REG - Eco (Atlantic) O&G - Strategic Acquisition

Eco (Atlantic) Oil & GasAnnouncement

10/01/2022 07:05

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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 IR                    +44(0)781 729 5070 | +1 (416) 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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