Eco increases exposure in ExxonMobil’s block off Guyana

Oil and gas exploration company Eco (Atlantic) Oil & Gas has reinforced and increased its position in Guyana through the acquisition of an additional interest in the ExxonMobil-operated Canje offshore Block, marking another step in the consolidation among smaller industry players.

Canje Block off Guyana; Source: JHI

Eco announced on Wednesday that it had purchased an additional 800,000 common shares in JHI Associates in return for 1,200,000 new common shares in Eco.  The transaction is expected to be completed on 21 January 2022, increasing the total number of shares currently held by Eco in JHI to 5,800,000 shares.

Gil Holzman, Co-Founder and CEO of Eco Atlantic, explained: “We are committed to creating material value for our shareholders through a multi catalyst, high impact, exploration portfolio. As such, we are pleased to increase our exposure in the Canje Block by building our equity holding in JHI. This also marks another step in the broader consolidation amongst smaller exploration players, in which we want to lead.”

As reported in June 2021, Eco acquired 5 million common shares representing a 6.4 per cent interest in JHI Associates, which is a private Canadian company with a 17.5 per cent working interest in the Canje Block.  

Guyana blocks; Source: Westmount
Guyana blocks; Source: Westmount

ExxonMobil and its partners are working to technically define additional drilling prospects in the Cretaceous and deeper in the Santonian, where the Sapote-1 well showed hydrocarbons during drilling in 2021 and following the January 2022 Santonian Fangtooth-1 discovery on the prolific Stabroek Block offshore Guyana.

To remind, ExxonMobil submitted an application for environmental authorisation with respect to a new 12-well 2022 drilling programme on the Canje Block to the Guyanese Environmental Protection Agency (EPA) late last year.

Related Article

JHI investment in line with Eco’s strategy

Following the completion of the transaction, Eco will hold approximately 7.35 per cent of the issued common shares in JHI and the firm also retains a warrant to subscribe for a further 9,155,471 new common shares in JHI at an exercise price of $2 per share for a period of eighteen months, which if exercised in full, will allow Eco to hold 11.4 per cent in JHI on a fully diluted basis.

Eco confirms that this investment is consistent with its strategy to create shareholder value through advanced exploration programmes on the offshore Atlantic margins for advantaged barrels as developing nations bridge the essential reserve requirements through the stages of the energy transition. 

It is worth noting that JHI had net assets of approximately $46.3 million and recorded a net loss of approximately $8.28 million on 31 December 2020, however, based on the closing share price of the company on 18 January 2022, the consideration shares are valued at approximately £312,000 (around $424,093).

“Following the work undertaken on Canje in 2021, which ExxonMobil and partners in the block continue to review, and after the recent highly positive drilling results on the nearby Stabroek Block, we believe this to be another exciting opportunity in our portfolio,” added Holzman.

It is worth reminding that Eco revealed a deal earlier this month, which would enable it to expand its footprint offshore South Africa and Namibia by acquiring Azinam Group and its asset portfolio. The company also revealed plans for a 2022 South Africa drilling programme.

Eco holds operatorship and 50 per cent working interest in Block 2B offshore South Africa, and 20 per cent working interest in deepwater 3B/4B Block and nearshore 3B/4B Blocks. In addition, Eco holds a 15 per cent working interest in Tullow-operated Orinduik Block, offshore Guyana.