Photo: Illustration; Source: Eco Atlantic

With final approval out of the way, Eco closes Azinam deal

Following the receipt of the awaited approval, Eco (Atlantic) Oil & Gas has put all the pieces into place to close the acquisition of the Azinam Group and its asset portfolio, expanding its footprint offshore South Africa and Namibia. 

Eco Atlantic revealed its intention to acquire the Azinam Group and its asset portfolio back in January 2022 when it inked a memorandum of understanding (MOU) to pursue this goal while disclosing its plans for a 2022 South Africa drilling programme.

The following month, the company took this further by signing a definitive purchase deal to add more acreage offshore South Africa and Namibia. The firm also started finalising its 2022 drilling plans to find more hydrocarbons.

Earlier this month, the oil and gas exploration player reported that all conditions required to be completed in order to close its acquisition of Azinam were carried out, save and except for one.

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In an update on Monday, Eco confirmed that the final approval from the TSX Venture Exchange has been received, thus, Eco is now the sole owner of Azinam.

Gil Holzman, Co-Founder and CEO of Eco Atlantic, commented: “We are happy to now officially own Azinam Group Ltd. and its subsidiaries. We now look forward to operating a number of highly prospective licences in three exploration hotspots: Guyana, Namibia and South Africa.”

This acquisition enabled 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.

Thanks to this acquisition, the company is expanding 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.

Source: Eco Atlantic
Source: Eco Atlantic

Furthermore, the acquisition will result in the issuance of 40,170,474 common shares to Azinam in the capital of Eco, providing Azinam with 16.5 per cent of Eco’s share capital, providing for a cashless acquisition to become the sole owner of Azinam’s entire African portfolio. Eco expects to receive a customary formal acknowledgement from the government of South Africa in respect of this change of control shortly.

Moreover, the company will issue 22,296,300 new common shares to Azinam Holdings representing 9.9 per cent of the enlarged share capital. It is expected that this admission will become effective at 8.00 a.m. on 31 March 2022. According to Eco, the issuance of the remaining  17,874,174 common shares are subject to exchange clearance of the Personal Information Forms (PIFs) of Azinam Holdings’ directors. This is expected to be received this week. 

Based on Eco’s statement, Azinam Holdings will not be entitled at any time to subscribe for and purchase more than 19.9 per cent of common shares, without the prior written consent of the exchange and Eco. However, as long as Azinam holds at least a 12.5 per cent interest in Eco’s share capital, it will be entitled to nominate one director for election to Eco’s board of directors.

“We continue to make strong progress towards the upcoming drilling of the Gazania-1 well on Block 2B, offshore South Africa, and following the signing of the rig contract earlier in the month, we anticipate drilling to commence in late Q3 2022,” concluded Holzman.

As previously reported, a joint venture partnership for Block 2B, located offshore South Africa, secured a semi-submersible drilling rig from Island Drilling to drill a high-impact exploration well later this year. After completing the Azinam acquisition, Eco is taking over the operatorship of this with a 50 per cent working interest in the joint venture.

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The firm’s other partners in Block 2B JV are Africa Energy with a 27.5 per cent interest, Panoro Energy’s subsidiary with a 12.5 per cent stake, and Crown Energy, which indirectly holds the remaining 10 per cent interest.