REG - Eco (Atlantic) O&G - Unaudited Results and Corporate Update
25/02/2022 07:16
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RNS Number : 7871C Eco (Atlantic) Oil and Gas Ltd. 25 February 2022
25 February 2022
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its subsidiaries, the
"Group")
Unaudited Results for the three and nine months ended 31 December 2021
Corporate and Operational Update
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX ‐ V: EOG), the oil and
gas exploration company with licences in the proven oil provinces of Guyana
and Namibia, is pleased to announce its results for the three and nine months
ended 31 December 2021, alongside a corporate and operational update.
Results Highlights:
Financials:
· Cash and cash equivalents of US$5.8 million and no debt as of 31
December 2021.
· Total assets of US$19million, current liabilities of US$2 million and
total equity of US$17 million as of 31 December 2021.
Operations during and post-period end:
Guyana
· The Company purchased an additional 800,000 common shares in JHI
Associates Inc. ("JHI") in return for 1,200,000 new common shares in Eco
("Consideration Shares"). The purchase of the 800,000 common shares in JHI
completed on 19 January 2022, increasing the total number of shares held by
Eco in JHI to 5,800,000 shares representing c.7.35% of JHI.
· On the Canje Block, Guyana, Eco received a detailed update from JHI
Associates Inc. on 30 October 2021 that ExxonMobil had successfully and safely
drilled the Sapote-1 well. The well recorded hydrocarbon shows while drilling
and in the logging sequence, in a deeper interval than anticipated, but had no
shows in the upper primary objective horizon. With sidewall coring and
wireline logging complete, ExxonMobil will now work to define the reservoir
properties, including porosity and permeability, and the cored samples will be
analysed for hydrocarbons.
· On the Orinduik Block, the JV Partners (Eco Atlantic (15% working
interest ("WI")), Tullow Guyana B.V. ("Tullow") (Operator, 60% WI) and TOQAP
Guyana B.V. ("TOQAP") (25% WI)) are advancing towards finalisation of the
target selection process and updating the drilling targets inventory. The
partnership aims to establish firm targets in the near-term and advance
towards drilling.
Namibia and South Africa
· On 10 January 2022, Eco announced this signing of a binding
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 16.5% equity stake in Eco (as enlarged by the
associated share issuance). Subsequent to this, Eco reported the signing of a
definitive Share Purchase Agreement ("SPA") with Azinam on 8 February 2022,
which, pending TSX-V approval, is anticipated to lead to the Closing of the
transaction imminently.
· Eco is now planning and preparing the drilling of an exploration well
on Block 2B in H2 2022, a highly prospective Block with past oil discovery
(AJ-1) in the Orange Basin, offshore South Africa, close to the recent Graff-1
discovery by Shell and Qatar Energy.
· In October 2021, Eco completed drafting the four new Joint Operating
Agreements ("JOAs") for its new 2021 Petroleum Licenses in the Walvis Basin,
offshore Namibia. The Company has received all paying partner approvals on the
JOAs and Namibia's Ministry of Mines and Energy has approved Eco Atlantic to
be the Operator of all four blocks, which total some 7,065,484 acres (28,593
km(2)).
· The Company continues to monitor and assess opportunities, both
technical and corporate, particularly with the recent Shell Namibia's Graff-1
and TotalEnergies Venus-1 discoveries in the Orange Basin.
Solear Ltd.
· On 24 February 2021, Eco was pleased to announce the successful sale
of the Kozani project in Greece by Solear Ltd. ("Solear") at 25% margin and
for US$2 million to Nepcoe Capital Partners Ltd ("Nepcoe") and the re-payment
of this consideration to Eco Atlantic will be received by the end of February
2022.
Outlook:
Guyana
· Eco continues to work closely with its JV Partners on the Orinduik
Block with regard to carrying out further drilling activity on the licence as
soon as practically possible. The Partners will likely look to drill at least
one of the light oil cretaceous stacked targets after the target selection
process is finalised.
· 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.
· Eco are encouraged by recent neighbouring discoveries - ExxonMobil
operated Stabroek block Fangtooth-1 discovery in deeper intervals and
Santonian sands similar to the shows seen in Sapote-1 well Canje block and by
CGX Energy operated Corentyne block, confirming a discovery at the Kawa-1
wildcat, a shelf discovery which is on trend geologically with the Orinduik
block.
Namibia and South Africa
· The Company's licences in Namibia cover approximately 28,593 km(2),
with over 2.362 BBOE of prospective P50 resources.
· With the addition of Azinam's offshore portfolio, Eco has expanded
upon its strategically significant acreage position in-country and is
progressing its various work programmes across its Namibian licences. With the
recently announced discoveries at the Graff-1 and Venus-1 the Company
continues to witness considerable interest in Namibia from multiple
international oil companies.
· Eco is now planning and preparing the drilling of an exploration well
on Block 2B in H2 2022, subject to available funding, a highly prospective
Block with past oil discovery (AJ-1) in the Orange Basin, rig contract
execution expected in the next month along with commencing orders of long lead
items. Once the Azinam deal has closed, Eco will become the official
operator of the Block.
Corporate:
· Eco continues to evaluate additional asset and corporate
opportunities in and around its current areas of operation, with an
overarching aim of building Eco into an exploration business of material
scale.
· Eco also maintains a strict control over costs throughout the
business, which continues to generate material savings, ensuring that Eco
remains well capitalised with a strong balance sheet.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic,
commented:
"I am excited about the positive and busy start to the year we have made. We
announced a transformational deal with the purchase of Azinam's offshore
acreage, which will add to our highly strategic acreage position in Namibia
and allow us entry into Orange Basin, South Africa. Two important large
discoveries offshore Namibia has already been announced this year on trend
with our new Orange basin blocks, and our team is working hard on the upcoming
drilling campaign on Block 2B in H2 2022 and furthering their technical
understanding on Block 3B4B which is geologically on same pathway with Graff-1
and Venus-1.
"We also increased our interest in JHI, via an additional share swap,
reinforcing our view that Guyana remains one of the most attractive
hydrocarbon provinces in the world. We look forward to announcing our future
drilling plans in due course, as we work with our JV Partners on finalising
the target selection and drilling plans.
"We were also pleased to play a role in the sale of Solear's Kozani project in
Greece for c.US$2 million, which generated a 25% return for Eco shareholders
and will now be returned to Eco's treasury.
"Eco continues to assess both asset and corporate opportunities, as well as a
number of meaningful catalysts that have the potential to deliver value for
all stakeholders, and we look forward to updating the market further in due
course."
The Company's unaudited financial results for the three and nine months ended
31 December 2021, together with Management's Discussion and Analysis, are
available to download on the Company's website at www.ecooilandgas.com
(http://www.ecooilandgas.com) and on Sedar at www.sedar.com
(http://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
December 31, March 31,
2021 2021
Unaudited Audited
Assets
Current assets
Cash and cash equivalents 5,234,103 11,807,309
Short-term investments 52,618 1,552,640
Government receivable 10,253 22,697
Amounts owing by license partners, net 394,839 193,655
Accounts receivable and prepaid expenses 106,261 46,480
5,798,074 13,622,781
Investment in associate 10,000,000 -
Petroleum and natural gas licenses 1,072,260 1,072,260
Renewable energy licenses 1,364,841 1,411,186
Right of use assets 321,653 332,495
Security deposit 471,380 490,455
Total Assets 19,028,208 16,929,177
Liabilities
Current liabilities
Accounts payable and accrued liabilities 646,719 501,022
Advances from and amounts owing to license partners, net - 97,153
Short-term portion of lease liability 22,987 22,987
Total current liabilities 669,706 621,162
Warrant liability 1,047,512 -
Lease liability 334,452 325,917
Total liabilities 2,051,670 947,079
Equity
Share capital 61,070,124 59,099,725
Restricted Share Units reserve 267,669 267,669
Stock options 2,663,057 2,675,724
Foreign currency translation reserve (1,171,172) (1,198,097)
Non-controlling interest - (48,674)
Accumulated deficit (45,853,140) (44,814,249)
Total Equity 16,976,538 15,982,098
Total Liabilities and Equity 19,028,208 16,929,177
Income Statement
Three months ended Nine months ended
December 31, December 31,
2021 2020 2021 2020
Unaudited Unaudited
Revenue
Interest income - 6,123 8,435 41,779
- 6,123 8,435 41,779
Operating expenses:
Compensation costs 128,724 173,373 712,991 486,999
Professional fees 91,355 80,280 514,378 200,694
Operating costs 660,170 255,477 1,139,962 1,105,892
General and administrative costs 121,569 138,472 430,926 367,742
Share-based compensation 2,373 33,457 14,083 88,277
Interest expense 8,828 - 19,341 -
Foreign exchange gain (loss) (12,235) (32,561) 40,987 (68,826)
Total operating expenses 1,000,784 648,498 2,872,668 2,180,778
Fair value change in warrant liability (1,236,827) - (1,874,016) -
Net profit (loss) for the period 236,043 (642,375) (990,217) (2,138,999)
Foreign currency translation adjustment 35,160 - 26,925 (87,942)
Comprehensive profir (loss) for the period 271,203 (642,375) (963,292) (2,226,941)
Basic and diluted net loss per share attributable to equity holders of the 0.00 (0.00) (0.01) (0.01)
parent
Weighted average number of ordinary shares used in computing basic and diluted 199,893,636 184,697,723 194,041,560 184,697,723
net loss per share
Cash Flow Statement
Nine months ended
December 31,
2021 2020
Unaudited
Cash flow from operating activities
Net loss from operations (990,217) (2,138,999)
Items not affecting cash:
Share-based compensation 14,083 88,277
Depreciation and amortization 57,187 -
Accrued interest 8,535 -
Revaluation of warrant liability (1,874,016) -
Changes in non‑cash working capital:
Government receivable 12,444 (20,007)
Accounts payable and accrued liabilities 145,697 (130,818)
Accounts receivable and prepaid expenses (59,781) (26,726)
Advance from and amounts owing to license partners (298,337) (135,313)
(2,984,405) (2,363,586)
Cash flow from investing activities
Investment in associate (10,000,000) -
Short-term investments 1,500,022 -
(8,499,978) -
Cash flow from financing activities
Issuance of shares 4,793,789 -
Exercise of stock options 71,388 -
4,865,177 -
Decrease in cash and cash equivalents (6,619,206) (2,363,586)
Foreign exchange differences 46,000 46,660
Cash and cash equivalents, beginning of period 11,807,309 18,667,016
Cash and cash equivalents, end of period 5,234,103 16,350,090
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.
**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
Emily Morris
Detlir Elezi
Celicourt (PR) +44 (0) 20 8434 2754
Mark Antelme
Jimmy Lea
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, as amended.
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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