REG - Eco (Atlantic) O&G - Acquisition of Further Interest in Orinduik Block

Eco (Atlantic) Oil & GasAnnouncement

10/08/2023 07:00

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RNS Number : 8631I  Eco (Atlantic) Oil and Gas Ltd.  10 August 2023

 

 

 

10 August 2023

 

ECO (ATLANTIC) OIL & GAS LTD.

("Eco," "Eco Atlantic," "Company," or together with its subsidiaries, the
"Group")

 

Acquisition of additional 60% Operated Interest in Orinduik Block Guyana from
Tullow Oil

 

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 Sale Purchase Agreement (the "Agreement")
pursuant to which its wholly owned subsidiary, Eco Guyana Oil and Gas
(Barbados) Limited ("Eco Guyana"), will acquire a 60% Operated Interest in
Orinduik Block, offshore Guyana, through the acquisition of Tullow Guyana B.V.
("TGBV"), a wholly owned subsidiary of Tullow Oil Plc. ("Tullow") (the
"Transaction") in exchange for a combination of upfront cash and contingent
consideration.

 

The Transaction is in line with Eco's strategy to deliver material value for
its stakeholders through early entry and exploring for hydrocarbons in some of
the most prolific petroleum basins in the world. Eco, via its wholly owned
subsidiary Eco (Atlantic) Guyana Inc, currently holds a 15% working interest
in the Orinduik Block. On completion of the Transaction, Eco, as operator and
majority interest holder in the Orinduik Block, intends to drive the
exploration process and focus on its strategy to attract new partners to join
the license and proactively engage in drilling.

 

Transaction summary:

·    US$700,000 cash payment upon transfer of TGBV's 60% Participating
Interest and operatorship of the Orinduik licence to Eco Guyana, to be paid to
Tullow Overseas Holdings B.V., the parent of TGBV ("TOHBV") on completion of
the Transaction (the "Initial Consideration").

·    Contingent consideration payable to TOHBV is linked to the success of
a series of potential future milestones, as follows:

o  US$4 million in the event of a commercial discovery;

o  US$10 million payment upon the issuance of a production licence from the
Government of Guyana; and

o  Royalty payments on future production - 1.75% of the 60% Participating
Interest entitlement revenue net of capital expenditure and lifting costs.

·    Transaction and payment of the Initial Consideration is subject to
certain market-standard conditions precedent, including customary Government
and JV partner approvals.

·    Completion is expected to occur in the second half of 2023.

 

On closing of the Transaction, the interests of the JV partners in the
Orinduik License will be as follows:

·    Eco will hold an aggregate 75% Participating Interest via Eco Guyana
and Eco (Atlantic) Guyana Inc., and be Operator of the Block; and

·    TOQAP Guyana B.V will continue to hold a Participating Interest of
25%.

 

 

Gil Holzman, President and Chief Executive Officer of Eco Atlantic,
commented:

 

"We are delighted to have reached this agreement with Tullow and to be able to
begin to unlock the Orinduik Block's full potential.  Since 2014, we have
believed in the potential of this Block, with our initial two wells in 2019
proving two different oil plays.  We will proactively engage in a farm out
process for this highly prospective license and begin preparations to drill a
well testing the cretaceous, where all light oil discoveries have been made in
the adjacent Stabroek Block."

 

 

Colin Kinley, Co-founder and Chief Operating Officer of Eco Atlantic, added:

"The Orinduik Block sits on the series of continental shelves leading into the
basin. This rich and prolific basin is clean sand filled and sealed nicely to
trap the massive volumes of oil found thus far. Following ten years of basin
evaluation and research, we have a solid and highly experienced team to take
over the Operatorship role. We will start by targeting stacked pay
opportunities we see in the cretaceous and look forward to continuing our
aggressive approach to discovery. We see an opportunity in the multi hundred
millions of recoverable range and now is the time to drill our targets."

 

Transaction Structure

TOHBV will transfer its entire interest in the Orinduik licence via the sale
of TGBV to Eco Guyana in exchange for the Initial Consideration and a series
of contingent payments based on future milestones as described above.

TGBV holds a 60% participating interest in, and Operatorship of, the Orinduik
Block pursuant to: (i) a petroleum agreement between the Minister responsible
for Petroleum representing the Government of the Co-operative Republic of
Guyana, Eco (Atlantic) Guyana Inc. and TGBV dated 14 January 2016 (as amended
from time to time) and (ii) the joint operating agreement dated between TGBV,
Eco (Atlantic) Guyana Inc., and TOQAP dated 18 January 2016 (as amended from
time to time).  Tullow will retain its interest in the Kanuku Block.

Additional cash consideration may be payable to TOHBV, in the form of
contingent payments, including a royalty payment, as noted above, on
upstream revenues once production from the Orinduik licence commences.

Subject to the satisfaction of certain market standard conditions precedent
and customary approvals, including Government and JV partner approvals, the
Transaction is expected to complete in the second half of 2023.

On 31 December 2022 as per the audited TGBV financial statements, the gross
asset value attributable to the interests being acquired through the
Transaction amounted to US$1.5 million, with attributable losses of US$713,000
(excluding a one-off write down of exploration expenses). As of 31 December
2022, the gross 2C resource attributable to the transferred interests amounted
to 47.7mmbls.

**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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