Eco (Atlantic) Oil & Gas Ltd yesterday announced it has closed a transaction with JHI Associates Inc, a private company incorporated in Ontario and headquartered in Toronto, Canada, for Eco to acquire up to a 10% interest in JHI which will allow it access to the Canje offshore block where oil exploration is taking place.
A release from Eco, also headquartered in Toronto, Canada, said that the Transaction provides it with immediate exposure to a current active drilling programme in the Canje Block offshore Guyana. The Canje Block is operated by ExxonMobil and is held by Working Interests partners Esso Exploration & Production Guyana Limited (35%), with Total E&P Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%) and Mid-Atlantic Oil & Gas Inc. (12.5%).
The Canje Block was controversially awarded in 2015 just prior to the general elections in May that year. Eco already has interest in another offshore block, Orinduik.
The release noted that JHI is a Guyana pure-play deepwater exploration company founded in 2011. In 2014, JHI teamed up with Guyana-based Mid-Atlantic Oil & Gas Inc. (“MOGI”) which was awarded the Canje Block in 2015. The release noted that in 2016, ExxonMobil joined the Canje Block as Operator, and in 2018 TotalEnergies farmed into the Block.
“Five years of extensive technical and seismic data analysis led to the Canje partners identifying multiple drillable prospects and successfully applying for a multi-well drilling permit. The 2021 multi-well exploration programme on the Canje Block seeks to test the extension of the prolific hydrocarbon system which has resulted in over 9 billion barrels of oil equivalent of recoverable resources being discovered in the adjacent Stabroek Block since 2015” , the release noted.
The release said that the transaction will increase Eco Atlantic’s presence in the Guyana-Suriname basin to include a three-well drilling programme, with the first two firm wells on the Canje Block drilling in 2021 and at least one on the Orinduik Block, subject to partner approval. It noted that the Jabillo-1 well is currently being drilled on the Canje Block utilizing the Stena Carron drillship with results expected in July. Further, the Sapote-1 well is scheduled to be drilled later this year in Q3 by the Stena DrillMax in the eastern portion of the Canje Block, which Eco will also have exposure to through its now shareholding in JHI.
The release said that Eco has subscribed for 5,000,000 new common shares in JHI at a price of US$2.0 per share, representing 6.4% of JHI’s enlarged share capital and has been issued a warrant to subscribe for a further 9,155,471 new common shares in JHI at an exercise price of US$2.0 per share for a period of eighteen months. If the JHI Warrant is exercised in full, Eco will hold an interest, ceteris paribus, of 10% in JHI on a fully diluted basis.
As at 31 December 2020, the release said that JHI had net assets of approximately US$46.3 million and recorded a net loss of approximately US$8.28 million.
The two-well drilling programme currently underway on the Canje Block offers Eco near-term, low-risk exploration drilling catalysts with significant upside, the release contended. JHI is carried on the costs for the drilling of the first well, Jabillo-1 and would also be carried for an offsetting appraisal well in the case of a find on Jabillo-1. The Canje Block partners have also committed to drill the Sapote-1 well later this year.
Eco says it has funded the JHI Investment through its own cash reserves, and intends to complete an associated private placement with its strategic partner Africa Oil Corp. (“Africa Oil”) and with Charlestown Energy Partners LLC (“Charlestown Energy”), a Private Equity firm based in New York, USA (the “Proposed Subscription”), to raise additional funds of approximately 6.1m CAD (US$4.9m).
Gil Holzman, Co-Founder and Chief Executive Officer of Eco Atlantic, commented:
“After a period of thorough technical analysis of the Canje block, by both our team at Eco and our strategic partners at Africa Oil Corp we are delighted to advise the market on this exciting transaction, and to be back drilling with results expected imminently.
“The carried Jabillo-1 well is underway and is expected to reach target in the coming few weeks, providing our shareholders with high impact near term catalysts.
“I want to thank the teams at Eco, Africa Oil and JHI for their hard work and collaboration over the past months in bringing this deal to execution.
“While we eagerly anticipate resuming drilling activity on our Orinduik block next year, pending partner approvals, and we have made sure to preserve sufficient funding for that, we are very excited that we now have two imminent Guyana wells in our portfolio as well as additional multiple prospects inventory on the Canje Block. Since 2014, Eco has strongly focused on the hydrocarbon potential offshore Guyana, and this strategic deal with JHI marks the beginning of a wider presence and potential increased future collaboration in the basin.”
Keith Hill, Non-Executive Director of Eco Atlantic and President and CEO of Africa Oil, further said:
“We are very pleased to have Eco team up with the two most knowledgeable operating partners in the basin and believe the Canje Block has the potential to hold resources comparable to the world class Stabroek Block which is undoubtedly the most successful exploration campaign in recent history. Combining this with the holdings in the Orinduik Block, Eco is well positioned to be part of the historic oil development in Offshore Guyana.”
