Unaudited Results and Business Update

RNS Number : 9764T

Eco (Atlantic) Oil and Gas Ltd.

20 November 2019

 

20 November 2019

ECO (ATLANTIC) OIL & GAS LTD.

("Eco," "Eco Atlantic," "Company," or together with its subsidiaries, the "Group")

Unaudited Results for the six months ended 30 September 2019 and Business Update

Preparations underway for 2020 drilling campaign

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX‐V: EOG), the oil and gas exploration company with licences in Guyana and Namibia, is pleased to announce its results for the three and six months ended 30 September 2019, alongside a corporate and operational update.

Results Highlights:

Financials

·    As at 30 September 2019, the Company had cash and cash equivalents of CAD $30.7 million. The Company remains well funded and currently has CAD $27.9 million of cash and cash equivalents on the balance sheet.

·    During the first quarter of the financial year, Eco completed its previously announced private placement raising gross proceeds of CAD $22.6 million.

·    As at 30 September 2019, Eco had total assets of CAD $32.3 million, total liabilities of CAD $2.5 million and total equity of CAD $29.8 million.

Operations - Guyana

·    On 12 August 2019, the Company announced a major oil discovery on its Orinduik offshore petroleum license in Guyana (the "Guyana License"). Evaluation of logging data confirms that Jethro-1 is the first discovery on the Guyana License and comprises high-quality oil-bearing sandstone reservoir of Lower Tertiary age. The well was cased and is awaiting further evaluation to determine the appropriate appraisal activity.

·    On 16 September 2019, the Company announced a second oil discovery on the Guyana License. Evaluation of MWD, wireline logging and sampling of the oil confirms that Joe-1 is the second discovery on the Orinduik license and comprises high quality oil-bearing sandstone reservoir with a high porosity of Upper Tertiary age.

·    Both wells were drilled within budget, with MWD logging tool and conventional wireline, and the reservoirs were considered to be high quality sands with good permeability.   

·    Fluid samples were taken in both of the wells and were sent for analysis by the Operator.  The complete fluid analysis and report for both wells have not yet been received. However, initial results suggest that the samples recovered to date from Jethro-1 and Joe-1 are mobile heavy crudes with high sulphur content.

·    Oil tested to date appears it is not dissimilar to the commercial heavy crudes currently in production in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola.

·    The Joint Venture partners on the block have engaged a third party consultant with heavy oil development expertise to help conduct preliminary evaluations related to production and commercialisation. Evaluation work is ongoing and the partners are considering alternatives for further drilling and testing and a number of development drilling and production alternatives are now to be considered. The Company remains optimistic in considering the development scenarios and as the project progresses will define further information on plans and timing.

·    The CPR published on 18 March 2019 suggested the block potentially contains in excess of 3.9 billion Gross Prospective Oil Equivalent Resources (P50 Best) on approximately 15 identified prospects. Approximately 900 million barrels of oil in Tertiary Reservoirs and approximately 3 billion barrels of oil in Cretaceous prospects, remain to be explored. The Company is currently preparing an updated CPR, which is expected to be published after the Kanuku block Carapa well results, potentially in January 2020. 

Outlook

·    Guyana

o  Multiple prospects currently being reviewed with high graded candidates under consideration for a 2020 drilling programme.

o  Operator is preparing a budget for long lead items including wellheads and casing.

o  Once the final well fluid reports and related testing data for the two discoveries as well as results from other regional exploration activities, including drilling of the neighbouring Carapa well have been analysed and evaluated, an updated CPR will be published

o  A further update will be made on the JV Partner's drilling plans for next year in January 2020.

·    Namibia

o  Eco continues to progress its various work programmes offshore Namibia.

o  The Company plans to monitor near term drilling activity in the region and will update the market on developments as appropriate.

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented: 

"We ended the first half of our financial year with a very strong balance sheet. After drilling our first two wells in Guyana we now have CAD $27.9 of cash and cash equivalents. These funds will be used to continue the evaluation of our two Guyana oil discoveries and to drill additional exploration and potentially appraisal wells on the block in 2020.

We recognise the market reaction to our last announcement on the oil quality discovered at Jethro and Joe and we are grateful for the continued support of our shareholders. This continues to be an exciting time for the Company, as the Orinduik block offers many promising prospects and we continue to work with our partners and third party experts to evaluate our first two discoveries and determine the 2020 drilling targets and budget. We expect to announce our drilling plans by the end of January 2020 and we look forward to updating our shareholders on this as appropriate."  

The Company's unaudited financial results for three and six months ended 30 September 2019, together with Management's Discussion and Analysis as at 30 September 2019, are available to download on the Company's website at www.ecooilandgas.com and on Sedar at 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 Canadian Dollars, unless otherwise stated.

Balance Sheet

In accordance with the Company's accounting policies, under IFRS, all our exploratory costs to date have been charged to the Company's statement of operations. Following the two discoveries on our Guyana Licenses, the Company will begin to capitalize all development related costs incurred until potential production phase.

	September 30,		March 31,
	2019		2019
Assets	Unaudited		Audited
Current assets
Cash and cash equivalents	30,654,374		25,007,479
Short-term investments	74,818		74,818
Government receivable	42,613		33,104
Accounts receivable and prepaid expenses	50,338		80,926
	30,822,143		25,196,327
Petroleum and natural gas licenses	1,489,971		1,489,971
Total Assets	32,312,114		26,686,298
Liabilities
Current liabilities
Accounts payable and accrued liabilities	147,986		423,513
Advances from and amounts owing to license partners, net	2,328,675		1,127,675
Total Liabilities	2,476,661		1,551,188
Equity
Share capital	78,759,680		50,025,998
Restricted Share Units reserve	356,493		111,493
Warrants	70,280		52,775
Stock options	3,278,086		3,184,658
Accumulated deficit	(52,629,086)		(28,239,814)
Total Equity	29,835,453		25,135,110
Total Liabilities and Equity	32,312,114		26,686,298

 

Income Statement

	Three months ended				Six months ended
	September 30,				September 30,
	2019		2018		2019		2018
	Unaudited				Unaudited
Revenue
Interest income	134,415		88,132		304,210		96,975
	134,415		88,132		304,210		96,975
Operating expenses:
Compensation costs	342,627		291,575		558,922		524,941
Professional fees	289,636		77,069		313,826		102,362
Operating costs	6,851,804		1,293,895		15,109,935		1,762,395
General and administrative costs	473,423		340,349		1,000,588		632,068
Share-based compensation	7,409,504		1,486		7,468,361		2,973
Foreign exchange gain	291,195		233,848		241,850		91,152
Total expenses	15,658,189		2,238,222		24,693,482		3,115,891
Net loss and comprehensive loss	(15,523,774)		(2,150,090)		(24,389,272)		(3,018,916)
Basic and diluted net loss per share attributable to equity holders of the parent	(0.09)		(0.01)		(0.13)		(0.02)
Weighted average number of ordinary shares used in computing basic and diluted net loss per share	182,038,204		159,195,217		181,112,949		158,619,131

 

Cash Flow Statement

	Six months ended
	September 30,
	2019		2018
	Unaudited
Cash flow from operating activities
Net loss from operations	(24,389,272)		(3,018,916)
Items not affecting cash:
Share-based compensation	7,468,361		2,973
Warrants issued for services	70,280		-
Changes in non‑cash working capital:
Government receivable	(9,509)		(4,505)
Accounts payable and accrued liabilities	(275,527)		(291,294)
Accounts receivable and prepaid expenses	30,588		40,413
Advance from and amounts owing to license partners	1,201,000		284,515
	(15,904,079)		(2,986,814)
Cash flow from financing activities
Net proceeds from Private Placement	21,338,853		-
Proceeds from the exercise of stock options	50,345		-
Proceeds from the exercise of warrants	161,776		-
	21,550,974		-
Increase (decrease) in cash and cash equivalents	5,646,895		(2,986,814)
Cash and cash equivalents, beginning of year	25,007,479		14,316,042
Cash and cash equivalents, end of period	30,654,374		11,329,228

Basis of Preparation

The condensed consolidated interim 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.

Subsequent Events

On October 24, 2019, the Company issued 178,750 common shares, in respect of 178,750 options that were exercised at $0.30 per option. Gross consideration received amounted to $53,625.

**ENDS**

For more information, please visit www.ecooilandgas.com or contact the following:

Eco Atlantic Oil and Gas	[phone]
Gil Holzman, CEO Colin Kinley, COO Alice Carroll, Head of Marketing and IR	[phone]
Strand Hanson Limited (Financial & Nominated Adviser)	[phone]
James Harris James Bellman
Stifel Nicolaus Europe Limited (Joint Broker) Callum Stewart Ashton Clanfield	[phone]
Berenberg (Joint Broker)	[phone]
Matthew Armitt Detlir Elezi
Celicourt (PR)	[phone]
Mark Antelme Jimmy Lea Hannam & Partners (Research Advisor) Neil Passmore Hamish Clegg Canaccord Genuity (North American Advisor) Simon Akit	[phone] [phone]

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014.

Notes to editors

About Eco Atlantic:

Eco Atlantic is a TSX-V and AIM quoted Oil & Gas exploration and production Company with interests in Guyana and Namibia, where significant oil discoveries have been made.

The Group aims to deliver material value for its stakeholders through oil exploration, appraisal and development activities in stable emerging markets, in partnership with major oil companies, including Tullow, Total and Azinam.

In Guyana, Eco Guyana holds a 15% working interest alongside Total (25%) and Tullow Oil (60%) in the 1,800 km² Orinduik Block in the shallow water of the prospective Suriname-Guyana basin. The Orinduik Block is adjacent and updip to ExxonMobil and Hess Corporation's Stabroek Block, on which thirteen discoveries have been announced and over 6 Billion BOE of oil equivalent recoverable resources are estimated. First oil production is expected from the deep-water Liza Field in 2020. 

Jethro-1 was the first major oil discovery on Orinduik Block. The Jethro-1 encountered 180.5 feet (55 meters) of net high-quality oil pay in excellent Lower Tertiary sandstone reservoirs which further proves recoverable oil resources. Joe-1 is the second discovery on the Orinduik Block and comprises high quality oil-bearing sandstone reservoir with a high porosity of Upper Tertiary age. The Joe-1 well encountered 52 feet (16 meters) of continuous thick sandstone which further proves the presence of recoverable oil resources.  

In Namibia, the Company holds interests in four offshore petroleum licences totalling approximately 25,000km² with over 2.3bboe of prospective P50 resources in the Walvis and Lüderitz Basins.  These four licences, Cooper, Guy, Sharon and Tamar are being developed alongside partners Azinam and NAMCOR. Eco has been granted a drilling permit on its Cooper Block (Operator).

 

END

 

 

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