Photo: Illustration; Source: Eco Atlantic

Eco advances Azinam deal as drilling plans take shape

Oil and gas exploration company Eco (Atlantic) Oil & Gas is one step closer to completing the acquisition of the Azinam Group and its asset portfolio with the signing of the definitive purchase deal, which will enable the firm to add more acreage offshore South Africa and Namibia. The company is also finalising its 2022 drilling plans in hopes of finding more hydrocarbons.

On 10 January 2022, Eco Atlantic reported that it had inked a memorandum of understanding (MOU) to expand its footprint by acquiring Azinam Group and its asset portfolio and revealed plans for a 2022 South Africa drilling programme.

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In its latest statement on Tuesday, Eco confirmed that it has signed a definitive share purchase agreement (SPA) to acquire 100 per cent of Azinam Group – a wholly-owned subsidiary of Azinam Holdings, majority-owned by Seacrest Capital Group – in return for a 16.5  per cent equity stake in the company.

Gil Holzman, Co-Founder and CEO of Eco Atlantic, commented: “We are very pleased to have signed the final definitive SPA to acquire Azinam Group. This now puts the company a step further towards joining all of Azinam’s offshore exploration acreage into our broader portfolio.”

This acquisition will enable Eco to acquire 50 per cent working interest in the Orange Basin, offshore South Africa and operatorship in Block 2B, along with a material working interest of 20 per cent in the deepwater 3B/4B Block and the shallow water and nearshore 3B/4B Blocks.

In addition, Eco will also expand its portfolio with additional working interests offshore Namibia in its current oil blocks – petroleum exploration licenses: 9798 and 99 – where Azinam is a partner, increasing Eco’s net working interest in these licenses to 85 per cent following completion, which will then align with the firm’s existing 85 per cent interest in license 100.

It is worth noting that Eco negotiated the reissuance and establishment of a ten-year life cycle for each of these licenses back in November 2020 and currently operates all four licenses.

Namibia Eco Atlantic
Source: Eco Atlantic

As previously reported, Azinam will also be issued warrants over new common shares in Eco – exercisable only in case of a producible commercial discovery on Block 2B or Block 3B4B – following completion of the acquisition.

Furthermore, Azinam will enter into a lock-in agreement to restrict the sale of the consideration shares until either the spudding of a well on Block 2B or six months following completion in respect of a third of the consideration shares, with two equal further tranches being released from the lock-in 12 and 18 months following completion.

Erik Tiller, Co-founder and CEO of Seacrest Capital Group, remarked:“We are very pleased to have signed the SPA between Eco and Azinam that will create a larger exploration company that will be better positioned to take advantage of value accretive E&P opportunities.”

The completion of the acquisition is subject to requisite approvals from the government of South Africa, the government of Namibia and the TSX Venture Exchange and it is expected to complete in two to three weeks pending TSX-V approval.

Firming up 2022 South Africa drilling campaign

Eco explained that discussions are still ongoing with its key existing stakeholders in relation to underwriting the funds required to participate directly in the 2022 Block 2B South Africa drilling programme.

Holzman explained the firm’s drilling plans by stating: “We are working towards drilling a well on Block 2B, a highly prospective play in the Orange Basin, offshore South Africa, close to the recent discovery by Shell and QatarEnergy in the Orange Basin in Namibia. The well is planned for the second half of this year. The company also anticipates drilling a further exploration well in Guyana following this.”

Guyana Eco Atlantic
Source: Eco Atlantic

To remind, Eco reinforced and increased its position in Guyana in January 2022 through the acquisition of an additional interest in the ExxonMobil-operated Canje Block, marking another step in the consolidation among smaller industry players.

“We also evaluate that Block 3B/4B, with the Block Partners at Africa Oil and Ricocure in the Orange Basin, South Africa, is directly correlated to the Graff-1 well, which was announced on Friday 4 February 2022 by Namcor and block partners as a light oil discovery in the primary and secondary targets,” added Holzman.

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“We look forward to firming up our exciting drilling plans and updating our shareholders on the funding structure and timing of the wells in due course,” concluded Holzman.