Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) has agreed a deal to sell a partial stake (6.25%) in the Block 3B/4B asset offshore South Africa for US$10.5mln.
Buyer Africa Oil will pay in cash, split across multiple tranches tied to project milestones.
It initially gets US$2.5mln following the signing of the sales agreement, then US$2.5mln is due once the government approves the deal. After that, US$4mln will be due if/when Africa Oil farms out a stake and US$1.5mln comes due when the project’s first well is spudded.
Eco’s Azinam subsidiary will retain a 20% interest in the project whilst Africa Oil’s stake rises to 26.25%. Private South African firm Ricocure owns the other 53.75% of the project.
A joint farm-out process continues with the aim of bringing in a new partner that could take up to 55% of the project.
“Since Africa Oil is already established as JV partner and operator on the block, receipt of the requisite regulatory approval for the transfer is expected to be straightforward,” said Eco chief executive Gil Holzman.
"We look forward to continuing our work with the South African government and regulatory bodies in terms of our Environmental Authorisation process and in the active exploration of Block 3B/4B.
“The initial cash to be received from Africa Oil will enable Eco Atlantic to fund its growth opportunities elsewhere and with no shareholders dilution, while maintaining a strategic and considerable 20% working interest in this highly prospective block.”