Eco Atlantic Oil & Gas Ltd. has signed an agreement to sell about a quarter of its stake in South Africa’s Block 3B/4B to Africa Oil SA Corp. for up to $10.5 million.
The divestment is equal to the 6.25 percent it acquired in 2022 from the Lunn Family Trust for $10 million. In announcing this purchase on June 27, 2022, Canada-based Eco cited encouraging prospects from oil discoveries earlier this year on the Namibian side of the Orange Basin, where 3B/4B is located.
In announcing the farm to Africa Oil Corp.’s wholly-owned subsidiary this week, Eco said the sale would allow it to fund growth elsewhere without having to give up shares, which would mean diluting its capital, to generate funds for expansion. .
In the same announcement, it said it was exercising its option to issue 1.2 million new common shares in lieu of $500,000 in cash to pay for the acquisition of 6.25 percent of Lunn Family Trust, shareholder of the co-owner of 3B/4B Ricocure Proprietary. Ltd. The family trust had already acquired more than 23.76 million common units in two Eco transactions in payment for the purchase, as indicated in the Eco media releases of July 6, 2022 and December 20, 2022.
Eco had $14.5 million in cash on hand and had zero net debt at the end of 2022, an unprofitable year for the company, according to its latest published results.
Upon completion of the definitive agreement with Africa Oil SA, Eco’s wholly owned subsidiary Azinam Ltd. will hold a 20% stake, Africa Oil SA will increase its operating stake to 26.25% and Ricocure will hold 53 .75%
“Given that Africa Oil is already established as a partner and operator of the block, receiving the necessary regulatory approval for the transfer is expected to be straightforward,” Eco co-founder and CEO Gil Holzman said in the ‘announcement
Eco said the drilling campaign for two wells on the block, with the potential for up to five wells, is still underway. The partners have reached the permit application process, he said.
“We look forward to continuing to work with the South African government and regulatory bodies regarding our environmental permitting process and active exploration of Block 3B/4B,” Holzman added.
The consortium is seeking up to a 55 percent gross working interest in the block, and there has been progress in negotiations with multiple potential partners, Eco said in the media release this week.
The project is located on the South African side of the Orange Basin, where Shell PLC and TotalEnergies SE had already confirmed hydrocarbon discoveries on the Namibian side.
On February 24, 2022, TotalEnergies announced an exploration success in the Venus 1-X well in Block 2913B offshore southern Namibia with approximately 275.6 feet of net oil pay. “This discovery offshore Namibia and the very promising initial results demonstrate the potential of this play in the Orange Basin, in which TotalEnergies has a significant position in both Namibia and South Africa,” said Kevin McLachlan , French’s senior vice president of exploration. company
Shell said on April 22, 2022 that it had made a discovery at its Graff-1 well in February 2022 and had another success at the La Rona-1 well in April 2022, both in its area of license PEL 0039, also in southern Namibia.
On March 8, 2022, Africa Oil, Eco’s partner, announced that an independent review by RISC Advisory UK Ltd. had shown prospects of about four billion barrels of oil equivalent in block 3B/4B. “Africa Oil is at the forefront of exciting exploration and appraisal activities in the Orange Basin, arguably the world’s most sought-after new oil region,” said Africa Oil President and CEO Keith Hill in this ad
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