Eco Atlantic Oil & Gas has struck a deal to buy another 6.25% stake in a South African block, while also raising $12.3 million.
Eco is adding another 6.25% stake in Block 3B/4B to its Azinam unit. It will acquire the stake from the Lunn Family Trust, which has a 10.4% stake in Ricocure, for $10mn.
As a result of the deal, Eco will have a 26.25% stake in the block. Africa Oil is the operator with a 20% stake and Ricocure has the remaining 53.75%.
The block is directly south of the Graff-1 and Venus-1 discoveries from earlier this year, by Shell and TotalEnergies. The Orange Basin block covers 17,581 square km, with water depths from 300 to 2,500 metres.
Partners on the area are reprocessing a large 3D seismic shoot with the aim of identifying drill targets. The operator may begin drilling in 2023.
© Supplied by Eco AtlanticEco CEO Gil Holzman said Block 3B/4B appeared to be a “very exciting licence”. He noted the Namibian discoveries from earlier this year in the Orange Basin and the growing industry interest in the basin.
“We are working closely with our partners to progress the technical work required, which includes reprocessing the 3D seismic we have for the block, in order to evaluate and identify drilling prospects and high grade leads for a drilling campaign we are contemplating for next year.”
Eco will begin drilling the Gazania-1 well, on Block 2B, in September this year.
Eco will issue 2.7mn new shares, worth around $1mn, and pay $1mn in cash within six days of signing the deal.
On completion, Eco will pay $1 to Ricocure and $500,000 in cash to the Lunn trust. It will also issue a number of shares to the seller for the rest of the deal.
Sean Lunn was the country manager for Impact Oil and Gas in Namibia and South Africa. He is now a shareholder and director of Sezigyn and Ricocure, in addition to being the chairman of iMbokodo Exploration and Production.
Two weeks ago, Eco announced it was abandoning a planned deal to acquire Guyana-focused JHI Associates, citing lock-up differences. The company has much more relaxed plans with Lunn, noting only $3mn worth of shares are restricted for six months.
Placing
The company also said it had issued 33.4mn new shares and the same in warrants, raising gross proceeds of $12.3mn. This represents around 10.8% of Eco’s share capital.
Holzman said the private placing included a number of leading South African funds. Africa Oil also subscribed with an investment of $1.8mn.
“The funds we are raising will be applied to our ongoing operations and will enable us to settle the cash consideration for the increased interest in Block 3B/4B announced earlier today, allowing us to retain our current cash resources to drill Gazania-1 well in Block 2B in South Africa in September,” he said.
The cash will also go to “expedite exploration activities on Block 3B/4B and prepare for potential wells next year in Guyana and South Africa”. Eco now has more than $38mn, he said.