Africa Oil Corp (AOC) has entered into a partnership with Eco (Atlantic) Oil and Gas for exploration in Guyana and Namibia.
Under the terms of an investment agreement, AOC has agreed to acquire a 19.77 per cent shareholding in Eco through the purchase, by way of private placement, of 29.2 million common shares at CAD$0.48 per share for a total consideration of CAD$14 million.
The investment agreement also provides the company with the right to participate in any future Eco equity issuances, on a pro rata basis, and to appoint one nominee to Eco’s Board of Directors. AOC President and Chief Executive Officer (CEO) Keith Hill will join the Eco Board of Directors as soon as practicable.
As part of the investment agreement, the parties have also entered into a Strategic Alliance Agreement (SAA), whereby they will jointly pursue new exploration projects. Pursuant to the terms of the SAA, AOC will be entitled to bid jointly on any new assets or ventures proposed to be acquired by Eco.
A statement issued on Monday said this would be done on the same terms as Eco and for an interest at least equal to the company’s percentage holding of the common shares in Eco from time to time. Additionally, under the terms of the SAA, AOC will also have a right of first offer on the farm-out of exploration properties currently held by Eco.
Eco has been able to assemble an extensive exploration portfolio in two countries that are at the forefront of exploration, including one block in Guyana and four blocks in Namibia.
In Guyana, ECO holds a block directly up dip from the Stabroek Block which holds Exxon estimates of 2.5 billion to 2.8 billion oil-equivalent barrels, including the supergiant Liza field.
The ECO block exhibits good evidence of slope fan prospects and is expected to be fully defined after processing and interpretation of the 2550 square-kilometre 3D seismic survey recently completed in September. Eco also recently announced it has entered into an option agreement for a farm-in by Total on this Guyana acreage.
This new investment has been described as a complement to the company’s existing investment in Africa Energy Corp (AFE) in which the company holds a 28.5 per cent shareholding interest. AFE holds blocks in Namibia adjacent to the Eco acreage and a block offshore South Africa. Together, the two companies represent significant holdings in several of the most attractive exploration areas in the world.
Eco CEO Gil Holzman described AOC as “a like-minded company with a similar philosophy” highlighting that the new shareholder and potential partner is focused on frontier regions and has “significant financial muscle” to deliver on its strategy.
“We are funded for our forthcoming work programmes in both Guyana and Namibia through a series of agreements with Tullow Oil, AziNam, and Total and through these new agreements with AO, we now also have the capability, as well as an industry leading partner, to identify further assets and to accelerate the work programmes on them”.
He added, “This is a very exciting and busy time for Eco and we look forward to working with the AOC team to identify new projects to add to our portfolio whilst progressing our current assets in Guyana and Namibia together with our existing industry leading partners.”