Eco (Atlantic) Oil & Gas Ltd (AIM:ECO, TSX-V:EOG) announced its deal to acquire JHI Associates, to increase its interests in exploration assets offshore Guyana, is off after technical terms of the deal could not be finalised.
The AIM-quoted company said it could not agree lock-up terms that would’ve protected its shareholders from JHI shareholders selling newly issued acquisition shares immediately after the deal.
JHI’s owners would’ve been issued some 127mln new Eco shares in the transaction, had it gone ahead.
“We are unable to proceed without the appropriate protection for our shareholders that such lock-up arrangements were designed to provide,” said chief executive Gil Holzman, Eco Atlantic chief executive.
“We look forward to remaining a significant shareholder in JHI with over 7% of the company and, as such, retain exposure to the potential of the Canje Block.
“We wish the JHI management the best of luck in growing and monetizing the business to benefit all shareholders. Notwithstanding termination of discussions, we and JHI may re-evaluate the proposed acquisition at a future date.”
Looking to operational matters, meanwhile, Holzman added: “We look forward to commencing our drilling campaigns planned in the prospective Block 2B in South Africa and Guyana this year and p roviding further corporate updates as appropriate."
Eco in March agreed to acquire JHI for US$52mln in an all-share deal. JHI’s owners would’ve held the equivalent of 34% of Eco as a result of the deal.
It would’ve increased Eco’s stake in JHI from 7.35% to 100%, giving it a material stake (17.5%) of the Exxon operated Canje block.
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.