TIDMECO
RNS Number : 5672F
Eco (Atlantic) Oil and Gas Ltd.
11 July 2023
11 July 2023
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its
subsidiaries, the "Group")
Sale of 6.25% WI in Block 3B/4B to Africa Oil Corp. for up to
$10.5m
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX -- V: EOG) ,
the oil and gas exploration company focused on the offshore
Atlantic Margins, is pleased to announce that it has signed a
legally binding Letter of Intent (the "Agreement") pursuant to
which its wholly owned subsidiary, Azinam Limited ("Azinam"), will
farm out 6.25% Participating Interest in Block 3B/4B, offshore
South to Africa Oil SA Corp , a wholly owned subsidiary of Africa
Oil Corp. ("Africa Oil") (the "Acquisition"). Pursuant to the terms
of the LOI, the completion of the Acquisition is subject to the
satisfaction of customary conditions precedent including, but not
limited to, the receipt of requisite regulatory approvals from the
government of South Africa and the TSX Venture Exchange (the
"TSXV").
The consideration for the Acquisition is up to US$10.5m in cash,
payable conditional on certain milestones as set out below:
-- US$2.5m within 30 days of signing of the LOI;
-- US$2.5m upon government approval for the transfer of the
6.25% interest in Block 3B/4B to Africa Oil;
-- US$4m upon the completion of targeted farm out to a third party; and
-- US$1.5m upon spud of the first exploration well in Block 3B/4B
On closing of the Acquisition, which is subject, amongst other
things, to Section 11 approval for the transfer from the government
of South Africa, TSXV approval and customary pre-emption
provisions, the Block 3B/4B interests of the JV partners in Block
3B/4B will be as follows:
-- Africa Oil SA Corp , a wholly owned subsidiary of Africa Oil
Corp. and the Operator of the Block, holding a 26.25% Participating
Interest;
-- Azinam Limited, a wholly owned subsidiary of Eco Atlantic,
holding a Participating Interest of 20%; and
-- Ricocure (Proprietary) Limited , holding the remaining 53.75% Participating Interest.
The JV partners continue to progress the collaborative farm-out
process, as previously announced, for up to a 55% gross working
interest in the Block, with various potential parties.
As announced on 21 March 2023, the application process for a
permit to drill one well and one contingent well (and potentially
up to five wells) within an area of interest in the north of Block
3B/4B remains underway.
Completion of previously announced acquisition of additional
interest in Block 3B/4B, South Africa
Further to the Company's announcement of 27 June 2022, the
Company can confirm that it will issue 1,200,000 new common shares
of no par value in the Company ("Common Shares") to Lunn Family
Trust in place of the US$500,000 cash consideration due in respect
of the acquisition of the 6.25% interest in Block3B/4B from Lunn
Family Trust ("Consideration Shares"). The Consideration Shares
represent the full and final component of the completion
consideration in respect of the acquisition announced on 27 June
2022 and there are no additional shares or cash due to the
seller.
Gil Holzman, Co-Founder and Chief Executive Officer of Eco
Atlantic, commented:
"We are very pleased to agree this transfer of a portion of our
WI on the Block to our strategic alliance partner Africa Oil. The
restructure of the WI will result in Africa Oil holding 26.25% and
Eco 20% and will strengthen the JV position amid ongoing
negotiations with third parties to farm into the Block and execute
a drilling campaign. Since Africa Oil is already established as JV
partner and Operator on the Block, receipt of the requisite
regulatory approval for the transfer is expected to be straight
forward.
"We look forward to continuing our work with the South African
government and regulatory bodies in terms of our Environmental
Authorisation process and in the active exploration of Block 3B/4B.
The initial cash to be received from Africa Oil will enable Eco
Atlantic to fund its growth opportunities elsewhere and with no
shareholders dilution, while maintaining a strategic and
considerable 20% working interest in this highly prospective Block
(pre farm out to a third party)."
Related Party Transaction
AIM Rules Disclosure
Africa Oil is a substantial shareholder in Eco, holding more
than 10% of the Company's issued share capital, and Keith Hill, a
director of Africa Oil, is also a non-executive director of the
Company. Africa Oil is therefore a related party as defined by the
AIM Rules for Companies. Accordingly, the Acquisition by Africa Oil
is a related party transaction pursuant to Rule 13 of the AIM Rules
for Companies. The independent Directors for the purposes of the
Acquisition, being all of the Directors other than Keith Hill,
having consulted with the Company's nominated adviser, Strand
Hanson Limited, consider that the terms of the Acquisition to be
fair and reasonable insofar as Eco's shareholders are
concerned.
TSXV Disclosure
Due to the inclusion of Africa Oil Corp. (and by virtue of a
mutual director Keith Hill) the Proposed Transaction will
constitute a Non-Arm's Length Transaction (as such term is defined
in the policies of the TSXV) and a "related party transaction" in
accordance with Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions ("MI 61-101").
However, the Proposed Transaction will be exempt from the formal
valuation and the minority shareholder approval requirements of MI
61-101 because at the time the transaction was agreed to, neither
the fair market value of the subject matter of, nor the fair market
value of the consideration for, the transaction, insofar as it
involves interested parties, exceeded 25% of Eco's market
capitalization.
Admission and Total Voting Rights
Application has been made for admission of the 1,200,000
Consideration Shares, which will rank pari passu with existing
Common Shares, to trading on AIM ("Admission"). It is expected that
Admission will become effective, and trading in the Consideration
Shares will commence, on or around 8:00 a.m. on 14 July 2023.
On Admission, the enlarged issued share capital of the Company
will be 366,882,014 Common Shares. The above figure may be used by
shareholders as the denominator for the calculations by which they
will determine if they are required to notify their interest in, or
a change to their interest in, the share capital of the
Company.
**ENDS**
For more information, please visit www.ecooilandgas.com or
contact the following :
Eco Atlantic Oil and Gas c/o Celicourt +44 (0) 20
8434 2754
Gil Holzman, CEO
Colin Kinley, COO
Alice Carroll, Head of Corporate Sustainability +44(0)781 729 5070
Strand Hanson (Financial & Nominated Adviser) +44 (0) 20 7409 3494
James Harris
James Bellman
Berenberg (Broker) +44 (0) 20 3207 7800
Matthew Armitt
Detlir Elezi
Echelon Capital (Financial Adviser N.
America Markets)
Ryan Mooney +1 (403) 606 4852
Simon Akit +1 (416) 8497776
Celicourt (PR) +44 (0) 20 7770 6424
Mark Antelme
Jimmy Lea
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of
United Kingdom domestic law by virtue of the European Union
(Withdrawal) Act 2018 (as amended).
About Eco Atlantic:
Eco Atlantic is a TSX-V and AIM-quoted Atlantic Margin-focused
oil & gas exploration company with offshore license interests
in Guyana, Namibia, and South Africa. Eco aims to deliver material
value for its stakeholders through its role in the energy
transition to explore for low carbon intensity oil and gas in
stable emerging markets close to infrastructure.
Offshore Guyana in the proven Guyana-Suriname Basin, the Company
holds a 15% Working Interest in the 1,800 km(2) Orinduik Block
Operated by Tullow Oil. In Namibia, the Company holds Operatorship
and an 85% Working Interest in four offshore Petroleum Licences:
PELs: 97, 98, 99, and 100, representing a combined area of 28,593
km(2) in the Walvis Basin.
Offshore South Africa, Eco is Operator and holds a 50% working
interest in Block 2B and a 26.25% Working Interest in Block 3B/4B
operated by Africa Oil Corp., totalling some 20,643km (2) .
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END
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