Eco (Atlantic) Oil & Gas Ltd has signed an agreement to increase its stake in a block in the Orange Basin, offshore South Africa.
Block 3B/4B covers an area of 17,581sq km in 300-2,500m of water and lies 120-250kms directly south of the multi-billion barrel discoveries offshore Namibia announced earlier this year by Shell (Graff-1) and TotalEnergies (Venus-1).
Eco is paying US$10mln to acquire an additional 6.25% of the block, which through its subsidiary Azinam will give it a 26.25% participating interest.
Riocure holds a 53.75% stake in the licence with Africa Oil the operator with a 20% stake.
Eco (Atlantic) is acquiring the additional 6.25% interest from the Lunn Family Trust, which is one of the shareholders in Riocure.
An extensive 3D seismic survey is underway on the licence to prepare for a possible drilling campaign later this year, said Eco (Atlantic).
Gil Holzman, Eco (Atlantic) chief executive, added” We are upbeat about the prospectivity of the licence following the significant oil discoveries made earlier in the year offshore Namibia Orange Basin and we are pleased to be strengthening our working relationship with Ricocure and Africa Oil Corp (TSX-V:AOI).
"We are seeing growing industry interest in the entire Orange Basin and, in particular, in Block 3B/4B and are therefore very happy to have managed to increase our WI [working interest] on the Block.
"We are set for an exciting couple of months and we look forward to keeping our stakeholders updated as we look to spud the Gazania-1 well on Block 2B, offshore South Africa, in early September 2022."
Payment for the stake will predominately be in shares at a value of 30p each, with a lock-up on a portion of those to be issued.
Up to a fifth of the consideration will be paid in cash.
US$12.3mln fundraise
Later, Eco (Atlantic) announced it had raised US$12.3mln from new and existing institutional investors including funds from South Africa at a price of 30p per unit comprising a share and warrant.
The fundraise comprised £8.25mln (US$10.1mln) from a subscription and £1.8mln (US$2.2mln) from a placing.
Africa Oil, its partner in the Orange Basin, offshore South Africa subscribed for units worth around US$1.8mln.
Holzman added: "We are pleased to be able to close this successful private placing.
"We are fortunate to be able to include some of the leading South African focussed funds in this financing.
“The funds we are raising will be applied to our ongoing operations and will enable us to settle the cash consideration for the increased interest in Block 3B/4B announced earlier today, allowing us to retain our current cash resources to drill Gazania-1 well in Block 2B in South Africa in September.
“With over U$38m now in treasury, we are in a very strong financial position to fund all our current planned exploration needs in both South Africa, Namibia and Guyana including the drilling of the Gazania-1 well in September and additional near-term wells on Guyana Orinduik Block and in Block 3B/4B. "
-- adds fund raise details-