National Geographic: FINAL ReconAfrica ripped through the Okavango watershed to find oil. Instead, they found trouble

Canadian driller ReconAfrica, facing lawsuits and investigations, has left angry
communities and fractured landscapes in the wildlife-rich Okavango Delta
watershed.

BY JEFFREY BARBEE AND LAUREL NEME

PUBLISHED March 28, 2023--

For the Canadian company hoping for an oil bonanza in the watershed of the wildlife-rich and visually spectacular Okavango Delta, 2022 was another grim year, and 2023 may not be any better. A hearing in Namibia set for April 3 could decide whether ReconAfrica's drilling permit, extended last year until 2025, will be revoked.

In 2022, Reconnaissance Energy Africa (ReconAfrica) drilled another “duster”—an industry term for an unproductive well. So far, all three of its test wells have failed to indicate the presence of commercially extractable oil. The company’s stock price has plummeted, lawsuits are ongoing on two continents, and a cash shortage may force it to cease operations.

ReconAfrica has licenses to explore across 13,200 square miles in Namibia and Botswana overlapping the sprawling Kavango-Zambezi Transfrontier Conservation Area, established by five countries to safeguard the headwaters and watersheds of the region’s great rivers, including the Okavango.

So far, the company has concentrated its search in northeastern Namibia, upstream of the Okavango Delta, a UN-recognized World Heritage site of channels and lagoons. The delta’s watershed—which includes the Okavango River and an underground network of shallow, interlinked aquifers—is vital for the livelihoods and survival of more than a million people in this arid part of southern Africa. The delta provides crucial habitat for the world's largest remaining populations of endangered African elephants, black rhinos, and African wild dogs. It's also home to the world’s largest remaining population of wild cheetahs and dozens of globally threatened birds, such as the slaty egret.

Describing ReconAfrica’s “sustainable approach,” former chairman Jay Park said that the company works with Namibia and Botswana “collaboratively with a full commitment to the land, water, wildlife, and people of these two countries that have invited us, in good faith, to explore possibilities to achieve the energy sovereignty that most other nations enjoy.”

In a series of eight articles since October 2020, National Geographic details ReconAfrica’s public ambitions for what the company’s leaders still claim is a huge oil “play,” its ongoing drilling and seismic explorations, and its numerous alleged circumventions of Namibian regulations and law. The reports show how the company allegedly didn’t adequately consult with local communities about the full drilling plan as required by Namibian law; intimidated local opponents; violated its promise to line its drilling waste pits to prevent groundwater pollution; failed to secure legally required water and land permits; drilled inside Kapinga Kamwalye Conservancy without legal rights, and bulldozed roads illegally through protected areas.

Now, high-resolution satellite images provided by SkyTruth reveal that by December 2022, ReconAfrica had again carried out illegal road construction inside Kapinga Kamwalye Conservancy. Namibian conservancies are legally protected areas managed and used by local communities. This time, the company illegally widened an existing road inside the conservancy and extended it across the Omatako River, allowing 18 wheelers to service a fourth well, proposed to be drilled a few miles outside Kapinga Kamwalye. This violates the company’s legally binding management plan, which says roads must avoid sensitive areas, including the “Omatako and its various tributaries.” The Omatako seasonally feeds the Okavango Delta with water.

According to Namibian law, anyone who wants to build a road inside a conservancy must get written approval from its management committee, but ReconAfrica’s roadwork was done without permission. “We were not informed,” says Thomas Muronga, Kapinga Kamwalye’s chairperson from October 2019 to February 2023. Permission was never given, and “it worries us deeply.”

ReconAfrica’s new road fractures habitat for the conservancy’s imperiled elephants and African wild dogs. Muronga notes that elephants “are no longer using the route they used to follow.” The animals are now migrating into unprepared villages, eating as they go and “destroying their crop fields.” The road also could facilitate deforestation and incursions by commercial poachers.

ReconAfrica did not respond to any questions from National Geographic.

On November 24, 2022, ReconAfrica announced in the Namibian government’s New Era newspaper that it aims to drill 12 more wells in Namibia, and on February 6, 2023, the company released an environmental impact assessment, allowing for public comment until February 27. Now, the Namibian government is deciding whether to issue a new permit to drill these additional wells.

This ambitious plan doesn’t appear to square with information ReconAfrica made public late last year. On November 24, the day its independent auditor, Deloitte LLP, resigned, ReconAfrica filed unaudited financial statements for 2022, prepared by management. The managers noted then, and again in their latest March 1 filing, “the existence of material uncertainties that may cast significant doubt” on whether the company can continue as a “going concern,” signaling that ReconAfrica is low on operating capital and may need to raise new financing to continue its exploration.

A few weeks later, in a December online call with investors, Grayson Andersen, ReconAfrica’s head of capital markets, said that although the company hadn’t yet found “a commercial accumulation of oil and gas,” it still had “a working petroleum system.” Andersen said there was “enough cash to fund our exploration” through most of 2023. “It can’t be stressed enough that we own 8.5 million acres, the entirety of the Kavango Basin,” Andersen said, referring to the geological formation–larger than Belgium– that cradles the Okavango Delta’s vulnerable watershed. Progress on the fourth well would move ahead, he continued, and will show that ReconAfrica is gifted with “the largest undiscovered on-shore hydrocarbon basin in the world.”

 

Falling share prices, lawsuits, investigations

For years, stock promoters, often with a financial relationship to the company, touted the basin’s massive potential, and ReconAfrica compared its license area in Namibia and Botswana to “super basins” opened up in Texas by fracking. In 2019, the company told investors that it planned “hundreds of wells” using modern fracking “stimulations.” Hydraulic fracturing is the controversial practice of injecting millions of gallons of water, often treated with potentially dangerous chemicals, deep into the ground to release more oil and gas.

ReconAfrica has since said it won’t use fracking but instead is “focused on conventional oil and gas reservoirs” and that “any decision on how to develop the potential resource is up to the relevant government.” Namibia and Botswana have said they don’t allow fracking, but neither country forbids it by law.

ReconAfrica’s grandiose claims corresponded with sharp increases in the company’s stock price—from 19 cents a share in September 2019 to a high of nearly $10 in late June 2021. But the boom didn’t last.

By October 24, 2021, the share price had dropped to less than four dollars. Shortly after that, in November, disgruntled investors filed a class action lawsuit in New York, alleging that ReconAfrica had concealed material information from the public about the data on its first two oil and gas test wells, and about its fracking plans in Namibia. They also argued that management sold shares while the stock price was high, knowing from test data that finding oil seemed less likely.

On November 29, 2022, ReconAfrica filed a motion to dismiss the case, saying it had not made false or misleading statements and that the “high risk nature of oil and gas exploration” and “challenges of conducting such efforts in an area that does not have a history of oil and gas exploration” explained the falling stock prices. The case is ongoing.

By December 8, 2022, after the company announced that its third test well hadn’t found any sign of commercially recoverable oil, the share price had lost nearly 90 percent of its highest value, falling to $1.20.

ReconAfrica also faces a lawsuit in Namibia, filed in April 2021 by a farmer, Andreas Sinonge, who asserts that the company is in “unlawful possession of my land,” which it cleared for its exploration activities. On
February 28, 2023, the parties suggested in court that they may settle the dispute, but for now the case is ongoing.

While these lawsuits make their way through the courts, as of October 2022, the Royal Canadian Mounted Police have been investigating ReconAfrica for securities fraud, according to a Toronto Globe and Mail report. In Europe, German financial regulator BaFin said it’s analyzing the company and its promotional allies for possible trading irregularities that could violate German law. And after a National Geographic report in 2021 uncovered a whistleblower complaint about possible stock manipulation by the company, two U.S. lawmakers asked the Securities and Exchange Commission and Department of Justice to investigate ReconAfrica.

A Crucial Hearing

At the request of the Namibian civil society consortium Saving Okavango’s Unique Life, the country’s Parliamentary Standing Committee on Natural Resources investigated ReconAfrica’s drilling activities in 2021 and 2022. The Namibian newspapers The Villager and The Namibian reported the committee’s finding that the company had no land-use permits and no permits for using or disposing of potentially polluted water, as required by law.

Yet on June 15, 2022, Namibia’s environmental commissioner, Timoteus Mufeti, extended ReconAfrica’s permission to drill until June 2025. The Economic and Social Justice Trust—a Namibian civil society group—and local communities objected, making separate formal appeals to environment minister Pohamba Shifeta to convene a review panel, as required by law, and explain that decision. The appeal hearing is set for April 3.

Neither Timoteus Mufeti nor Pohamba Shifeta responded to questions from National Geographic.

In an open letter published in The Namibian on December 16, 2022, the Women’s Leadership Centre—a civil society group—and 121 other local groups and organizations urged a full and transparent public inquiry into ReconAfrica. They called for a moratorium on drilling, saying it “could lead to depletion and contamination of scarce local water sources and other forms of pollution, health hazards, displacement and disruption of local livelihoods and food security.”

“Everything has changed” since ReconAfrica arrived, Muronga says. “Will Recon stop here?” he asks. “The company shows us that they don’t respect our place, and we won’t be silenced."

ReconAfrica is now preparing the way to drill for oil in neighboring Botswana, pitching itself as a provider of jobs for the San, believed to be Africa’s oldest Indigenous people.

The backlash is growing against global corporations seen as conducting business at the expense of local people and the environment. Such companies “are filling their bank accounts while emptying our world of its natural gifts,” said UN Secretary-General António Guterres on December 6, 2022, at the Convention on Biological Diversity summit in Montréal. Governments must make plans, Guterres said, “that recognize and protect the rights of Indigenous people and local communities, who have always been the most effective guardians of biodiversity.”

Wildlife Watch is an investigative reporting project between National Geographic Society and National Geographic Partners focusing on wildlife crime and exploitation. Read more Wildlife Watch stories here, and learn more about National Geographic Society’s nonprofit mission at natgeo.com/impact. Send tips, feedback, and story ideas to NGP.WildlifeWatch@natgeo.com.

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