Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) has agreed a farm-out deal to bring TotalEnergies SE (NYSE:TOT, EPA:TTE) and Qatar Energy into its Block 3B/4B asset, in the Orange basin, offshore South Africa.
The deal sees Eco receive up to $32.1 million of value, the company said, including payments now applicable under its existing separate agreement with Africa Oil Corp (TSX:AOI).
Total and Qatar will make staged cash payments of up to $11.92 million, tied to project milestones.
Meanwhile, Eco’s partners will fully carry the junior explorer on all of its 6.25% share of joint venture costs (with the funds recouped from its share of initial production once any resulting field is in production).
Total and Qatar will at the same time acquire 9.25% of project equity from Africa Oil.
"We are delighted to have signed this agreement with TotalEnergies and QatarEnergy,” Eco chief executive Gil Holzman said in a statement.
“Block 3B/4B sits in one of the most prolific and exciting areas in the world for offshore oil and gas exploration and development.
“The decision by two of the largest energy companies globally to farm into this licence is strengthened by their significant understanding of the Orange Basin, having made the Venus large light oil discovery just recently north of the basin in Namibia.”
Holzman added: "I would like to thank our partners at Africa Oil and Ricocure for their cooperation and jointly negotiating this farm-out agreement.
“We now look forward to working closely with the government of South Africa and our new partners on the exploration licence to prepare first drilling."
Going forward the project equity split will be: TotalEnergies as operator with a 33% interest, Qatar Energy holding 24%, Ricocure with 19.75%, Africa Oil with 17%, and Eco retaining a 6.25% interest.