TIDMECO
RNS Number : 9008X
Eco (Atlantic) Oil and Gas Ltd.
10 January 2022
10 January 2022
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its
subsidiaries, the "Group")
Strategic Acquisition Offshore South Africa and Namibia
2022 Drilling Programme
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX -- V: EOG), the
oil and gas exploration company focused on the offshore Atlantic
Margins, announces today that it has signed a Memorandum of
Understanding ("MOU") to acquire 100% of Azinam Group Limited
("Azinam") (the "Acquisition"), including Azinam's entire offshore
asset portfolio, in return for a 16.65% equity stake in the
enlarged Group on completion of the Acquisition.
Highlights
-- Acquisition of a material offshore petroleum exploration
asset base in Namibia and South Africa
-- Consideration in the form of new common shares to Azinam
Holdings Limited (the "Vendor") who will own 16.65% of the enlarged
Group
-- The Vendor will also be issued warrants in the Company,
exercisable only upon a producible commercial discovery
-- The transaction strengthens the Groups strategic partnership
with Africa Energy and Africa Oil
-- Clear drilling programme with an exploration well planned to
be drilled on Block 2B - South Africa in H2 2022
-- The deal is expected to complete by 31 January 2022 subject,
inter alia, to the signing of a Share Purchase Agreement and
satisfactory completion of due diligence by Eco and any requisite
approvals
-- Discussions are already underway with Eco's key existing
stakeholders in relation to underwriting the funds required to
participate directly in the 2022 Block 2B South Africa drilling
programme.
Information on the Acquisition
Azinam is a wholly owned subsidiary of Azinam Holdings Limited
(the "Vendor"), which is majority owned by Seacrest Capital Group
("Seacrest"). Azinam has successfully built a material offshore
petroleum assets base in Namibia and South Africa. Pursuant to the
MOU and subject, inter alia, to the signing of a binding share
purchase agreement and completion of the Acquisition, Eco Atlantic
will issue to the Vendor such number of new common shares in Eco as
provides the Vendor with 16.65% of Eco's share capital as enlarged
by such issue ("Enlarged Share Capital"), providing for a cashless
acquisition to become the sole owner of Azinam's entire African
portfolio.
Offshore South Africa, Orange Basin, Eco Atlantic will acquire
50% Working Interest ("WI") and Operatorship in Block 2B, where
Africa Energy Corp. and Panoro Energy ASA maintain Working
Interests. Eco will also acquire a material Working Interest of 20%
in the deepwater 3B/4B Block and the shallow water and Nearshore
3B/4B Blocks where the Company will strengthen its ongoing
strategic partnership with Africa Oil Corp. as the Operator and 20%
Working Interest partner.
Offshore Namibia, Eco will acquire additional Working Interests
in its current oil blocks where Azinam is a partner, being
Petroleum Exploration Licenses ("PELs") #97, #98 and #99. Eco's
resultant net Working Interest in these PELs will be 85% on
completion. Working Interest on these Blocks are the same as its
existing interest in PEL #100, and Eco is the Operator on all four
PELs.
Completion of the Acquisition ("Completion") is subject, inter
alia, to the signing of a Share Purchase Agreement and satisfactory
completion of due diligence by Eco (which is nearing completion) by
31 January 2022 (or such later date as may be agreed) and any
requisite approvals from the Government of South Africa, the
Government of Namibia and the TSX Venture Exchange.
Gil Holzman Co-Founder and CEO of Eco Atlantic commented:
"We are delighted to update the market on this exciting
transaction and welcome the stronger alignment with Africa Oil
Corp. and the broader Lundin Group through direct partnership in
Blocks 3B/4B and 2B .
"The acquisition strengthens our long-term and strategic
position in Namibia, giving us 85% and Operatorship in four highly
prospective blocks, and gives us added versatility as we look to
partner with a major player to help accelerate further exploration
activities in the country's burgeoning energy industry.
"As we have always stated in our corporate strategy, our goal is
to build a portfolio that will offer shareholders near-term
exposure to high impact drilling catalysts. The Azinam acquisition
requires no cash funding to close, and positive discussions have
been ongoing with Eco's key existing stakeholders in relation to
underwriting the funds required to participate directly in 2022
South Africa drilling activity.
"We anticipate that our drilling in South Africa this year will
be closely followed by an exploration well in Guyana. These
activities come at a time when global discovered resources volumes
and access to energy in southern Africa is at an all-time low and
hydrocarbons are desperately required as the world navigates the
path of successfully achieving the energy transition. We firmly
believe that companies such as ours that explore for oil in and
around emerging economies will play a vital role in reducing energy
poverty.
"We are looking forward to commencing with our drilling
campaigns planned in the prospective Block 2B in South Africa and
in Guyana this year and beyond, and we will continue to further
build our corporation to offer additional exploration catalysts as
and when we believe these opportunities will be value accretive to
our stakeholders."
Colin Kinley, Co-Founder and COO of Eco Atlantic commented:
"Much of the engineering and geological and geophysical work on
the Gazania-1 well has been completed during the past year, so we
are stepping into an active plan, which has the potential to offer
shareholders additional near term catalysts. We have an experienced
team of exploration specialists who are working to finalize the
well planning and we benefit from having excellent support from our
JV Partners at Africa Energy from their Cape Town base. We have
already held meetings with the engineering contractor, the JV
Partners and with the proposed rig contractor who currently is
holding a slot for us while we seek to conclude the Acquisition and
finalise our plans. Block 2B already has a previous light oil
discovery - as there was an offsetting strat well, A-J1, drilled in
1988 that proved the presence of high quality oil in the area. We
are excited to move ahead on planning the targeted well, having
done extensive evaluation of this specific region over the past six
years and are familiar and confident with its prospectivity."
Keith Hill, Non-Executive Director of Eco Atlantic and CEO of
Africa Oil, further commented:
"The recent string of industry exploration successes, led by
Guyana/Suriname but also in Ivory Coast, Ghana and offshore Brazil,
has refocused attention on frontier basins in the southern
Atlantic. With the addition of the Azinam acreage, we now hold some
of the highest potential acreage in many of these proven and
developing areas. The Orange Basin has two high profile wells
currently drilling, namely the TotalEnergies Venus-1 and Shell
Graff-1 wells, and success in either or both of these wells could
make it one of the hottest exploration destinations in the
world".
"The Gazania-1 well is planned to be drilled this year on Block
2B in South Africa in a rift basin that shows remarkably similar
characteristics to the Lokichar Basin in Kenya. It's location in
shallow water would facilitate a fast-track development with
favourable economics. Africa Oil is very supportive of this
acquisition and will actively assist Eco in its near-term
exploration and any corporate initiatives."
Further information on the Acquisition
On completion of the Acquisition, Eco Atlantic will issue to the
Vendor such number of new common shares in Eco as provides the
Vendor with 16.65% of Eco's then Enlarged Share Capital. In
addition, the Vendor will be issued warrants over new common shares
in Eco, exercisable only in case of a producible commercial
discovery on Block 2B or Block 3B4B, as follows: 20,000,000
warrants exercisable at a price of CAD$1.00 per share during the
twenty-four month period immediately following Completion, and
20,000,000 warrants exercisable at a price of CAD$1.50 per share
during the thirty-six month period immediately following the
Completion, such exercise dates to be extended in the event a well
is not drilled on Block 2B or Block 3B4B, until such time as a well
is drilled on either Block and a producible commercial discovery
declared.
In addition, the Vendor will enter into a lock-in agreement to
restrict the sale of the consideration shares until the earlier of:
the spudding of a well on Block 2B; or, 6 months following
Completion in respect of a third of the consideration shares, with
two equal further tranches being released from the lock-in 12 and
18 months following Completion
As at 30 September 2021, Azinam had total assets of
approximately US$16 million, and in the nine months to 30 September
2021 recorded net income of approximately US$1.26 million.
A further announcement will be issued on closing of the
Acquisition.
Drilling Planned 2022 Block 2B - South Africa:
With Operatorship and a 50% WI acquired in Block 2B, Eco joins
block partners Africa Energy Corp. - 27.5% WI (Carried), Panoro 2B
Limited - 12.5% WI and Crown Energy AB - 10% WI (Carried) (the "JV
Partners").
Block 2B already has a previous light oil discovery - as there
was an offsetting strat well, Soekor A-J1, drilled in 1988 that
proved the presence of high quality oil in the area. Thick
reservoir sandstones were intersected between 2,985 meters and
3,350 meters. The well was tested and flowed 191 barrels of oil per
day of 36 degree API oil from a 10 meter sandstone interval at
about 3,250 meters. The 686 square kilometre 2013 3D seismic data
confirmed the up-dip prospectivity of the A-J1 discovery and
significant further prospectivity.
In Block 2B, Azinam and the JV Partners have secured a contract
with NRG Well Management Ltd, an international well engineering and
project management company headquartered in Aberdeen, Scotland, to
complete well design engineering and to assist with critical path
well planning. The JV Partners have defined proposed drilling
targets, completed a seabed survey, conducted a semi-submersible
rig tender and begun negotiations to secure critical equipment,
including securing a wellhead, and negotiating a rig contract. Eco
will step into the role of Operator to drill this well. The
Gazania-1 exploration well, expected to be drilled in H2 2022, will
target JV Partners' estimates of 349 Million Barrels of Oil (Best
Estimate - Gross Prospective Resources) in relatively shallow water
depths of less than 200 metres. Block 2B is located in the Orange
Basin in South Africa and covers an area of 3,062 km(2) . The Block
is located approximately 300 kilometres north of Cape Town with
water depths ranging from 50 to 200 meters. Discussions are ongoing
with Eco's key existing stakeholders in relation to underwriting
the funds required to participate directly in the 2022 South Africa
drilling activity.
Block 3B/4B:
Eco Atlantic have acquired 20% WI in Blocks 3B/4B and Nearshore
3B/4B Offshore South Africa. Eco joins partners Africa Oil Corp.
who is Operator of the Block (20% WI) and Ricocure (Pty) Ltd (60%
WI carried) . Partners in Block 3B/4B are currently reprocessing a
large 3D seismic survey that will be used to high-grade leads
towards a drilling prospect. Block 3B/4B is located in South Africa
Orange Basin directly south of the currently drilling Namibia
Orange Basin wells - Graff-1 (Shell) and Venus-1 (Total
Energies).
Guyana Update:
In Guyana, Eco and its JV partners firmly believe that the
Orinduik Block offers significant upside and are focused on the
careful selection of stacked drilling target locations in the
Cretaceous light oil. We will update the market on the 2022 target
selection and drilling plans on the block once finalized. On Canje
Block, where Eco holds 6.4% in JHI Associates Inc., which holds a
17.5% WI, the Operator, ExxonMobil, and JV partners including
TotalEnergies continue to evaluate the 2021 drilling programme
technical results.
Guyana continues to be one of the most prolific exploration
regions in the world, with over ten billion barrels of oil
discovered in the last six years, and in addition two new
significant oil discoveries were announced last week by the
ExxonMobil led consortium on the Stabroek Block north of Orinduik
Block.
**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 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 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 consuming oil and gas in
stable emerging markets near to infrastructure.
Offshore Guyana in the proven Suriname-Guyana Basin, the Company
holds a 15% Working Interest in the 1,800 km(2) Orinduik Block
Operated by Tullow Oil, and also indirectly through a 6.4%
shareholding in JHI Associates Inc. a private company which holds a
17.5% WI in the 4,800km(2) Canje Block Operated by ExxonMobil. In
Namibia, the Company holds Operatorship and 85% Working Interests
in four offshore Petroleum Licences: PEL's: 97, 98, 99 and 100
totalling 28,593 km(2) in the Walvis Basin.
Offshore South Africa, Eco holds Operatorship and 50% WI of
Block 2B, and 20% Working Interest of Blocks 3B/4B and Nearshore
3B/4B, totalling some 21,603 km (2) .
Eco Atlantic is also a 100% 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.
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END
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