Eco (Atlantic) Oil & Gas, an AIM-listed and Canada-headquartered oil and gas company focused on the Atlantic Margin, has received the final ministerial sign-off for the transfer of a lion’s share of its participating interest across three offshore petroleum licenses to BP Namibia Energy, a subsidiary of the UK-headquartered energy giant BP, which clears the way for the completion of the deal, enabling the European player to step in as operator and fully carry Eco’s remaining interest through the current exploration phase.
The keys to the Walvis Basin are officially changing hands, as Eco Atlantic Oil & Gas, which is considered to be the biggest owner and operator in this basin, has secured the final blessing from Namibia's Ministry of Industries, Mines and Energy for its farm-down to BP, setting the stage for a heavily backed exploration operations off the coast of Namibia, while Eco shifts its focus to growing its footprint in Guyana and South Africa.
The company, through its wholly owned subsidiaries, Azinam Group, Eco Oil & Gas Namibia, and Eco Oil & Gas Services, will transfer an aggregate of 60% of its participating interest, transferring operatorship to BP in respect of Block 2012A in PEL97, known as the Cooper license; blocks 2111B and 2211A in PEL99, named the Guy license; and blocks 2211B and 2311A in PEL100, called the Tamar license. The approval represents the final governmental consent required under Namibia's law for the transaction.
Following receipt of this final ministerial go-ahead, the parties are now finishing the remaining closing deliverables, and completion is expected shortly. As a result of this farm-down, the joint venture (JV) will embark on a comprehensive exploration work program, and Eco will substantially reduce its funding while retaining material upside exposure to the licenses as a new international operator takes over to progress the blocks’ exploration activities.
The firm intends to use the cash proceeds of the transaction to support its ongoing growth through exploration and appraisal activities across its Atlantic Margin portfolio and for general working capital purposes. Eco will get a one-time cash consideration of $2.7 million on completion and retain a 25% participating interest in PEL97, PEL99, and PEL100.
BP will carry 100% of Eco’s 25% retained stake as well as its proportionate share of the NAMCOR (10%) and the Local Partners (5%) participating interests across these licenses during the current exploration phase. The government-approved exploration work program includes completing seismic reprocessing on PEL97 and acquiring at least 3,000 square kilometers of new 3D seismic data on PEL99 and PEL100.
If partners decide to enter the second renewal period of the license term in 2028 and commit to drilling an exploration well, Eco will have the ability to either exercise a put option to transfer an additional 10% interest to BP in exchange for a full carry on its remaining 15% stake, subject to a cap of $21 million net to the firm for every well on each of the licenses, or opt to retain its 25% stake of the drilling costs.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented: “With final regulatory approval now secured, we will complete the remaining closing formalities as swiftly as possible and look forward to moving full steam ahead with BP, NAMCOR and our local partners into the next phase of exploration across these highly prospective Walvis Basin licences.
“With our significant South Africa and Namibia transactions now successfully progressed, our focus turns to delivering the remaining key milestones across the portfolio, including finalising our PSA negotiations in Guyana and completing the JHI acquisition announced earlier this year.”