A Canadian oil company says it will push ahead with exploration drilling and seismic work in Namibia, despite its failure to find commercial amounts of oil in its latest well.
Reconnaissance Energy Africa Ltd. RECO-X, also known as ReconAfrica, is exploring for oil in the Kalahari region of Namibia, not far from the Okavango River, which flows into the Okavango Delta, a world-famous wildlife region that attracts thousands of tourists annually.
Environmentalists have been fighting the project for the past three years, with help from celebrities such as Prince Harry and Leonardo DiCaprio. They are concerned that it could jeopardize elephant migration routes and underground water sources that reach the Okavango River.
ReconAfrica announced on Wednesday that it did not find enough oil for its Makandina 8-2 Well to be commercially viable. The well, which it began drilling in late June, was at a total depth of 2,056 metres by August.
The company’s shares on the TSX Venture Exchange have lost more than 40 per cent of their value since the announcement. By the end of trading on Friday, ReconAfrica’s stock was at just over $2 a share, compared to a peak of about $12 last year.
In a statement, ReconAfrica said the latest well found methane and gas liquids, confirming the presence of a working petroleum system. The well found “valuable geological information” and the analytical work will continue, it said.
The company said it will proceed with another well, with drilling expected to begin in mid-December. It is currently building an access road and drilling pad for that well.
The company has also conducted two phases of seismic operations over the past two years, covering a total of 1,258 kilometres. It is planning to extend the second phase by a further 1,500 kilometres, using seismic acquisition tractors from Calgary-based Polaris National Resources Inc., in a program that will continue at least until April. Seismic tests help oil and gas companies determine where to drill.
ReconAfrica has its legal headquarters in Vancouver and its operational headquarters in Calgary, according to its website and press releases.
Elisabeth Kosters, an independent geologist and former academic and government scientist, said the latest results announced by the company are consistent with her own interpretation of the subsurface in the region, which she had published in an earlier critique of ReconAfrica’s claims.
“I’m puzzled as to why they keep going in the face of such disappointing results,” she told The Globe and Mail on Friday.
Dr. Kosters was one of several people to be interviewed by the RCMP this year as part of an investigation into ReconAfrica’s stock promotion activities and its relations with politically connected people in Namibia.
In a May 2 e-mail to Rob Parker, an activist at the Economic and Social Justice Trust of Namibia, RCMP Corporal Karla Kincade wrote that the force was investigating possible securities fraud and alleged violations of the Corruption of Foreign Public Officials Act. Mr. Parker was also interviewed by the investigators.
The CFPOA prohibits Canadian companies from bribing foreign public officials in exchange for contracts or other benefits.
ReconAfrica has not responded to questions from The Globe about the RCMP investigation.
The media relations office of the RCMP’s National Division, in response to queries from The Globe in July, said the RCMP does not confirm or deny the existence of criminal investigations unless charges are laid.