Thanks to Malcy's Blog
8/10/23
Eco (Atlantic) Oil & Gas
Eco has announce that it has signed a Sale Purchase Agreement pursuant to which its wholly owned subsidiary, Eco Guyana Oil and Gas (Barbados) Limited, will acquire a 60% Operated Interest in Orinduik Block, offshore Guyana, through the acquisition of Tullow Guyana B.V, a wholly owned subsidiary of Tullow Oil Plc in exchange for a combination of upfront cash and contingent consideration.
The Transaction is in line with Eco’s strategy to deliver material value for its stakeholders through early entry and exploring for hydrocarbons in some of the most prolific petroleum basins in the world. Eco, via its wholly owned subsidiary Eco (Atlantic) Guyana Inc, currently holds a 15% working interest in the Orinduik Block. On completion of the Transaction, Eco, as operator and majority interest holder in the Orinduik Block, intends to drive the exploration process and focus on its strategy to attract new partners to join the license and proactively engage in drilling.
Transaction summary:
· US$700,000 cash payment upon transfer of TGBV’s 60% Participating Interest and operatorship of the Orinduik licence to Eco Guyana, to be paid to Tullow Overseas Holdings B.V., the parent of TGBV (“TOHBV”) on completion of the Transaction (the “Initial Consideration”).
· Contingent consideration payable to TOHBV is linked to the success of a series of potential future milestones, as follows:
o US$4 million in the event of a commercial discovery;
o US$10 million payment upon the issuance of a production licence from the Government of Guyana; and
o Royalty payments on future production – 1.75% of the 60% Participating Interest entitlement revenue net of capital expenditure and lifting costs.
· Transaction and payment of the Initial Consideration is subject to certain market-standard conditions precedent, including customary Government and JV partner approvals.
· Completion is expected to occur in the second half of 2023.
On closing of the Transaction, the interests of the JV partners in the Orinduik License will be as follows:
· Eco will hold an aggregate 75% Participating Interest via Eco Guyana and Eco (Atlantic) Guyana Inc., and be Operator of the Block; and
· TOQAP Guyana B.V will continue to hold a Participating Interest of 25%.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:
“We are delighted to have reached this agreement with Tullow and to be able to begin to unlock the Orinduik Block’s full potential. Since 2014, we have believed in the potential of this Block, with our initial two wells in 2019 proving two different oil plays. We will proactively engage in a farm out process for this highly prospective license and begin preparations to drill a well testing the cretaceous, where all light oil discoveries have been made in the adjacent Stabroek Block.”
Colin Kinley, Co-founder and Chief Operating Officer of Eco Atlantic, added:
“The Orinduik Block sits on the series of continental shelves leading into the basin. This rich and prolific basin is clean sand filled and sealed nicely to trap the massive volumes of oil found thus far. Following ten years of basin evaluation and research, we have a solid and highly experienced team to take over the Operatorship role. We will start by targeting stacked pay opportunities we see in the cretaceous and look forward to continuing our aggressive approach to discovery. We see an opportunity in the multi hundred millions of recoverable range and now is the time to drill our targets.”
This block, or rather the way that Tullow has held up its development for the last ten years drives me mad, it was a long time ago that the original plans were made and it should have been drilled out by now. As it is Eco will now be able to get on with a partnering process not to mention the technical challenges of being the operator.
With new partners and a decent exploration budget Eco can return to focus on Guyana although now it is fair to say that with its fantastic exposure in southern Africa the Orinduik block is no longer the only asset in the portfolio that could be a ten-bagger for the company.
