Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) told investors that its subsidiary, Azinam Limited, has received government approval for its proposed farm-out transaction with Africa Oil, which will see a 6.25% stake in the Block 3B/4B asset offshore South Africa transferred to the Toronto-listed partner. It comes as the South African authorities approved the deal. In July, Eco was paid $2.5 million and now receives a further payment of $2.5 million from Africa Oil to be followed by contingent payments of up to $5.5 million tied to project milestones. Eco retains a 20% stake in the South Africa project, whilst Africa Oil’s stake rises to 26.25%. Private South African firm Ricocure owns the other 53.75% of the project.
A joint farm-out process continues with the aim of bringing in a new partner that could take up to 55% of the project. Elsewhere, Eco updated investors on the Orinduik Licence, offshore Guyana, where the company has now moved into the licence’s second renewal period. It opens a new phase of commitments, which will now include the drilling of an exploration well.
At the same time, Eco is now absorbing a larger stake in the project as TOQAP Guyana – a TotalEnergies and QatarEnergy partnership – relinquished a 25% stake and exited the project, resulting in Eco holding 100% of the project across two entities.
The company noted that Total and Qatar Energy opted out of the project for “strategic reasons”. Last year, following management changes and a strategic review, former partner Tullow Oil exited the project which similarly gave Eco a larger interest in the project via a transaction and saw the AIM-quoted explorer become the project operator.
Eco now holds 40% of the project as Eco Guyana and 60% of the project as Eco Orinduik. A separate farm-out process is expected to bring new partners into the Guyana project, to advance the exploration project. “Knowing the material value and potential of Orinduik Block, Eco acquired Tullow’s 60% WI and has remained focused on drilling a massive, stacked pay interval in the Southeastern quadrant of the block,” Eco chief operating officer Colin Kinley said in a statement.
“Eco Atlantic now approved operator intends to bring in new partners and to drill the significant potential of the Cretaceous interval on the Guyana oil fairway. “With this well commitment, we now move into planning and engineering preparations to drill in next 12-18 months.”
Kinley added: “We feel extremely positive about the future of the Orinduik block, receiving significant interest from key industry partners and IOCs in our recently commenced farm-out process.” “We will provide further updates to shareholders on operational and farm-out progress throughout the year.”
Source: proactiveinvestors.co.uk