Petroleum Africa
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Wednesday, November 15, 2017
Africa Oil Corp. and Eco (Atlantic) Oil & Gas Ltd. entered into a strategic partnership for exploration in West Africa and South America. Under the terms of an investment agreement, Africa Oil agreed to acquire a 19.77% shareholding in Eco through the purchase, by way of private placement, of 29.2 million common shares at CAD$0.48 per share for a total consideration of CAD$14.0 million.
The investment agreement also provides Africa Oil with the right to participate in any future Eco equity issuances, on a pro rata basis, and to appoint one nominee to Eco’s board of directors. In addition, Keith Hill, President and CEO of Africa Oil, will join the Eco’s board of directors as soon as practicable.
As part of the agreement, the parties have also entered into a Strategic Alliance Agreement (SAA), whereby the two firms will jointly pursue new exploration projects. Pursuant to the terms of the SAA, Africa Oil will be entitled to bid jointly on any new assets or ventures proposed to be acquired by Eco, on the same terms as Eco and for an interest at least equal to the company’s percentage holding of the common shares in Eco from time to time. Additionally, under the terms of the SAA, AOC will also have a right of first offer on the farmout of exploration properties currently held by Eco.
Eco holds four blocks in Namibia and one block in Guyana. The Namibian blocks are located in an area of proven source rocks and large, seismically-defined stratigraphic traps where upcoming wells by neighboring operators will be drilled in the near future to de-risk the play. In Guyana, it holds a block directly updip from the Stabroek block on which Exxon estimates resources of 2.5 billion to 2.8 billion oil-equivalent barrels, including the supergiant Liza field. The Eco block exhibits good evidence of slope fan prospects and is expected to be fully delineated after processing and interpretation of the 2,550sqkm3D seismic survey recently completed in September. ECO also recently announced it has entered into an option agreement for a farmin by Total on this Guyana acreage.
According to Africa Oil, the investment is a good complement to its existing investment in Africa Energy Corp. (AFE) in which it holds a 28.5% shareholding interest. AFE holds blocks in Namibia adjacent to the Eco acreage and a block offshore South Africa. Together, the two companies represent significant holdings in several of the most attractive exploration areas in the world.
Africa Oil CEO Keith Hill commented, “We are very excited to be joining this talented group of explorers who have been able to secure top quality blocks in prime exploration areas. We look forward to realizing the value of this acreage and believe we will be able to play a positive role in the expansion of their portfolio. The pace of exploration is increasing in these regions with large independents and even super-majors taking big acreage positions with aggressive drilling plans over the next few years. This alliance will help us take advantage of this upswing in activity.”
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