12 billion barrels of oil (or) 119 trillion cubic feet of natural gas.

And things get even better. In its recent report, Haywood notes that it's initiated coverage and put a short-term $2.50 price on RECO because the company is "set and funded to de-risk a potentially material resource play onshore Namibia and Botswana with 1,348 mmbbls/58.1 Tcf. (update:Haywood have just raised their short term price target to $4.00)

Haywood is recommending "accumulating a position ahead of drilling/evaluation news flow in H1/21 aimed at proving up the presence of a working hydrocarbons system, which if confirmed, should provide abundant opportunities for further exploration and appraisal drilling".

Meanwhile, as mentioned above, Dan Jarvie in a more recent analysis sees potential for 120 billion barrels of petroleum potential on just 12% of Recon Africa's holdings.

And Jarvie thinks his estimates are "conservative".

In a must read interview with Oilprice.com, Jarvie said that even though the estimates of potential oil are conservative, "they are pretty comparable to the Permian in Texas".

Drilling Down to Put Namibia on the Oil Map

Namibia's never produced a drop of oil--ever.

Recon Africa (tsx.v:RECO)(otcmkts:RECAF) is hoping to be the first to change that. And it is now ready to drill its first well.

And Jarvie, who's sitting in the front row ohas a trick up his sleeve that gives Recon an advantage in Kavango: They are using water-based mud to drill, which Jarvie says makes it easier to pinpoint the highly exploitable zones--the pay zones.

According to the geochemist, this is what often makes or breaks exploration. Oil-based mud makes it difficult for geochemists to identify what they are drilling through because that mud is mixed with reused oil residue that could even have come from a different basin.

It's a problem they have in Mexico and in the Permian, largely because oil-based mud makes it a bit easier for the drillers, who are just there to drill. But Jarvie's at the helm here, and the point isn't just to drill, it's to pinpoint the pay zones. He won't risk bypassing them over mud.

And once they hit the pay zone, the development costs are looking just as sweet as the basin itself.

Those are projected per-barrel development costs that would thrive even in a sustained pandemic.

And, as we wait on the first drill results to come in, it's worth remembering that Bloomberg and Reuters have charted out the per-acre value of Kavango, which is now prime real estate that the supermajors are happy to have a junior develop:

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