Fresh information has emerged suggesting that the Okavango Basin oil find is a huge investment scam and the Canadian oil and gas company company behind the exploration, ReconAfrica is a pack of penny-stock peddlers who falsified their findings to inflate their stock prices.
Africa Geographic, The Globe and Mail and the National Geographichave published a damaging report by an independent financial research organisation Viceroy Research, that ReconAfrica’s claims of a huge oil find in Botswana and Namibia is a pump and dump scam. Typically, a pump and dump scam occurs when fraudsters boost the company’s stock price by sharing positive, but fake, information. Scammers buy up the shares cheap before spreading the rumours that drive the stock price higher and higher and encourage other investors to get in on the supposed windfall.
The report states that ReconAfrica is a “tale as old as time”, manipulating investors that will ultimately be burned when the fiction is revealed as such The Viceroy report labels ReconAfrica a “stock-promoted junior explorer, drilling imaginary oil basins in a fragile ecosystem”. The report further states that “once (ReconAfrica’s) promotional veil has been pulled back, we believe the company will revert to trading as a speculative, but highly unimpressive, penny stock”.
The Viceroy report has been shared with Canadian regulators who are expected to launch an investigation into the company’s operations in Botswana and Namibia.
Viceroy’s report prompted a brief dip in ReconAfrica share price and an immediate backlash from the Canadian oil and gas company. In a press statement, a copy of which has been passed to the Sunday Standard, ReconAfrica dismissed Viceroy as a short seller who has shorted ReconAfrica stock, suggesting that Viceroy is peddling false claims about the Okavango oil find being a scam in a bid to make money by pulling down the stock price of the Canadian oil and gas company.
Short selling occurs when an investor borrows a security and sells it on the open market, planning to buy it back later for less money. Short-sellers bet on, and profit from, a drop in a security’s price. This can be contrasted with long investors who want the price to go up.
The Viceroy report highlights among other things:
ReconAfrica has been marketing its exploration allotment as a potential shale (unconventional) play – a type of exploration banned by the Namibian Government. The Botswana Government on the other hand has denied that ReconAfrica has permission to conduct this type of exploration and has stated that the company is only in the initial stages of assessing geological data.
The report further states that the company has used surface geology analysis, geochemical sniffing and aeromagnetic data to indicate the possibility of a basin that might justify real oil and gas exploration – “this severe overreaction is the equivalent of justifying a gold mine at a beach because a metal detector pinged”.
It further emerges from the report that the company is years and tens of millions of dollars away from drilling an exploratory well with any chance of discovering commercial oil or gas. The three stratigraphic wells were drilled to “justify overly optimistic press releases, swindle investors and fulfil their immediate commitments to the government to retain their leases”.
No well data has been released because the two wells drilled so far failed to encounter oil or gas.
The Viceroy report also indicates that various members of ReconAfrica’s management come with chequered histories, ranging from bribery to incompetence and a trail of ecological damage and unrehabilitated wells. The retail interest they have acquired, according to the report, is due to a strategy of duping unsophisticated investors through crooked analysts, stock promoters, YouTubers and “ClickBait masters”. ReconAfrica’s association with Namibian businessman Knowledge Katti created the impression of insider political connections to “do the magic” with government officials.
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