TIDMECO
RNS Number : 9926G
Eco (Atlantic) Oil and Gas Ltd.
30 July 2021
30 July 2021
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its
subsidiaries, the "Group")
Audited Results for the year ended 31 March 2021
and Operational and Business Update
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX -- V: EOG) ,
the oil and gas exploration company with licences in the proven oil
province of Guyana and the highly prospective basins of Namibia, is
pleased to announce its results for the year ended 31 March 2021,
alongside a corporate and operational update.
The Company also notes that an updated corporate presentation is
now available on its website at www.ecooilandgas.com .
Results Highlights:
Financials:
-- As at 31 March 2021, the Company had working capital of US$13 million and no debt.
-- I n June 2021, the Company raised an additional US$4.9m in the form of a private placement.
-- As at 31 March 2021, the Company had total assets of US$17.0
million, total liabilities of $1 million and total equity of
US$16.0 million.
-- The Company has materially decreased its total
non-exploration expenses for the year ended 31 March 2021,
including general and administration expenses and compensation
costs by 33%.
Operations;
Eco Atlantic Oil & Gas
-- Orinduik Block offshore Guyana - all seismic data
reprocessing has now been completed and multiple light sweet oil
drilling prospects are currently being reviewed by the Company and
its licence partners (the "JV Partners"), with high-graded
candidates being considered for the next drilling programme which
Eco intends to drill in 2022. The intention is to provide further
definition to the upper and lower Cretaceous interpretation and
target selection for drilling. Target selection is expected in Q3
2021.
-- The Company, together with its strategic partner and
substantial shareholder Africa Oil Corp., continues to evaluate
additional asset opportunities in both West Africa and South
America with a focus on near-term high-impact exploration
opportunities.
-- On 30 November 2020, the Company successfully negotiated the
reissuance of its four licences in Namibia's Walvis Basin for 10
years, which received final Government confirmation on 5 February
2021.
-- On June 28, 2021, the Company announced that it had closed a
transaction with JHI Associates Inc. ("JHI"), a private company and
holder of 17.5% WI in the Canje block offshore Guyana, to acquire
up to a 10% interest in JHI on a fully diluted basis (the "JHI
Transaction") and to appoint Keith Hill, a non-executive Director
of the Company, to the board of directors of JHI.
-- The JHI Transaction increases Eco Atlantic's presence in the
Guyana-Suriname basin, providing exposure to near-term drilling
programme including at least three wells, with the first two firm
wells on the Canje Block drilling in 2021 and at least one on the
Orinduik Block in 2022, subject to partner approval .
-- On July 5, 2021, the Company announced that it received a
detailed update from JHI regarding the Jabillo-1 well in the Canje
Block, offshore Guyana, which reached its planned target depth and
was evaluated, but did not show evidence of commercial
hydrocarbons. JHI also updated that spudding of the committed
Sapote 1 well on the Canje block is scheduled for mid-August 2021,
with a drilling time of up to 60 days.
Solear Ltd. (formerly Eco Atlantic Renewables post period
end)
-- On January 26, 2021, the Company announced the formation of a
new joint venture company, to source, acquire and develop an
exclusive pipeline of potential high yield solar projects. At the
time of launch, the new entity was to be called Eco Atlantic
Renewables, however, in order to further reflect the standalone
nature of the business the company has been re-named Solear Ltd.
("Solear").
-- Eco agreed to provide a secured loan of up to US$6 million to
Solear (the "Loan"). The Loan, which carries a 2% annual interest,
is expected to be repayable from the proceeds of either a public or
private financing, through operating cash flow, and/or a project
monetization event.
-- In January 2021, Solear completed its first acquisition of a
fully contracted, permitted, and build ready 11MW solar project in
Greece, known as the Kozani Project.
-- Solear's near-term objective is to develop its pipeline of
solar assets with competitive rates of return through acquisition,
development and construction of solar assets, led by an experienced
renewable energy team.
Outlook:
Guyana
-- Guyana continues to be one of the most prolific exploration
regions in the world, with over nine billion barrels of oil
discovered in the last five years. Eco and its JV Partners have
already delivered two substantial oil discoveries on the Orinduik
Block and the Block continues to offer significant upside
potential. With the recent increase in oil prices, the JV partners
will revisit the Jethro discovery commercialisation potential.
-- As previously reported, Eco is fully funded for further
drilling on the Orinduik Block and, with its JV Partners, is
assessing all opportunities available to drill at least one
exploration well into the light oil cretaceous stacked targets as
soon as practical. The Company is fully aligned with its JV
partners on careful target selection, based on the reprocessed 3D
seismic data on the block and nearby oil discoveries, for the next
drilling campaign and Eco expects to be able to update the market
on further drilling plans in Q3 2021.
-- The JHI Transaction provides the Company with immediate
exposure to a current active drilling program in the Canje Block
offshore Guyana. JHI has announced that the Block Operator
ExxonMobil confirmed its plan to spud a second exploration well,
Sapote 1, by mid-August 2021.
The Orinduik Block JV partners are Eco Atlantic (15% working
interest ("WI")), Tullow Guyana B.V. ("Tullow") (Operator, 60% WI)
and TOQAP Guyana B.V. ("TOQAP") (25% WI) a company jointly owned by
TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum (40%)
.
Namibia
-- The Company's successful negotiation of the reissuance of its
four licences in the Walvis Basin, Offshore Namibia, lead to the
expansion of its acreage position. As announced on 30 November
2020, the Company's updated licences in Namibia cover approximately
28,593 km(2) , with over 2.362 BBOE of prospective P50
resources.
-- Eco has a strategically significant acreage position
in-country and is progressing its various work programmes across
its four blocks offshore Namibia. The Company has witnessed
considerable interest from multiple international oil companies in
Namibia.
-- The Company continues to monitor upcoming drilling activity
in the region, which could potentially see up to four exploration
wells drilled on behalf of ExxonMobil, Total, Maurel & Prom,
and Shell in the next 12 months.
Corporate:
-- Throughout the ongoing COVID-19 pandemic, Eco has prioritised
the welfare of its staff and partners.
-- The Company continues to keep a strict control over costs
throughout the business, which continues to generate material
savings as reflected in the 54% decrease in G&A for the year
and has ensured that Eco remains well capitalised with a strong
balance sheet.
Gil Holzman, President and Chief Executive Officer of Eco
Atlantic, commented:
"The past year has seen Eco make significant strides across a
number of different aspects of its business. In terms of oil and
gas exploration, we have made material progress in Namibia, through
the successful negotiation and reissuance of our four licences in
the Walvis Basin, and in Guyana we have completed a landmark
transaction with JHI, ensuring near-term exposure to low risk, high
impact drilling activity. We see the JHI Transaction as an
important step for us, as we look to broaden our presence in
Guyana, with the potential for increased future collaboration with
the region's existing players. We also remain very upbeat about
recommencing drilling activity on the Orinduik Block and we look
forward to updating our investors on the timing of this during Q3
2021. We were also very encouraged to learn about the Whiptail
discovery made by ExxonMobil and partners on the Stabroek block
yesterday adding to the estimated discovered recoverable resource
of 9 billion barrels of oil equivalent and further highlighting the
basin's prospectivity.
"We remain strongly committed to achieving exploration success
at our high value assets in Namibia and Guyana, and we are very
pleased to be able to demonstrate strong progress with regard to
both over the past year.
"Our strategic investment into Solear Ltd. has added another
attractive asset to the Company's portfolio and shows our
determination to deliver value for shareholders through prudent,
selective use of our cash reserves. We are excited to update the
market in the coming months on Solear's progress, as we believe our
investment into the business presents compelling, near-term
opportunities and the potential to achieve ambitious long term
strategic growth targets in an evolving energy market.
"Despite the ongoing macroeconomic backdrop, we remain very
positive about what the future holds for Eco Atlantic. We have a
resilient business model, a strong cash position and a number of
significant near-term catalysts which we believe have the potential
to create considerable value for shareholders. As ever, I look
forward to keeping all of our stakeholders updated on our progress
over the coming months."
The Company's audited financial results for the year ended 31
March 2021, together with Management's Discussion and Analysis and
Annual Information Form as at 31 March 2021, are available to
download on the Company's website at www.ecooilandgas.com and on
SEDAR at www.sedar.com .
The following are the Company's Balance Sheet, Income
Statements, Cash Flow Statement and selected notes from the annual
Financial Statements. All amounts are in US Dollars, unless
otherwise stated.
Balance Sheet
March 31, March 31, April 1,
---------------------------
2021 2020 2019
--------------------------- ------------------------- ----------------------------- -----------------------------
Assets
Current assets
Cash and cash
equivalents 11,807,309 18,667,016 18,750,453
Short-term
investments 1,552,640 52,737 56,098
Government
receivable 22,697 19,276 24,821
Amounts owing by
license
partners,
net 193,655 45,596 -
Accounts
receivable and
prepaid
expenses 46,480 46,262 60,678
--------------------------- ------------------------- ----------------------------- -----------------------------
13,622,781 18,830,887 18,892,050
Renewable energy 1,411,186 - -
licenses
Right of use assets 332,495 - -
Security deposit 490,455 - -
Petroleum and natural
gas
licenses 1,072,260 1,117,171 1,117,171
--------------------------- ------------------------- ----------------------------- -----------------------------
Total Assets 16,929,177 19,948,058 20,009,221
--------------------------- ------------------------- ----------------------------- -----------------------------
Liabilities
Current liabilities
Accounts payable and
accrued
liabilities 501,022 350,242 317,548
Advances from and
amounts
owing to license
partners,
net 97,153 - 845,524
Short-term portion of 22,987 - -
lease
liability
---------------------------
Total Liabilities 621,162 350,242 1,163,072
Long term liabilities
Lease liability 325,917 - -
---------------------------
947,079 350,242 1,163,072
Equity
Share capital 59,099,725 59,099,725 37,509,183
Restricted Share
Units reserve 267,669 267,669 83,597
Warrants - 53,026 39,570
Stock options 2,675,724 2,542,824 2,387,837
Foreign currency
translation
reserve (1,198,097) (1,117,859) -
Non-controlling (48,674) - -
interest
Accumulated
deficit (44,814,249) (41,247,569) (21,174,038)
--------------------------- ------------------------- ----------------------------- -----------------------------
Total Equity 15,982,098 19,597,816 18,846,149
--------------------------- ------------------------- ----------------------------- -----------------------------
Total Liabilities and
Equity 16,929,177 19,948,058 20,009,221
--------------------------- ------------------------- ----------------------------- -----------------------------
Income Statement
Year ended
March 31,
----------------------------------------------
2021 2020
---------------------- ----------------------
Revenue
Interest income 47,097 378,194
---------------------- ----------------------
47,097 378,194
Operating expenses :
Compensation costs 712,667 863,683
Professional fees 501,349 503,275
Operating costs 1,706,522 12,731,068
General and administrative costs 648,749 1,402,502
Share-based compensation 144,327 5,740,319
Interest expense 2,275 -
Foreign exchange gain (loss) 11,015 (789,122)
---------------------- ----------------------
Total expenses 3,726,904 20,451,725
---------------------- ----------------------
Net loss for the year (3,679,807) (20,073,531)
Foreign currency translation adjustment (80,238) (1,117,859)
Comprehensive loss for the year (3,760,045) (21,191,390)
---------------------- ----------------------
Net loss for the year attributed
to:
Equity holders of the parent (3,631,133) (20,073,531)
Non-controlling interests (48,674) -
---------------------- ----------------------
(3,679,807) (20,073,531)
====================== ======================
Basic and diluted net loss per
share attributable to equity holders
of the parent (0.02) (0.11)
====================== ======================
Weighted average number of ordinary
shares used in computing basic
and diluted net loss per share 184,697,723 182,829,288
====================== ======================
Cash Flow Statement
Year ended
March 31,
--------------------------------------------
2021 2020
--------------------- ---------------------
Cash flow from operating activities
Net loss from operations (3,679,807) (20,073,531)
Items not affecting cash:
Share-based compensation 144,327 5,740,319
Depreciation and amortization 24,204 -
Accrued interest 2,672 -
Changes in non--cash working capital:
Government receivable 13,518 4,326
Accounts payable and accrued liabilities 41,583 107,947
Accounts receivable and prepaid expenses (218) 11,492
Advance from and amounts owing to
license partners (50,906) (948,784)
-------------------------------------------- --------------------- ---------------------
(3,504,627) (15,158,231)
-------------------------------------------- --------------------- ---------------------
Cash flow from investing activities
Security deposit (490,455) -
Acquisition of Liversol and Ponsol (1,318,931) -
Short-term investments (1,499,903) -
-------------------------------------------- --------------------- ---------------------
(3,309,289) -
-------------------------------------------- --------------------- ---------------------
Cash flow from financing activities
Net proceeds from Private Placement - 15,935,765
Proceeds from the exercise of stock
options - 93,559
Proceeds from the exercise of warrants - 120,612
-------------------------------------------- --------------------- ---------------------
- 16,149,936
-------------------------------------------- --------------------- ---------------------
Increase (decrease) in cash and cash
equivalents (6,813,916) 991,705
Foreign exchange differences (45,791) (1,075,142)
Cash and cash equivalents, beginning
of year 18,667,016 18,750,453
-------------------------------------------- --------------------- ---------------------
Cash and cash equivalents, end of
year 11,807,309 18,667,016
-------------------------------------------- --------------------- ---------------------
Notes to the Financial Statements
Basis of Preparation
The consolidated financial statements of the Company have been
prepared on a historical cost basis with the exception of certain
financial instruments that are measured at fair value. Historical
cost is generally based on the fair value of the consideration
given in exchange for assets.
Summary of Significant Accounting Policies
Critical accounting estimates
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized
prospectively from the period in which the estimates are revised.
The following are the key estimate and assumption uncertainties
considered by management.
Change in functional currency assessment
The functional currency of the Company and its subsidiaries
represent the currency of the primary economic environment in which
each entity operates. Through to March 31, 2020, all entities were
considered to have a functional currency of Canadian Dollars. On
March 31, 2020, the Company determined the United States Dollar
("USD") to be the functional currency for Eco Guyana based on the
increased expenditures incurred in USD which is expected to
continue in the foreseeable future. On April 1, 2020, the Company
determined the USD to be the functional currency for Eco (Atlantic)
Oil and Gas Ltd, based on the increase in USD denominated spending
as of April 1, 2020. On April 1, 2020, the Company also determined
the USD to be the functional currency of Eco Guyana Oil & Gas
(Barbados) Ltd, since this entity is 100% owned by Eco Atlantic,
and is the 100% owner of Eco Guyana, both of which have functional
currencies denominated in USD. The change in estimate has been
applied on a prospective basis effective April 1, 2020. On February
1, 2021, the Company determined the USD to be the functional
currency of EOGN, EOGS, PAONH and PAON following the re-issuance of
the Namibia Licenses (as defined below).
Effective April 1, 2020, the Company also changed its
presentation currency from Canadian Dollars to USD. The change in
presentation currency is to better reflect the Company's business
activities and to improve investors' ability to compare the
Company's results to its peers. This change has been applied
retrospectively as if the Company's new presentation currency has
always been the Company's presentation currency.
Events After the Reporting Period
a) JHI Transaction
On June 28, 2021, the Company closed a transaction with JHI
Associates Inc. ("JHI"), a private company incorporated in Ontario
and headquartered in Toronto, Canada, for the Company to acquire up
to a 10% interest on a fully diluted basis in JHI (the
"Transaction") and to appoint Keith Hill, a non-executive director
of the Company, to the JHI Board. The Transaction provides the
Company with immediate exposure to a current active drilling
program in the Canje Block offshore Guyana. The Canje Block is
operated by ExxonMobil and is held by Working Interests partners
Esso Exploration & Production Guyana Limited (35%), with Total
E&P Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and
Mid-Atlantic Oil & Gas Inc. (12.5%).
Pursuant to the Transaction, the Company subscribed for
5,000,000 new common shares in JHI at a price of US$2.0 per share,
representing 6.4% of JHI's enlarged share capital (the 'JHI
Investment'), and has been issued a warrant to subscribe for a
further 9,155,471 new common shares in JHI at an exercise price of
US$2.00 per share for a period of eighteen months (the 'JHI
Warrant'). If the JHI Warrant is exercised in full, the Company
will hold an interest, ceteris paribus, of 10% in JHI on a fully
diluted basis.
b) Private Placement
On July 19, 2021, the Company closed a private placement
financing with Africa Oil Corp. and Charlestown Energy Partners LLC
issuing a total of 14,945,913 common shares and 14,945,913 share
purchase warrants exercisable for 2 years at CAD$0.47.
As a result of the financing, Africa Oil Corp.'s interest in the
Company is 19.99%.
**S**
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 Marketing and +44(0)781 729 5070 | +1 (416)
IR 318 8272
Strand Hanson Limited (Financial & Nominated
Adviser) +44 (0) 20 7409 3494
James Harris
Rory Murphy
James Bellman
Berenberg (Broker) +44 (0) 20 3207 7800
Matthew Armitt
Emily Morris
Detlir Elezi
Celicourt (PR) +44 (0) 20 8434 2754
Mark Antelme
Jimmy Lea
Ollie Mills
Hannam & Partners (Research Advisor)
Neil Passmore +44 (0) 20 7905 8500
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.
Notes to editors:
About Eco Atlantic:
Eco Atlantic is a TSX-V and AIM quoted Oil & Gas exploration
and production Company with interests in Guyana and Namibia, where
significant oil discoveries have been made.
The Group aims to deliver material value for its stakeholders
through oil exploration, appraisal and development activities in
stable emerging markets, in partnership with major oil
companies.
In Guyana, Eco Guyana holds a 15% Working Interest alongside
TOQAP Guyana B.V. ("TOQAP") a company jointly owned by
TotalEnergies E&P Guyana B.V. (60%) and Qatar Petroleum (40%)
and Operator Tullow Oil (60%) in the 1,800 km(2) Orinduik Block in
the shallow water of the prospective Suriname-Guyana basin. The
Orinduik Block is adjacent and updip to ExxonMobil Operated
Stabroek Block, on which twenty discoveries have been announced and
over 9 billion BOE recoverable resources are estimated. On 28 June
2021, Eco acquired a 6.4% interest, with the option to increase its
stake to 10%, in JHI Associates Inc. a private company which holds
a 17.5% WI in the 4,800km(2) Canje Block. The Canje Block is
operated by ExxonMobil and is held by Working Interests partners
Esso Exploration & Production Guyana Limited (35%), with
TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI) Inc.
(17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%).
Jethro-1 was the first major oil discovery on Orinduik Block.
The Jethro-1 encountered 180.5 feet (55 meters) of net heavy oil
pay in excellent Lower Tertiary sandstone reservoirs. Joe-1 was the
second discovery on the Orinduik Block and comprised of high
quality oil-bearing sandstone reservoir, with a high porosity of
Upper Tertiary age. The Joe-1 well encountered 52 feet (16 meters)
of continuous thick sandstone.
In Namibia, the Company holds interests in four offshore
petroleum licences totalling approximately 28,593km(2) with over
2.362bboe of prospective P50 resources in the Walvis Basin. These
four licences, Cooper, Guy, Sharon, and Tamar are being explored
with industry partners with Eco Operating and maintaining an
average 60% Working Interest. Eco has been granted a drilling
permit on its Cooper Block (Operator).
Eco Atlantic is a 70% shareholder in Solear Ltd., Solear is an
independent private clean energy investment company focused on low
cost, high yield solar development projects in southern Europe.
Solear offers investors exposure to a portfolio of pre-construction
opportunities across the renewable energy value chain, from
Ready-to-Build to early-stage development.
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END
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