With final approval in place, Eco boosts its stake in South African offshore block

With final approvals in place, Eco boosts its stake in South African offshore block

Oil and gas exploration company Eco (Atlantic) Oil & Gas has secured all the required approvals for the acquisition of an additional interest in a block located offshore South Africa, south of recent discoveries made by oil majors Shell and TotalEnergies off Namibia.

Illustration; Source: Eco Atlantic

Back in June 2022, Eco disclosed that the inking of a farm-out agreement with Lunn Family Trust, one of the shareholders of Ricocure, enabling its wholly-owned subsidiary, Azinam to get an additional 6.25 per cent participating interest in Block 3B/4B, offshore South Africa. Covering an area of 17,581 km², this block lies in water depths ranging from 300-2,500 metres.

Source: Eco Atlantic
Source: Eco Atlantic

In an update on Monday, Eco confirmed that it had received all regulatory approvals from South Africa’s Department of Mineral Resources and Energy (DMRE) and the Petroleum Agency (PASA), which was the final condition in respect of completion. Therefore, the firm, through Azinam, will now close this acquisition, increasing its participating interest to 26.25 per cent in Block 3B/4B, with Africa Oil Corp., the operator of the block, holding a 20 per cent interest, and Ricocure with the remaining 53.75 per cent interest.   

Eco intends to pay a cash amount of $500,000 to Lunn Family Trust for this acquisition; issue to the seller new common shares with an aggregate value of $500,000; issue to Lunn Family Trust new common shares with an aggregate value of $3 million, then new common shares with an aggregate value of $2 million; and new common shares equal to $2 million divided by the greater of the value of the 30-day VWAP per common share prior to the date of the announcement of such common shares and the lowest issuance price then allowed by the rules of the TSX Venture Exchange (TSXV) and AIM.

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented: “We are extremely pleased to have received the South African authorities’ final approval and to be increasing our interest in Block 3B/4B to 26.25 per cent. The block looks to be a very exciting licence for all the partners involved. 

“Recently completing a full reprocessing of the 3D data on the block, we are upbeat about the prospectivity of the licence and following the significant oil discoveries, Venus & Graff, made earlier in the year offshore Namibia Orange Basin, and we are pleased to be strengthening our working relationship with Ricocure and Africa Oil Corp.”

Located between 120-250 km offshore South Africa in the Orange Basin, Block 3B/4B is situated directly south of the “prolific multi-billion barrels” discoveries offshore Namibia, which were made by Shell (Graff-1) and TotalEnergies (Venus-1). Earlier this year, Eco obtained a material working interest of 20 per cent in the deepwater 3B/4B Block and the shallow water and nearshore 3B/4B Blocks following its acquisition of the Azinam Group and its asset portfolio.

“We are seeing growing industry interest in the entire Orange Basin, and in particular in Block 3B/4B, and as announced last month, a collaborative farm-out process (of up to a 55 per cent working interest) is underway. In the past six months, we have worked very closely with our partners to identify and determine the block drilling prospects for a drilling campaign we are contemplating for next year,” highlighted Holzman.