Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) is expected to receive the first tranche of US$8.3 million from the farm-out of Block 3B/4B offshore South Africa next month.
The junior company, which now focuses on Guyana and Namibia, farmed out most of its interest in the Orange Basin block to Total Energies and Qatar Energy in March for US$32.1 million.
Receipt of the first tranche will leave Eco with cash and cash equivalents of US$10 million, with no near-term capital commitments for operational expenses. Currently, Eco's cash is US$1.5 million.
Eco also announced a deal with Africa Oil yesterday for the sale of a 1% interest in Block 3B/4B in exchange for the cancellation of all of AOI's shares and warrants in Eco worth C$11.5 million.
Gil Holzman, chief executive, added that the farm-out on Block 3B/4B significantly increases its cash resources and “leaves tremendous upside potential on the table in the event a discovery is drilled on the block”.
"In Namibia and Guyana, we have active farm-out processes underway, and we are very upbeat about the number and calibre of the companies we have had in our data rooms.
“Both jurisdictions remain at the forefront of global hydrocarbon exploration, and we are confident of delivering a positive update on both in due course.”
Losses in the year to end March 2024 were US$21.2 million (US$36.7 million).