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Eco (Atlantic) O&G (ECO)

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Friday 25 February, 2022

Eco (Atlantic) O&G

Unaudited Results and Corporate Update

RNS Number : 7871C
Eco (Atlantic) Oil and Gas Ltd.
25 February 2022
 

25 February 2022

 

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 2021

 

Corporate and Operational Update

 

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX     V: EOG) the oil and gas exploration company with licences in the proven oil provinces of Guyana and Namibia, is pleased to announce its results for the three and nine months ended 31 December 2021, alongside a corporate and operational update.  

 

Results Highlights:

 

Financials:

 

· Cash and cash equivalents of US$5.8 million and no debt as of 31 December 2021. 

· Total assets of US$19million, current liabilities of US$2 million and total equity of US$17 million as of 31 December 2021.

 

Operations during and post-period end:

 

Guyana

 

· The Company purchased an additional 800,000 common shares in JHI Associates Inc. ("JHI") in return for 1,200,000 new common shares in Eco ("Consideration Shares").  The purchase of the 800,000 common shares in JHI completed on 19 January 2022, increasing the total number of shares held by Eco in JHI to 5,800,000 shares representing c.7.35% of JHI.

· On the Canje Block, Guyana, Eco received a detailed update from JHI Associates Inc. on 30 October 2021 that ExxonMobil had successfully and safely drilled the Sapote-1 well. The well recorded hydrocarbon shows while drilling and in the logging sequence, in a deeper interval than anticipated, but had no shows in the upper primary objective horizon. With sidewall coring and wireline logging complete, ExxonMobil will now work to define the reservoir properties, including porosity and permeability, and the cored samples will be analysed for hydrocarbons.

· On the Orinduik Block, the JV Partners (Eco Atlantic (15% working interest ("WI")), Tullow Guyana B.V. ("Tullow") (Operator, 60% WI) and TOQAP Guyana B.V. ("TOQAP") (25% WI)) are advancing towards finalisation of the target selection process and updating the drilling targets inventory. The partnership aims to establish firm targets in the near-term and advance towards drilling. 

 

 

Namibia and South Africa

 

· On 10 January 2022, Eco announced this signing of a binding Memorandum of Understanding ("MOU") to acquire 100% of Azinam Group Limited ("Azinam") (the "Acquisition"), including Azinam's entire offshore asset portfolio, in return for a 16.5% equity stake in Eco (as enlarged by the associated share issuance). Subsequent to this, Eco reported the signing of a definitive Share Purchase Agreement ("SPA") with Azinam on 8 February 2022, which, pending TSX-V approval, is anticipated to lead to the Closing of the transaction imminently.

· Eco is now planning and preparing the drilling of an exploration well on Block 2B in H2 2022, a highly prospective Block with past oil discovery (AJ-1) in the Orange Basin, offshore South Africa, close to the recent Graff-1 discovery by Shell and Qatar Energy.

· In October 2021, Eco completed drafting the four new Joint Operating Agreements ("JOAs") for its new 2021 Petroleum Licenses in the Walvis Basin, offshore Namibia. The Company has received all paying partner approvals on the JOAs and Namibia's Ministry of Mines and Energy has approved Eco Atlantic to be the Operator of all four blocks, which total some 7,065,484 acres (28,593 km2).

· The Company continues to monitor and assess opportunities, both technical and corporate, particularly with the recent Shell Namibia's Graff-1 and TotalEnergies Venus-1 discoveries in the Orange Basin.

 

Solear Ltd.

 

· On 24 February 2021, Eco was pleased to announce the successful sale of the Kozani project in Greece by Solear Ltd. ("Solear") at 25% margin and for US$2 million to Nepcoe Capital Partners Ltd ("Nepcoe") and the re-payment of this consideration to Eco Atlantic will be received by the end of February 2022.

 

Outlook:

 

Guyana

 

· Eco continues to work closely with its JV Partners on the Orinduik Block with regard to carrying out further drilling activity on the licence as soon as practically possible. The Partners will likely look to drill at least one of the light oil cretaceous stacked targets after the target selection process is finalised.

· Guyana continues to be one of the most prolific exploration regions in the world, with over ten billion barrels of oil discovered in the last six years.

· Eco are encouraged by recent neighbouring discoveries - ExxonMobil operated Stabroek block Fangtooth-1 discovery in deeper intervals and Santonian sands similar to the shows seen in Sapote-1 well Canje block and by CGX Energy operated Corentyne block, confirming a discovery at the Kawa-1 wildcat, a shelf discovery which is on trend geologically with the Orinduik block. 

 

 

Namibia and South Africa

 

· The Company's licences in Namibia cover approximately 28,593 km2, with over 2.362 BBOE of prospective P50 resources.

· With the addition of Azinam's offshore portfolio, Eco has expanded upon its strategically significant acreage position in-country and is progressing its various work programmes across its Namibian licences. With the recently announced discoveries at the Graff-1 and Venus-1 the Company continues to witness considerable interest in Namibia from multiple international oil companies.

· Eco is now planning and preparing the drilling of an exploration well on Block 2B in H2 2022, subject to available funding, a highly prospective Block with past oil discovery (AJ-1) in the Orange Basin, rig contract execution expected in the next month along with commencing orders of long lead items.  Once the Azinam deal has closed, Eco will become the official operator of the Block.

 

 

Corporate:

 

· Eco continues to evaluate additional asset and corporate opportunities in and around its current areas of operation, with an overarching aim of building Eco into an exploration business of material scale.

· Eco also maintains a strict control over costs throughout the business, which continues to generate material savings, ensuring that Eco remains well capitalised with a strong balance sheet.

 

 

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

 

"I am excited about the positive and busy start to the year we have made. We announced a transformational deal with the purchase of Azinam's offshore acreage, which will add to our highly strategic acreage position in Namibia and allow us entry into Orange Basin, South Africa.  Two important large discoveries offshore Namibia has already been announced this year on trend with our new Orange basin blocks, and our team is working hard on the upcoming drilling campaign on Block 2B in H2 2022 and furthering their technical understanding on Block 3B4B which is geologically on same pathway with Graff-1 and Venus-1. 

 

"We also increased our interest in JHI, via an additional share swap, reinforcing our view that Guyana remains one of the most attractive hydrocarbon provinces in the world. We look forward to announcing our future drilling plans in due course, as we work with our JV Partners on finalising the target selection and drilling plans.

 

"We were also pleased to play a role in the sale of Solear's Kozani project in Greece for c.US$2 million, which generated a 25% return for Eco shareholders and will now be returned to Eco's treasury.

 

"Eco continues to assess both asset and corporate opportunities, as well as a number of meaningful catalysts that have the potential to deliver value for all stakeholders, and we look forward to updating the market further in due course."

 

 

The Company's unaudited financial results for the three and nine months ended 31 December 2021, together with Management's Discussion and Analysis, 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,

2021

2021

 

 Unaudited

 

 Audited

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

  5,234,103

 

  11,807,309

Short-term investments

  52,618

 

  1,552,640

Government receivable

  10,253

 

  22,697

Amounts owing by license partners, net

  394,839

 

  193,655

Accounts receivable and prepaid expenses

  106,261

 

  46,480

 

  5,798,074

 

  13,622,781

 

 

 

 

  Investment in associate

  10,000,000

 

  - 

  Petroleum and natural gas licenses

  1,072,260

 

  1,072,260

  Renewable energy licenses

  1,364,841

 

  1,411,186

  Right of use assets

  321,653

 

  332,495

  Security deposit

  471,380

 

  490,455

 

 

 

 

Total Assets

  19,028,208

 

  16,929,177

 

 

 

 

Liabilities

 

 

 

Current liabilities

Accounts payable and accrued liabilities

  646,719

 

  501,022

Advances from and amounts owing to license partners, net

  - 

 

Short-term portion of lease liability

  22,987

 

  22,987

Total current liabilities

  669,706

 

  621,162

 

 

 

 

  Warrant liability

  1,047,512

 

Lease liability

  334,452

 

  325,917

Total liabilities

  2,051,670

 

  947,079

 

 

 

 

Equity

 

 

 

Share capital

  61,070,124

 

  59,099,725

Restricted Share Units reserve

  267,669

 

  267,669

Stock options

  2,663,057

 

  2,675,724

Foreign currency translation reserve

  (1,171,172)

 

  (1,198,097)

Non-controlling interest

  - 

 

  (48,674)

Accumulated deficit

  (45,853,140)

 

  (44,814,249)

 

 

 

 

Total Equity

  16,976,538

 

  15,982,098

 

 

 

 

Total Liabilities and Equity

  19,028,208

 

  16,929,177

 

 

 

Income Statement

 

 

 

Three months ended

 

Nine months ended

 

December 31,

December 31,

 

 

2021

 

2020

 

2021

 

2020

 

 

Unaudited

 

Unaudited

Revenue

 

 

 

 

 

 

 

 

Interest income

 

  - 

 

  6,123

 

  8,435

 

  41,779

 

 

  - 

 

  6,123

 

  8,435

 

  41,779

Operating expenses :

 

 

 

 

 

 

 

 

Compensation costs

 

  128,724

 

  173,373

 

  712,991

 

  486,999

Professional fees

 

  91,355

 

  80,280

 

  514,378

 

  200,694

Operating costs

 

  660,170

 

  255,477

 

  1,139,962

 

  1,105,892

General and administrative costs

 

  121,569

 

  138,472

 

  430,926

 

  367,742

Share-based compensation

 

  2,373

 

  33,457

 

  14,083

 

  88,277

Interest expense

 

  8,828

 

  - 

 

  19,341

 

  - 

Foreign exchange gain (loss)

 

  (12,235)

 

  (32,561)

 

  40,987

 

  (68,826)

Total operating expenses

 

  1,000,784

 

  648,498

 

  2,872,668

 

  2,180,778

 

 

 

 

 

 

 

 

 

Fair value change in warrant liability

 

  (1,236,827)

 

  - 

 

  (1,874,016)

 

  - 

 

 

 

 

 

 

 

 

 

Net profit (loss) for the period

 

  236,043

 

  (642,375)

 

  (990,217)

 

  (2,138,999)

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

  35,160

 

  - 

 

  26,925

 

  (87,942)

Comprehensive profir (loss) for the period

 

  271,203

 

  (642,375)

 

  (963,292)

 

  (2,226,941)

 

 

 

 

 

 

 

 

 

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

 

  0.00

 

  (0.00)

 

  (0.01)

 

  (0.01)

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

 

  199,893,636

 

  184,697,723

 

  194,041,560

 

  184,697,723

 

 

 

Cash Flow Statement

 

 

Nine months ended

 

December 31,

2021

 

2020

 

Unaudited

Cash flow from operating activities

 

 

 

Net loss from operations

  (990,217)

 

  (2,138,999)

Items not affecting cash:

 

 

 

  Share-based compensation

  14,083

 

  88,277

  Depreciation and amortization

  57,187

 

  - 

  Accrued interest

  8,535

 

  - 

  Revaluation of warrant liability

  (1,874,016)

 

  - 

Changes in non‑cash working capital:

 

 

 

  Government receivable

  12,444

 

  (20,007)

  Accounts payable and accrued liabilities

  145,697

 

  (130,818)

  Accounts receivable and prepaid expenses

  (59,781)

 

  (26,726)

  Advance from and amounts owing to license partners

  (298,337)

 

  (135,313)

 

  (2,984,405)

 

  (2,363,586)

 

 

 

 

Cash flow from investing activities

 

 

 

 Investment in associate

  (10,000,000)

 

  - 

 Short-term investments

  1,500,022

 

  - 

 

  (8,499,978)

 

  - 

 

 

 

 

Cash flow from financing activities

 

 

 

 Issuance of shares

  4,793,789

 

  - 

 Exercise of stock options

  71,388

 

  - 

 

  4,865,177

 

  - 

 

 

 

Decrease in cash and cash equivalents

  (6,619,206)

 

  (2,363,586)

Foreign exchange differences

  46,000

 

  46,660

Cash and cash equivalents, beginning of period

  11,807,309

 

  18,667,016

 

 

 

 

Cash and cash equivalents, end of period

  5,234,103

 

  16,350,090

 

 

Notes to the Financial Statements

 

Basis of Preparation

 

The 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.

 

Summary of Significant Accounting Policies

 

Critical accounting estimates

 

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized prospectively from the period in which the estimates are revised. The following are the key estimate and assumption uncertainties considered by management.

 

**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 Marketing and IR

 

 

+44(0)781 729 5070 | +1 (416) 318 8272

Strand Hanson Limited (Financial & Nominated Adviser)

 

+44 (0) 20 7409 3494

James Harris

Rory Murphy

James Bellman

 

 

Berenberg (Broker)

 

+44 (0) 20 3207 7800

Emily Morris

Detlir Elezi

 

 

Celicourt (PR)

 

+44 (0) 20 8434 2754

Mark Antelme

Jimmy Lea

 

 

Hannam & Partners (Research Advisor)

 

Neil Passmore

 

+44 (0) 20 7905 8500

 

 

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 consuming oil and gas in stable emerging markets near to infrastructure. 

 

Offshore Guyana in the proven Suriname-Guyana Basin, the Company holds a 15% Working Interest in the 1,800 km 2  Orinduik Block Operated by Tullow Oil, and also indirectly through a 6.4% shareholding in JHI Associates Inc. a private company which holds a 17.5% WI in the 4,800km 2  Canje Block Operated by ExxonMobil.   In Namibia, the Company holds Operatorship and 85% Working Interests in four offshore Petroleum Licences: PEL's:  97, 98, 99 and 100   totalling 28,593 km 2  in the Walvis Basin. 

 

Offshore South Africa, Eco holds  Operatorship and 50% WI of Block 2B, and 20% Working Interest of Blocks 3B/4B and Nearshore 3B/4B, totalling some 21,603 km 2

 

Eco Atlantic is also a 100% shareholder in Solear Ltd., Solear is an independent private clean energy investment company focused on low cost, high yield solar development projects in southern Europe. 

 

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