Eco (Atlantic) Oil & Gas Ltd. (Eco Atlantic or the Company) announced Thursday that it has executed a Farm-out agreement (the Agreement) with Tullow Kudu Limited, a wholly owned subsidiary of Tullow Oil plc. (Tullow), pursuant to which Tullow has agreed to acquire up to a 40 percent working interest in Block 2012A, situated in the Walvis Basin, offshore Namibia (the Cooper Block or the Block). This Farm-In, in conjunction with Eco Atlantic’s prior Farm-Out to Azimuth for 20 percent, nets the Company a 100 percent carry of all costs on an expanded 386 square mile (1,000 square kilometer) 3D seismic survey and interpretation (the Seismic Program). The Seismic Program is expected to commence the fourth quarter of 2014. Dependent on the establishment of a target from the Seismic Program, Tullow has also committed to a full carry of cost to drill an exploration well on the Block.
Pursuant to the Agreement, the Company will initially transfer a 25 percent working interest in the Cooper Block to Tullow in return for a carry of the Company’s share of costs to execute and process the Seismic Program, and the reimbursement of 25 percent of the Company’s past costs in an amount to Eco Atlantic of approximately $1 million (the First Transfer). Following the First Transfer, if Tullow elects to participate in the drilling of an exploration well on the Cooper Block, Tullow will be transferred an additional 15 percent working interest in the Block, in return for a full carry of the Company’s share of costs to drill an exploration well on the Block (capped at $53 million) and the reimbursement of an additional 15 percent of the past costs (the Second Transfer). Eco Atlantic will remain Operator until the Second Transfer, at which time, Tullow will be appointed as Operator of the Cooper Block.
The completion of the First Transfer and the Second Transfer are subject to a number of conditions, including the approval of Namibia’s Ministry of Mines and Energy and various approvals of the other Block participants. AziNam Limited, an existing Block 2012A partner with 20 percent working interest, has given their approval to the transaction and expanded work program.
Dundee Securities Europe LLP acted as financial advisor in relation to the Agreement.
Eco Atlantic currently holds a 70 percent working interest in the Cooper Block, AziNam Limited holds a 20 percent working interest, and NAMCOR, the Namibian national oil company, holds a 10 percent working interest. Following the First Transfer, the Company will hold a 45 percent working interest in the Cooper Block, Tullow will hold a 25 percent working interest, and AziNam and NAMCOR will retain their respective working interests.
Gil Holzman, president and CEO of Eco Atlantic, stated: “We are extremely happy to complete this farm-out deal with one of Africa's preeminent and successful oil and gas explorers – Tullow Oil. This provides the requisite financing to progress activities on the Cooper Block, and further validates our exploration work and findings to date. Our strategy is one of identifying, acquiring and derisking our prospective acreage while attracting world class partners to progress the exploration process. We are delighted to welcome Tullow to partner with us on this block, and to join our other partners - AziNam and NAMCOR. Now that Cooper’s exploration is funded, we will continue to review further partnerships across our portfolio. We also wish to thank our Block partner AziNam for their positive support of the process as well as to our financial advisors, Dundee Securities.
Colin Kinley, COO and director of Eco Atlantic comments: “Eco has taken a very strategic approach to the exploration of its Namibian assets; each well drilled in this frontier basin has helped to further define our targets. Our approach, specifically to the Walvis Basin is simple. The mechanics are all there and the region is generating oil and gas, we know that for a fact. The Cooper Block has been analyzed closely by multiple parties – all resulting in acute interest. Attracting Tullow, who is one of Africa’s most successful explorers as a partner, who now has well over 100,000 barrels a day under its belt, is exciting for us. We have a highly credible team of upstream industry experts already within our own members and partners in AziNam and NAMCOR, and now we are bringing fresh eyes into the block who have the unique interpretation strength to find oil, drill wells and bring it on line quickly and economically.”
WHAT DO YOU THINK?
Click on the button below to add a comment.
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
Most Popular Articles
From the Career Center
Jobs that may interest you