Eco Atlantic Oil & Gas (ECO ) announced that it has closed a transaction with JHI Associates Inc. to acquire up to a 10% interest in JHI, a Guyana pure-play deepwater exploration group.
The Guyana and Namibian-focused oil and gas exploration firm said the transaction provides immediate exposure to a current active drilling program in the Canje Block offshore Guyana.
In 2014, JHI partnered with Guyana-based Mid-Atlantic Oil & Gas Inc. ("MOGI") which was awarded the Canje Block in 2015. Later in 2016, natural gas company, ExxonMobil, joined the Canje Block as the site’s operator, and in 2018 TotalEnergies farmed into the Block.
Eco has subscribed for 5,000,000 new common shares in JHI at a price of US$2.0 per share, representing 6.4% of JHI's enlarged share capital. As at 31 December 2020, JHI had net assets of around US$46.3 million and recorded a net loss of approximately US$8.28 million.
The Canje partners, which includes Esso Exploration & Production Guyana (35%) and Total E&P Guyana B.V. (35%), have identified multiple drillable prospects and applied for a multi-well drilling permit following five years of extensive technical and seismic data analysis.
The 2021 multi-well exploration programme on the Canje Block seeks to test the extension of the prolific hydrocarbon system which has resulted in over 9 billion barrels of oil equivalent of recoverable resources being discovered in the adjacent Stabroek Block since 2015, it noted.
The transaction is expected to increase Eco Atlantic's presence in the Guyana-Suriname basin to include a three well drilling programme, with the first two firm wells on the Canje Block drilling in 2021 and at least one on the Orinduik Block, subject to partner approval.
The Jabillo-1 well is currently being drilled on the Canje Block utilizing the Stena Carron drillship with results expected in July. Meanwhile, the Sapote-1 well is scheduled to be drilled later this year in Q3 by the Stena DrillMax in the eastern portion of the Canje Block, which Eco will also now have exposure to through its acquired shareholding in JHI.
Eco told investors that it will finance the transaction from existing cash resources as well as through an expected private placement of shares to Africa Oil and Charlestown Energy, which it said will leave it with ‘strong cash reserves for future exploration wells on Orinduik.’
Commenting on the acquisition, Gil Holzman, Co-Founder and Chief Executive Officer of Eco Atlantic, said: “After a period of thorough technical analysis of the Canje block, by both our team at Eco and our strategic partners at Africa Oil Corp we are delighted to advise the market on this exciting transaction, and to be back drilling with results expected imminently.”
“The carried Jabillo-1 well is underway and is expected to reach its target in the coming few weeks, providing our shareholders with high impact near term catalysts,” said Holzman.
As part of the acquisition, Eco noted that it will appoint Keith Hill, a non-executive Director of the Group and President and CEO of Africa Oil, to the JHI Board with immediate effect.
Hill highlighted that Eco believes the Canje Block “has the potential to hold resources comparable to the world class Stabroek Block which is undoubtedly the most successful exploration campaign in recent history. Combining this with the holdings in the Orinduik Block, Eco is well positioned to be part of the historic oil development in Offshore Guyana."
Holzman added, “Since 2014, Eco has strongly focused on the hydrocarbon potential offshore Guyana, and this strategic deal with JHI marks the beginning of a wider presence and potential increased future collaboration in the basin."
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Earlier this month, Eco said that its partner and operator of the Orinduik Block offshore Guyana, Tullow Oil, is ‘confident’ that the pair can form a new drilling schedule in 3Q21.
Eco, which is ready and prepared to drill a well in 2022, subject to approval by the JV, said
seismic reprocessing will be completed this summer with target selection committed to follow.
As Eco plans to outline a new drill programme in 3Q22, the company has highlighted that the Guyana / Suriname Basin is set to mature from its current valuation to potentially 10 FPSOs and over a million barrels of production per day, expected mid-way through this decade.
Eco says this, supported by estimated breakeven prices of US$35, US$25 and US$32 per barrel recently reported by Hess in respect of discoveries on the nearby Stabroek block in the same region, proves extremely positive for the Orinduik partners and company stakeholders. The company highlighted to investors that this has motivated the drive to additional drilling.
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