- Investors across the world are asking themselves why Reconnaissance Energy Africa stock (OTCQX:RECAF;TSXV:RECO) has been steadily dropping over the past two years
- RECAF stock has lost more than 92 per cent of its value since its all-time-high of US$9.89 on July 2, 2021, for a variety of factors
- These include potential corruption in the form of government relationships, environmental claims, and unsubstantiated stock promotion
Investors across the world are asking themselves why Reconnaissance Energy Africa stock (OTCQX:RECAF;TSXV:RECO) has been steadily dropping over the past two years.
The Calgary-based oil and gas company, which works with national governments to explore oil and gas potential in Namibia and Botswana, holds petroleum licenses covering 8.5 million contiguous acres, which it estimates to contain 1.7 trillion cubic feet (TCF) of risked prospective gas resources and 436.1 million barrels of unrisked prospective oil resources.
Despite the company’s 19 gas prospects and six oil prospects, encouraging well results as recently as November 2022, a multi-well drill program in the works, no debt as of September 2023, and C$22.5 million in cash as of June 2023, RECAF stock has lost more than 92 per cent of its value since its all-time-high of US$9.89 on July 2, 2021, for a variety of factors.
Why RECAF stock is dropping
Coinciding with RECAF stock’s initial more than 50-per-cent drop in summer 2021, The Globe and Mail reported about increasingly deafening criticism of ReconAfrica’s planned drilling adjacent to the Okavango Delta, which is a UNESCO World Heritage Site and one of the world’s most concentrated wildlife habitats that includes endangered elephants, amid an outcry over the company’s questionable relationships with the Namibian government.
Less than one year later, in October 2022, The Globe and Mail covered allegations of deceptive stock promotion and inadequate disclosures submitted to British Columbia and U.S. securities regulators, as well as continued concerns about potentially illegal government involvement with the company. The story, like its predecessor, coincides with a more than 50-per-cent drop in RECAF stock.
Environmental and local community opposition to ReconAfrica’s foray into the Okavango led it to temporarily suspend operations in June 2023, a move that saw RECAF stock increase by approximately 45 per cent. This pattern was soon reversed with a 21 per cent drop to date after an August 2023 report about the company’s potentially misleading ESG credentials, raising an alarm for investors who took its staunch environmental commitment at face value.
Despite continued resistance from local communities and a growing global spotlight because of anti-drilling support from celebrity activists, such as Leonardo DiCaprio, ReconAfrica’s new CEO is still touting the potential of the company’s Okavango-adjacent holdings as drilling continues in 2024.
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