TIDMECO
RNS Number : 2705Q
Eco (Atlantic) Oil and Gas Ltd.
25 February 2021
25 February 2021
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its
subsidiaries, the "Group")
Unaudited Results for the three and nine months ended 31
December 2020
Corporate and Operational Update
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX -- V: EOG) ,
the oil and gas exploration company with licences in proven oil
province in Guyana and the highly prospective basins in Namibia, is
pleased to announce its results for the three and nine months ended
31 December 2020, alongside a corporate and operational update.
Results Highlights:
Financials
-- As at 31 December 2020, the Company had cash and cash
equivalents of US$16,350,090 with no debt.
-- Eco remains fully funded for its share (15% WI net) of its
planned two exploration wells at the Orinduik Block offshore
Guyana.
-- As at 31 December 2020, the Company had total assets of
US$17.7 million and a net equity position of $17.4 million.
-- The Company has decreased its total non-exploration expenses,
including general and administration expense and compensation costs
incurred during the nine months ended 31 December 2020 (H1 2021),
when compared to the nine months ended 31 December 2019, by over 5
0 %.
Operations
Eco Atlantic Oil & Gas
-- Multiple light sweet oil drilling prospects on the Orinduik
block are currently being reviewed by the Company and its licence
partners (the "JV Partners"), with high-graded candidates being
considered for the next drilling programme. The intention is to
provide further definition to the upper and lower Cretaceous
interpretation and target selection for drilling.
-- The Company, together with its strategic alliance partner
Africa Oil Corp., continues to evaluate additional asset
opportunities in both West Africa and South America.
-- On 30 November 2020, the Company successfully negotiated the
reissuance of its four licenses in Namibia's Walvis Basin for 10
years, which received final Government confirmation on 5 February
2021.
Solear Ltd. (formerly Eco Atlantic Renewables post period
end)
-- On January 26, 2021, the Company announced the formation of a
new joint venture company with Nepcoe Capital Partners Ltd, to
source, acquire and develop an exclusive pipeline of potential high
yield solar projects. At the time of launch, the new entity was to
be called Eco Atlantic Renewables, however, in order to further
reflect the standalone nature of the business the company has been
re-named Solear Ltd ("Solear").
-- Eco agreed to provide a secured loan of up to US$6 million
(the "Loan") to Solear, as a result of which the Company holds a
70% shareholding in Solear, with Nepcoe holding the remaining 30%.
The Loan, which carries a 2% annual interest, is expected to be
repayable from the proceeds of either a public or private
financing, through operating cash flow, and/or a project
monetization event.
-- In January 2021, Solear completed its first acquisition of a
fully contracted, permitted, and build ready project in Greece,
known as the Kozani Project.
-- Solear is continuing to build its exclusive portfolio in
Spain, Italy, and Greece and is targeting a further financing event
in the form of a private finance and/or IPO later this year.
Outlook:
Guyana
-- Guyana continues to be one of the most prolific exploration
regions in the world, with over nine billion barrels of oil
discovered in the last five years. Eco and its JV Partners have
already delivered two substantial oil discoveries on the Orinduik
Block and the licence continues to offer significant upside
potential. With the increase in oil prices the JV partners will
revisit the Jethro discovery commercialisation potential.
-- As previously reported, Eco is fully funded for further
drilling on the block and, with its JV Partners, is assessing all
opportunities available to drill at least two exploration wells
into the light oil cretaceous targets as soon as practical. The
Company is fully aligned with its JV partners on careful target
selection based on the reprocessed 3D and the block and nearby oil
discoveries for the next drilling campaign and Eco expects to be
able to update the market on further drilling plans in due
course.
The Orinduik JV partners are Eco Atlantic (15% working interest
("WI")), Tullow Guyana B.V. ("Tullow") (Operator, 60% WI) and Total
E&P Guyana B.V. ("Total") (25% WI) in partnership with Qatar
Petroleum.
Namibia
-- The Company's successful negotiation of the reissuance of its
four licences in the Walvis Basin, Offshore Namibia, lead to the
expansion of its acreage position. As announced on 30 November
2020, the Company's updated licences in Namibia cover approximately
28,593 km(2) , with over 2.362 BBOE of prospective P50
resources.
-- Eco has a strategically significant acreage position
in-country and is progressing its various work programmes across
its four blocks offshore Namibia. The Company has witnessed
considerable interest from multiple international oil companies in
Namibia.
-- The Company continues to monitor upcoming drilling activity
in the region, which could potentially see up to five exploration
wells drilled on behalf of ExxonMobil, Total, Maurel & Prom,
Shell and ReconAfrica in the next 12 months.
Corporate
-- Throughout the ongoing COVID-19 pandemic, Eco has prioritised
the welfare of its staff and partners.
-- The Company continues to keep a strict control over costs
throughout the business, which continues to generate material
savings and has ensured that Eco remains well capitalised with a
strong balance sheet.
Gil Holzman, President and Chief Executive Officer of Eco
Atlantic, commented:
"We have made significant progress in recent months across a
number of aspects of the business. We have demonstrated our
commitment to our core business strategy of achieving near-term
exploration success in Guyana and Namibia, through maturing and
upgrading the drilling targets' inventory in Guyana and the
successful reissuance of our licences in Namibia, as well as adding
a highly relevant and attractive asset to our portfolio through the
formation of Solear Ltd., a majority held renewable energy
company.
" Successfully renegotiating our four licences offshore Namibia,
which we see as being an increasingly active exploration
jurisdiction, was an important milestone for the Company and gives
us a considerable footprint in country from which we will seek
create significant shareholder value.
"In Guyana, we continue to work with our partners in the
Orinduik block to finalise drilling selection, and look forward to
recommencing drilling activity in the coming months. We remain very
confident in Guyana's prospectivity as a hydrocarbon basin and the
upside potential it offers. The recent increase in oil prices makes
our existing discoveries in Guyana and drilling prospects inventory
ever more attractive.
"Our recent strategic investment into Solear Ltd. demonstrates
our drive and determination to use our cash reserves wisely
alongside high impact exploration drilling. We are very excited
about both the near-term opportunities that Solear brings, as well
as the long-term benefits that come with broadening our asset
portfolio. Solear has a highly attractive pipeline of low cost,
high yield solar PV projects, that have the potential to generate
high IRR returns for our shareholders. As ever, we look forward to
keeping the market updated on our progress over the coming
months."
The Company's unaudited financial results for three months and
nine months ended 31 December 2020, together with Management's
Discussion and Analysis as at 31 December 2020, are available to
download on the Company's website at www.ecooilandgas.com and on
Sedar at www.sedar.com .
The following are the Company's Balance Sheet, Income
Statements, Cash Flow Statement and selected notes from the annual
Financial Statements. All amounts are in US Dollars, unless
otherwise stated.
Balance Sheet
December March 31, April 1,
31,
---------------------------
2020 2020 2019
--------------------------- --------------------- ------------------------- -----------------------------------
Assets Unaudited Audited Audited
--------------------- ------------------------- -----------------------------------
Current assets
Cash and cash equivalents 16,350,090 18,667,016 18,750,453
Short-term investments 52,663 52,737 56,098
Government receivable 39,283 19,276 24,821
Amounts owing by license
partners,
net 89,805 45,596 -
Accounts receivable and
prepaid
expenses 73,215 46,262 60,678
--------------------------- --------------------- ------------------------- -----------------------------------
16,605,056 18,830,887 18,892,050
Petroleum and natural
gas licenses 1,117,171 1,117,171 1,117,171
--------------------------- --------------------- ------------------------- -----------------------------------
Total Assets 17,722,227 19,948,058 20,009,221
--------------------------- --------------------- ------------------------- -----------------------------------
Liabilities
Current liabilities
Accounts payable and
accrued
liabilities 158,784 350,242 317,548
Advances from and amounts
owing
to license partners, net 98,947 - 845,524
---------------------------
Total Liabilities 257,731 350,242 1,163,072
Long term liabilities
Equity
Share capital 59,099,725 59,099,725 37,509,183
Restricted Share
Units reserve 267,669 267,669 83,597
Warrants 53,026 53,026 39,570
Stock options 2,631,101 2,542,824 2,387,837
Foreign currency
translation
reserve (1,200,457) (1,117,859) -
Accumulated
deficit (43,386,568) (41,247,569) (21,174,038)
--------------------------- --------------------- ------------------------- -----------------------------------
Total Equity 17,464,496 19,597,816 18,846,149
--------------------------- --------------------- ------------------------- -----------------------------------
Total Liabilities and
Equity 17,722,227 19,948,058 20,009,221
--------------------------- --------------------- ------------------------- -----------------------------------
Income Statement
Three months ended Nine months ended
December 31, December 31,
------------------------------------------ -------------------------------------------
2020 2019 2020 2019
--------------------- ------------------- -------------------- ---------------------
Unaudited Unaudited
------------------------------------------ -------------------------------------------
Revenue
Interest income 6,123 80,302 41,779 309,186
--------------------- ------------------- -------------------- ---------------------
6,123 80,302 41,779 309,186
Operating expenses :
Compensation
costs 173,373 207,440 486,999 627,967
Professional
fees 80,280 117,844 200,694 353,963
Operating costs 255,477 1,097,788 1,105,892 12,466,334
General and
administrative
costs 138,472 386,275 367,742 1,139,106
Share-based
compensation 33,457 35,758 88,277 5,654,869
Foreign
exchange gain (32,561) 708,530 (68,826) 890,495
Total expenses 648,498 2,553,635 2,180,778 21,132,734
Net loss and
comprehensive
loss (642,375) (2,473,333) (2,138,999) (20,823,548)
===================== =================== ==================== =====================
Basic and diluted net
loss
per share attributable
to equity holders of
the
parent (0.00) (0.01) (0.01) (0.11)
===================== =================== ==================== =====================
Weighted average number
of ordinary shares
used
in computing basic and
diluted net loss per
share 184,697,723 184,441,830 184,697,723 182,225,982
===================== =================== ==================== =====================
Cash Flow Statement
Nine months ended
December 31,
----------------------------------------
2020 2019
------------------- -------------------
Unaudited
----------------------------------------
Cash flow from operating activities
Net loss from operations (2,138,999) (20,823,548)
Items not affecting cash:
Share-based compensation 88,277 5,654,869
Warrants issued for services -
Changes in non--cash working
capital:
Government receivable (20,007) (12,818)
Accounts payable and accrued
liabilities (130,818) (172,484)
Accounts receivable and prepaid
expenses (26,726) 11,533
Advance from and amounts owing
to license partners (135,313) (749,180)
-------------------------------------- ------------------- -------------------
(2,363,586) (16,091,628)
-------------------------------------- ------------------- -------------------
Cash flow from financing activities
Issuance of shares from Restricted -
share units
Net proceeds from Private Placement - 15,935,765
Proceeds from the exercise of
stock options - 93,559
Proceeds from the exercise of
warrants - 120,612
-------------------------------------- ------------------- -------------------
- 16,149,936
-------------------------------------- ------------------- -------------------
Increase (decrease) in cash and
cash equivalents (2,363,586) 58,308
Foreign exchange differences 46,660 721,021
Cash and cash equivalents, beginning
of period 18,667,016 18,750,453
-------------------------------------- ------------------- -------------------
Cash and cash equivalents, end
of period 16,350,090 19,529,782
-------------------------------------- ------------------- -------------------
Notes to the Financial Statements
Basis of Preparation
The condensed consolidated interim financial statements of the
Company have been prepared on a historical cost basis with the
exception of certain financial instruments that are measured at
fair value. Historical cost is generally based on the fair value of
the consideration given in exchange for assets.
Summary of Significant Accounting Policies
Critical accounting estimates
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognized
prospectively from the period in which the estimates are revised.
The following are the key estimate and assumption uncertainties
considered by management.
Change in functional currency assessment
The functional currency of the Company and its subsidiaries
represent the currency of the primary economic environment in which
each entity operates. Through to March 31, 2020, all entities were
considered to have a functional currency of Canadian Dollars. On
March 31, 2020, the Company determined the United States Dollar
("USD") to be the functional currency for Eco Guyana based on the
increased expenditures incurred in USD which is expected to
continue in the foreseeable future. On April 1, 2020, the Company
determined the USD to be the functional currency for Eco (Atlantic)
Oil and Gas Ltd, based on the increase in USD denominated spending
as of April 1, 2020. On April 1, 2020, the Company also determined
the USD to be the functional currency of Eco Guyana Oil & Gas
(Barbados) Ltd, since this entity is 100% owned by Eco Atlantic,
and is the 100% owner of Eco Guyana, both of which have functional
currencies denominated in USD. The change in estimate has been
applied on a prospective basis effective April 1, 2020.
Effective April 1, 2020, the Company also changed its
presentation currency from Canadian Dollars to USD. The change in
presentation currency is to better reflect the Company's business
activities and to improve investors' ability to compare the
Company's results to its peers. This change has been applied
retroactively as if the Company's new presentation currency has
always been the Company's presentation currency.
Events After the Reporting Period
On January 26, 2021, the Company announced the formation of a
new partnership with Nepcoe Capital Partners (Hong Kong) Ltd.
("Nepcoe"), to source, acquire and develop an exclusive pipeline of
potential high yield solar projects. To give effect to the new
venture, the Company's existing subsidiary Eco - EBVI, has been
renamed Solear Ltd. ("Solear"), in which the Company now owns 70%
and Nepcoe owns 30%. Solear completed its first acquisition of a
fully contracted, permitted, and build ready project in Greece,
known as the Kozani Project.
The Company has agreed to provide a secured loan of up to $6m
(the "Loan") to Solear. The Loan bears 2% annual interest, which
will accrue and is expected to be payable from the proceeds of
either a public or private financing, through operating cash flow,
or a project monetization event. The Board of Eco Atlantic will
assess the ability for shareholders to participate directly in the
financing of Solear when it seeks to raise the necessary funds for
capturing more project opportunities and / or the construction of
the projects within its pipeline, for which a number of options are
being actively considered.
**ENDS**
For more information, please visit www.ecooilandgas.com or
contact the following :
Eco Atlantic Oil and Gas c/o Celicourt +44 (0) 20
8434 2754
Gil Holzman, CEO
Colin Kinley, COO
Alice Carroll, Head of Marketing and +44(0)781 729 5070 | +1 (416)
IR 318 8272
Strand Hanson Limited (Financial & Nominated
Adviser) +44 (0) 20 7409 3494
James Harris
Rory Murphy
James Bellman
Berenberg (Broker) +44 (0) 20 3207 7800
Matthew Armitt
Emily Morris
Detlir Elezi
Celicourt (PR) +44 (0) 20 8434 2754
Mark Antelme
Jimmy Lea
Hannam & Partners (Research Advisor)
Neil Passmore +44 (0) 20 7905 8500
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014.
Notes to editors:
About Eco Atlantic:
Eco Atlantic is a TSX-V and AIM quoted Oil & Gas exploration
and production Company with interests in Guyana and Namibia, where
significant oil discoveries have been made.
The Group aims to deliver material value for its stakeholders
through oil exploration, appraisal and development activities in
stable emerging markets, in partnership with major oil companies,
including Tullow, Total and Azinam.
In Guyana, Eco Guyana holds a 15% Working Interest alongside
Total (25%) and Operator Tullow Oil (60%) in the 1,800 km2 Orinduik
Block in the shallow water of the prospective Suriname-Guyana
basin. The Orinduik Block is adjacent and updip to ExxonMobil
Operated Stabroek Block, on which eighteen discoveries have been
announced and over 9 Billion BOE of oil equivalent recoverable
resources are estimated. First oil production commenced in December
2019 from the deep-water Liza Field, less than three years from
FID.
Jethro-1 was the first major oil discovery on Orinduik Block.
The Jethro-1 encountered 180.5 feet (55 meters) of net high-quality
oil pay in excellent Lower Tertiary sandstone reservoirs which
further proves recoverable oil resources. Joe-1 is the second
discovery on the Orinduik Block and comprises high quality
oil-bearing sandstone reservoir with a high porosity of Upper
Tertiary age. The Joe-1 well encountered 52 feet (16 meters) of
continuous thick sandstone which further proves the presence of
recoverable oil resources.
In Namibia, the Company holds interests in four offshore
petroleum licenses totalling approximately 28,593km2 with over
2.362bboe of prospective P50 resources in the Walvis Basin. These
four licenses, Cooper, Guy, Sharon and Tamar are being developed
alongside partners Azinam and NAMCOR. Eco has been granted a
drilling permit on its Cooper Block (Operator).
Eco Atlantic is a 70% shareholder in Solear Ltd., alongside
Nepcoe Capital Partners Ltd., a renewable energy developer and
investment company, that own the remaining 30%. Solear is a private
clean energy investment company focused on low cost, high yield
solar development projects. Solear provides exposure to a large
primarily European portfolio of pre-construction opportunities
across the renewable energy value chain, from Ready-to-Build to
early-stage development.
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END
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