Unaudited Results and Corporate Update

RNS Number : 0633R
Eco (Atlantic) Oil and Gas Ltd.
27 February 2023
 


27 February 2023

 

ECO (ATLANTIC) OIL & GAS LTD.

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

 

Unaudited Results for the three and nine months ended 31 December 2023

Corporate and Operational Update

 

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX     V: EOG) , the oil and gas exploration company focused on the offshore Atlantic Margins, is pleased to announce its results for the three and nine months ended 31 December 2022, and to provide a corporate and operational update. 

 

Highlights:

 

Financials (as at 31 December 2022)

 

·   The Company had cash and cash equivalents of US$14.5 million and no debt as at 31 December 2022.

·   The Company had total assets of US$68.0 million, total liabilities of US$17.8 million and total equity of US$50.1 million as at 31 December 2022.

 

Operations:

 

South Africa

 

Block 2B

 

·   In November 2022, the JV Partners submitted a Production Right Application to the Petroleum Agency of SouthAfrica ("PASA"), based on the existing oil discovery of AJ-1 and potential future operations. 

· Following the drilling of the Gazania-1 well in November 2022, further analysis of the well data is being undertaken to determine next steps on the Block.  

· Eco and its JV partners continue to believe that Block 2B contains considerable hydrocarbon resources and further updates will be made in due course on how the JV partners will look to deliver value from the licence for the benefit of all stakeholders.

 

Block 3B/4B

 

·   In December 2022, Eco received regulatory approval from the Department of Mineral Resources and Energy ("DMRE") of South Africa and Petroleum Agency South Africa ("PASA") in respect of its acquisition of an additional 6.25% participating interest in the Block (the "Acquisition"), giving Eco an overall interest of 26.25%.

· As the final instalment of the share consideration due in respect of the Acquisition, Eco is issuing an additional 1,666,666 common shares to the Lunn Family Trust, the Vendor (the "Final Consideration Shares").

· The Company and its JV partners are progressing plans to conduct a two-well campaign on Block 3B/4B and in addition continue to progress the collaborative farm-out process, up to 55% gross working interest in the Block, with various potential parties.

·   The JV Partners have selected a leading South African environmental consulting firm to conduct a comprehensive Environmental and Social Impact Assessment (ESIA) process commencing in March 2023 in preparation for permitting and drilling activity on the Block.

· Africa Oil Corp. the Operator of the Block is preparing a new 51-101 Competent Person's Report following the completion of the 3D data reprocessing and targets and leads identification.

 

Namibia

 

· Namibia witnessed some of the largest oil exploration discoveries in the world in 2022 and with significant exploration activity set to continue this year, the Company believes that its highly strategic acreage in-country will remain of considerable interest to operators looking to enter the region.

· Eco continues to explore possible farm out opportunities with its four licences in the region and will update investors on developments accordingly.

 

Guyana

 

· Eco and its JV partners on the Orinduik Block, offshore Guyana, continue to work towards identifying the optimal drilling target and Eco plans to drill at least one well into a light oil Cretaceous target in the next 12-18 months.

· With an excess of 11 billion barrels of oil discovered in Guyana to date, the region has become one of the most prolific hydrocarbon basins in the world. Eco continues to work towards unlocking the potential of the Orinduik Block as fast as practically possible.

 

 

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

 

"We have had a busy start to the year, and I am pleased to report substantial progress across a number of fronts in our exciting exploration portfolio.

 

Following our drilling campaign on Block 2B, offshore South Africa, in Q4 2022, we continue to analyse the well data obtained from the Gazania-1 well. We remain of the view that considerable untapped potential remains in the asset and we are working with our partners on the Block to plan our next steps, in order to deliver value for all stakeholders.

 

Significant progress continues to be made on Block 3B/4B, offshore South Africa, with a number of workstreams progressing well. As we have said previously, we are conducting a farm out process on the licence and we are looking ahead to commencing a two well drilling program once ESIA is completed and permits obtained.

 

Both Guyana and Namibia continue to yield sizeable discoveries, and we are seeing unprecedented levels of interest for exploration assets in these regions. As such, we continue to progress our highly strategic acreage positions in both Guyana and Namibia and we look forward to updating the market on our farm out program in Namibia and our plans for a drilling campaign in Guyana as soon as practically possible.

 

We remain excited about the potential for 2023 and we look forward to keeping all stakeholders updated throughout the course of the year."

 

 

Admission of the Common Shares

Application has been made for admission of the Final Consideration Shares, which will rank pari passu with existing Common Shares, to trading on AIM ("Admission"). It is expected that Admission will become effective, and trading will commence on or around 8.00  a.m. on 3 March 2023.

Following Admission of the Consideration Shares, the enlarged issued share capital of the Company will be 367,348,680 Common Shares. The above figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company.

 

 

The Company's unaudited financial results for the three and nine months ended 31 December 2022, together with Management's Discussion and Analysis as at 31 December 2022, 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 US Dollars, unless otherwise stated.

 

 

Balance Sheet

 

 

December 31,

 

March 31,

2022

2022

 

 (Unaudited)

 

 (Audited)

Assets

 



Current Assets

 



  Cash and cash equivalents

14,461,888

 

3,438,834

  Short-term investments

55,266

 

52,618

  Government receivable

42,468

 

27,487

  Amounts owing by license partners, net

4,279,350

 

-

  Accounts receivable and prepaid expenses

788,597

 

257,911

  Assets held for sale

-

 

2,061,734

Total Current Assets

19,627,569

 

5,838,584

 




Non- Current Assets

 



  Investment in associate

9,000,254

 

9,277,162

  Petroleum and natural gas licenses

39,351,990

 

30,753,034

Total Non-Current Assets

48,352,244

 

40,030,196

Total Assets

67,979,813

45,868,780

 




Liabilities

 



Current Liabilities

  Accounts payable and accrued liabilities

17,003,778

 

1,931,823

  Current liabilities related to assets held for sale

-

 

473,254

  Warrant liability

838,789

 

3,241,762

Total Current Liabilities

17,842,567

 

5,646,839

 

 



Total Liabilities

  17,842,567

 

  5,646,839

 




Equity

 



 

Share capital

 

121,570,983

 

  63,141,609

 

Shares to be issued

 

 - 

 

  20,766,996

 

Restricted Share Units reserve

 

433,153

 

  267,669

 

Warrants

 

  14,778,272

 

  7,806,000

 

Stock options

 

2,560,023

 

  958,056

 

Foreign currency translation reserve

 

 (1,846,026)

 

  (1,309,727)

 

Accumulated deficit

 

 

 

  (87,359,159)

 

  (51,408,662)

 




Total Equity

  50,137,246

 

  40,221,941

 




Total Liabilities and Equity

  67,979,813

 

  45,868,780

 

 

 

Income Statement

 



Three months ended

 

Nine months ended

 

December 31,

December 31,

 


2022

 

2021

 

2022

 

2021

 


Unaudited

 

Unaudited

Revenue

 








 

Interest income


  36,731

 

  - 


  93,183

 

  8,435



  36,731

 

  - 


  93,183

 

  8,435

Operating expenses :

 







 

 

Compensation costs


 

217,192

 

  116,651


  697,106

 

  526,738

 

Professional fees

 


  131,188

 

  79,763


  591,767

 

  261,262

Operating costs, net

 

 


19,880,507

 

179,885


32,921,918

 

597,703

General and administrative costs

 

 


120,692

 

121,569


728,846

 

430,926

Share-based compensation

 


484,125

 

2,373


2,236,011

 

14,083

Foreign exchange loss

 


(333,104)

 

(12,235)


642,117

 

40,987

 

Total operating expenses

 


 

20,500,600

 

 

488,006


 

37,817,765

 

 

1,871,699










 

Operating loss

 

  (20,463,869)

 

  (488,006)


  (37,724,582)

 

  (1,863,264)










 

Fair value change in warrant liability

 

 


 

556,277

 

 

1,236,827


 

2,402,973

 

 

1,874,016

Share of losses of company accounted for at equity

 

 


(92,303)

 

-


(276,908)

 

-

 

Net profit (loss) for the period from continuing operations

 

 

 

 

(19,999,895)

 

 

748,821


 

(35,598,517)

 

 

10,752

Gain (loss) from discontinued operations, after-tax

 

 


546,343

 

(512,778)


(351,980)

 

(1,000,969)

 

Net profit (loss) for the period

 

 

(19,453,552)


 

236,043


 

(35,950,497)


 

(990,217)










Foreign currency translation adjustment

 

 


16,803

 

35,160


(536,299)

 

26,925

Comprehensive profit (loss) for the period

 

(19,436,749)

 

271,203


(36,486,796)

 

(963,292)










Basic and diluted net loss per share attributable to equity holders of the parent

 


(0.055)

 

(0.002)


(0.104)

 

(0.005)

 

Weighted average number of ordinary shares used in computing basic and diluted net loss per share


365,355,650

 

199,893,636


344,158,567

 

194,041,560

 

 

Cash Flow Statement

 


Nine months ended

 

December 31,

2022

 

2021

 

 (Unaudited)

 

 (Unaudited)

Cash flow from operating activities

 

 



Net loss from continuing operations

 

(35,598,517)

 

10,752

Net loss from discontinued operations

 

 

(351,980)

 

(1,000,969)

Items not affecting cash:




Share-based compensation

 

2,236,012

 

14,083

Depreciation and amortization

 

-

 

57,187

Accrued interest

 

-

 

8,535

Revaluation of warrant liability

 

(2,402,973)

 

(1,874,016)

Share of losses of companies accounted for at equity

 

 

276,908

 

-

Changes in non‑cash working capital:




Government receivable

 

(14,981)

 

12,444

Accounts payable and accrued liabilities

 

15,243,249

 

145,697

Accounts receivable and prepaid expenses

 

7,969,314

 

(59,781)

Reallocation to discontinued operations cashflows

 

(171,294)

 

-

Advance from and amounts owing to license partners

(12,878,306)


(298,337)

 

 

(25,692,568)


(2,984,405)





Net change in non-cash working capital items relating to discontinued operations

(458,842)

 

  - 





Cash flow from investing activities

 



Investment in associate

  - 

 

  (10,000,000)

 

Short-term investments

 

  (2,648)


  1,500,022


(2,648)


(8,499,978)





Cash flow from investing activities - discontinued operations

2,047,322

 

-





Cash flow from financing activities

 



Proceeds from private placements, net

 

35,666,089

 

-

Issuance of shares

 

-

 

4,793,789

Exercise of stock options

-

 

71,388


35,666,089


4,865,177





Increase (decrease) in cash and cash equivalents

 

11,559,353

 

(6,619,206)

Foreign exchange differences

 

(536,299)

 

46,000

Cash and cash equivalents, beginning of period

3,438,834


11,807,309





Cash and cash equivalents, end of period

14,461,888


5,234,103









Supplementary disclosure of cash flow information:

 



Significant non-cash transactions

 



Issuance of shares in respect of farm out agreement

8,500,000


-

 

8,500,000


-

 

Notes to the Financial Statements

 

Basis of Preparation

 

The Condensed Interim Consolidated 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.

 

**ENDS**

 

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

 

Eco Atlantic Oil and Gas

 

c/o Celicourt +44 (0) 20 8434 2754

Gil Holzman, CEO

Colin Kinley, COO

Alice Carroll, Head of Corporate Sustainability

 

 

+44(0)781 729 5070

Strand Hanson (Financial & Nominated Adviser)

 

+44 (0) 20 7409 3494

James Harris

James Bellman


 

Berenberg (Broker)

 

+44 (0) 20 3207 7800

Matthew Armitt

Detlir Elezi


Echelon Capital (Financial Adviser N. America Markets)

 

 

Ryan Mooney 

Simon Akit

+1 (403) 606 4852

+1 (416) 8497776

 

Celicourt (PR)

 

+44 (0) 20 8434 2754

Mark Antelme

Jimmy Lea

 

 


The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).

 

Notes to editors:

 

About Eco Atlantic:

 

Eco Atlantic is a TSX-V and AIM-quoted Atlantic Margin-focused oil & gas exploration company with offshore license interests in Guyana, Namibia, and South Africa. Eco aims to deliver material value for its stakeholders through its role in the energy transition to explore for low carbon intensity oil and gas in stable emerging markets close to infrastructure. 

 

Offshore Guyana in the proven Guyana-Suriname Basin, the Company holds a 15% Working Interest in the 1,800 km2 Orinduik Block Operated by Tullow Oil. In Namibia, the Company holds Operatorship and an 85% Working Interest in four offshore Petroleum Licences: PELs: 97, 98, 99, and 100, representing a combined area of 28,593 km2 in the Walvis Basin. 

 

Offshore South Africa, Eco is Operator and holds a 50% working interest in Block 2B and a 26.25% Working Interest in Block 3B/4B operated by Africa Oil Corp., totalling some 20,643km 2

 

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