Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) has struck a deal to acquire JHI Associates Inc, the owner of an interest in a key offshore licence in Guyana which is being explored by ExxonMobil.
A cashless US$52mln deal will see Eco increase its shareholding to 100% from 7.35%, to become the sole owner of JHI's US$15mln cash balance and its 17.5% working interest (WI) in the Canje Block. It will issue 1.1994 new Eco shares for every 1 JHI owned by JHI shareholders. As a result, JHI’s current shareholders will own the equivalent of some 34% of Eco shares.
Eco said the deal adds to its strategic acreage position in Guyana and paves the way for further drilling activity over the coming years.
"Being a shareholder of JHI since last year has given us a deep understanding of the Canje Block and its prospectivity. It has also given us the opportunity to get to know the great management team at JHI and their technical and business achievements to date,” said Eco chief executive Gil Holzman.
“We believe that there is considerable strategic rationale in acquiring JHI. Eco's ambition is to become the ‘go-to’ small-cap exploration vehicle for investors seeking exposure to high-impact drilling programs in three of the world's most exciting hydrocarbon provinces in Guyana, Namibia and South Africa.”
Holzman added: “This transaction adds to Eco's strategic acreage position in Guyana and ensures that there will be a number of drilling catalysts over the next couple of years on Eco's eight offshore blocks.”
John Cullen, JHI chief executive, commented: "This transaction provides JHI's shareholders access to Eco's exciting portfolio of exploration opportunities in the emerging oil basins of Namibia and South Africa, and in Guyana with their Orinduik block, while maintaining their exposure to the Canje Block, where we have been working steadily with our partners to identify the next prospect to drill.
“It also represents the culmination of a tremendous amount of work from JHI's technical team which, over the last six years, saw two supermajors join the Canje Block, and three wells drilled providing valuable information towards unlocking the potential of the deeper water portions of the Guyana-Suriname Basin.”
JHI will have the right to appoint two non-executive directors to Eco’s eight-member board.
The acquisition is expected to close in the second quarter of 2022 subject to the completion of due diligence, partner and regulatory approvals.
Exxon-operated Canje is located adjacent to the Stabroek area, the American oiler’s flagship block offshore Guyana.
Stabroek, as many Eco shareholders already understand, is the stellar oil block in the region. It flanks Eco’s own Orinduik block and is host to the vast majority of Exxon’s multi-billion barrel oil discoveries offshore Guyana.
The large-scale Liza field development is located within Stabroek and is rapidly ramping up to a new production peak of 220,000 barrels of oil per day in the coming months.