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Eco (Atlantic) O&G - Unaudited Results and Corporate Update

RNS Number : 1197E
Eco (Atlantic) Oil and Gas Ltd.
26 February 2020
 

26 February 2020

 

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 2019

and Corporate and Operational Update

 

 

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX‐V: EOG)the oil and gas exploration company with licenses in Guyana and Namibia, is pleased to announce its results for the three and nine months ended 31 December 2019, alongside a corporate and operational update.

 

Results Highlights:

 

Financials

 

·    As at 31 December 2019, the Company had cash and cash equivalents of CAD $25.4 million with no debt and remains fully funded for its share of further appraisal and exploration drilling at Orinduik Block offshore Guyana of up to US$120m (gross).

·    As at 31 December 2019, Eco had total assets of CAD $27 million, total liabilities of CAD $0.3 million and total equity of CAD $26.7 million.

 

Operations - Guyana

 

·    On 12 August 2019, the Company announced a major oil discovery on its Orinduik offshore petroleum license in Guyana (the "Guyana License"). Evaluation of logging data confirms that Jethro-1 is the first discovery on the Guyana License and comprises high quality oil-bearing sandstone 55m reservoir of Lower Tertiary age. The well was cased and is awaiting further evaluation to determine the appropriate appraisal activity.

·    On 16 September 2019, the Company announced a second oil discovery on the Guyana License. Evaluation of MWD, wireline logging and sampling of the oil confirms that Joe-1 is the second discovery on the Orinduik License and comprises a high-quality oil-bearing sandstone 16m reservoir with a high porosity of Upper Tertiary age.

·   Both wells were drilled within budget, with MWD logging tool and conventional wireline, and the reservoirs were considered to be high-quality sands with good permeability.   

·   Fluid samples were taken in both of the wells and were sent for analysis by the Operator.  Results of that testing confirm that the samples recovered to date from Jethro-1 and Joe-1 are mobile heavy crudes with high sulphur content.

·   Oil tested to date appears not dissimilar to the commercial heavy crudes currently in production in the North Sea, Gulf of Mexico, the Campos Basin in Brazil, Venezuela and Angola.

·   The Company has engaged a third-party consultant with heavy oil development and economics expertise to help conduct preliminary evaluations related to production schemes and commercialisation. Technical and commercial evaluation work is ongoing and the Company is considering alternatives for further drilling and testing and a number of development scenarios and production alternatives. The Company remains optimistic in considering the development scenarios and, as the project progresses, will provide further information on plans and timing.

·    On 3 February 2020, the Company announced the filing of a National Instrument 51-101 compliant resource report on the Orinduik Block, offshore Guyana, which included:

Significant increase in Gross Prospective Resources to 5,141 MMBOE (771 MMBOE net to Eco) from previous estimate of Gross Prospective Resources of 3,981 MMBOE in March 2019.

22 prospects identified on Orinduik Block including 11 leads in the Upper Cretaceous horizon.

Majority of the project leads have over a 30% or better chance of success (COS), enhanced by the recent discovery of light oil in the Carapa 1 well on the Kanuku block to the south of Orinduik.

Leads in the Tertiary aged section estimated to contain 1,204 MMBOE.

Leads in the Cretaceous section are estimated to contain approximately 3,936 MMBOE.

 

Outlook

 

Guyana

·    The Block operator has proposed a further fine tuning analysis of the upper cretaceous reservoirs, and the Operator has announced a plan to incorporate the Carapa well data into Orinduik's existing geological models and technical analysis over the coming period. Further, the partners plan to integrate the discoveries at Jethro and Joe with the Carapa discovery with the rest of the regional data now available and to incorporate this data into a reprocessing of the 3D seismic already shot on Orinduik. The intent is to provide further definition to the Cretaceous interpretation and target selection for drilling.

·    Geological modeling, prospects maturation and target selection on the Block are ongoing, and the JV Partners are working closely to agree the best work program to further explore the prospectivity of the license.

·    Multiple prospects are currently being reviewed with high-graded candidates under consideration for the next drilling programme.

·    Eco is fully funded and is pushing to drill a minimum of at least one upper Cretaceous target as soon as practically possible for its partners. Consideration is being given to prioritise a stacked multi-target well.

 

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).

 

Namibia

·    Eco continues to progress its various work programmes offshore Namibia.

·    Eco sees an increasing interest in Namibia by major companies and large IOCs. The Company plans to monitor near-term drilling activity in the region and will update the market on developments as appropriate.

 

 

Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented: 

"After completing a successful drilling campaign in 2019, we continue to benefit from a very strong balance sheet and remain fully funded to conduct further exploration and appraisal drilling activity on the Orinduik Block. Our recently updated CPR reaffirms the high prospectivity of the license and the considerable upside potential contained within the Tertiary and Cretaceous horizons. As such, the JV Partners are working on incorporating the learnings gained from other regional discoveries, such as the Carapa well result, into our existing geological models, as this will enable us to identify the most high value targets on the Block.

 

"While it is Eco's intention, and there remains the potential, to conduct a drilling program later this year, the need to integrate the new data learned from recent discoveries in the region into our understanding of the Block's geology may result in further drilling and appraisal activity taking place in H1 2021. However, a final decision on further drilling activity and the overall budget will be made in the coming months. It is important to note that we remain convinced of the significant upside of Orinduik, are well funded, have strong shareholders and partners, and are confident that further drilling activity will be conducted as soon as practically possible and will prove the Block's potential."

 

 

 

The Company's unaudited financial results for three and six months ended 30 September 2019, together with Management's Discussion and Analysis as at 31 December 2019, 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 Canadian Dollars, unless otherwise stated.

 

Balance Sheet

 

          

December 31,

 

March 31,

2019

2019

Assets

Unaudited

 

Audited

Current assets

 

 

 

Cash and cash equivalents

 25,365,280

 

25,007,479

Short-term investments

                 74,818

 

                   74,818

Government receivable

                 50,102

 

                   33,104

Accounts receivable and prepaid expenses

                 65,632

 

                   80,926

 

  25,555,832

 

 25,196,327

 

 

 

 

    Petroleum and natural gas licenses

  1,489,971

 

  1,489,971

 

 

 

 

Total Assets

     27,045,803

 

    26,686,298

 

 

 

 

Liabilities

 

 

 

Current liabilities

      Accounts payable and accrued liabilities

                194,782

 

                  423,513

    Advances from and amounts owing to license partners, net

                134,187

 

               1,127,675

Total Liabilities

                328,969

 

1,551,188

 

 

 

 

Equity

 

 

 

Share capital

78,853,808

 

50,025,998

Restricted Share Units reserve

                356,493

 

                  111,493

Warrants

                 70,280

 

                   52,775

Stock options

3,319,117

 

3,184,658

Accumulated deficit

(55,882,864)

 

(28,239,814)

 

 

 

 

Total Equity

26,716,834

 

25,135,110

 

 

 

 

Total Liabilities and Equity

27,045,803

 

26,686,298

 

 

Income Statement

 

 

Three months ended

 

Nine months ended

 

December 31,

December 31,

 

 

2019

 

2018

 

2019

 

2018

 

Unaudited

 

Unaudited

 

Revenue

 

 

 

 

 

 

 

Income from farm-out agreement

          -  

 

16,759,307

 

                          -  

 

      16,759,307

Interest income

                105,802

 

            47,877

 

                  410,012

 

          144,852

 

                105,802

 

16,807,184

 

                  410,012

 

      16,904,159

Operating expenses:

 

 

 

 

 

 

  

Compensation costs

                265,096

 

          247,330

 

                  832,747

 

          771,953

Professional fees

                138,017

 

            72,295

 

                  469,390

 

          172,591

Operating costs (Notes 14)

             1,456,929

 

   1,891,595

 

             16,531,606

 

        3,656,989

General and administrative costs (Note 15)

                500,998

 

          337,005

 

               1,510,568

 

          968,458

Share-based compensation (Notes 9(i))

                 59,504

 

              1,487

 

               7,527,865

 

              4,460

Foreign exchange loss (gain)

                939,036

 

    (96,049)

 

               1,180,886

 

             (4,897)

 

 

 

 

 

 

 

 

Total expenses

             3,359,580

 

  2,453,663

 

             28,053,062

 

        5,569,554

 

 

 

 

 

 

 

Net profit (loss) and comprehensive loss

           (3,253,778)

 

 14,353,521

 

   (27,643,050)

 

      11,334,605

 

 

 

 

 

 

 

 

Basic and diluted net profit (loss) per share attributable to equity holders of the parent

                    (0.02)

 

                0.09

 

                      (0.15)

 

                0.07

Weighted average number of ordinary shares used in computing basic and diluted net loss per share

         184,441,830

 

  159,785,217

 

           182,225,982

 

    158,998,512

                 

 

 

Cash Flow Statement

 

 

Nine months ended

 

December 31,

2019

 

2018

 

Unaudited

Cash flow from operating activities

 

 

 

Net profit (loss) from operations

      (27,643,050)

 

      11,333,119

Items not affecting cash:

 

 

 

   Share-based compensation

         7,527,865

 

              5,946

   Warrants issued for services

              70,280

 

                   -  

Changes in non‑cash working capital:

 

 

 

   Government receivable

   (16,998)

 

              3,904

   Accounts payable and accrued liabilities

   (228,731)

 

            46,053

   Accounts receivable and prepaid expenses

              15,294

 

            48,330

   Advance from and amounts owing to license partners

   (993,488)

 

   (8,043)

 

      (21,268,828)

 

      11,429,309

 

 

 

 

Cash flow from financing activities

 

 

 

Net proceeds from private placement

       21,338,853

 

                        -  

Proceeds from the exercise of stock options

            126,000

 

                        -  

Proceeds from the exercise of warrants

            161,776

 

                   -  

 

       21,626,629

 

                        -  

 

 

 

 

Increase (decrease) in cash and cash equivalents

            357,801

 

  11,429,309

Cash and cash equivalents, beginning of year

       25,007,479

 

   14,316,042

 

 

 

 

Cash and cash equivalents, end of period

       25,365,280

 

    25,745,351

 

 

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.

 

Subsequent Events

 

On 9 January 2020, a director of the Company elected to exercise 350,000 options at an exercise price of $0.30. In order to effect a cashless exercise, as permitted under the Company's Stock Option Plan, and minimize dilution to shareholders, the Board agreed to issue 250,000 common shares in lieu of the 350,000 options intended to be exercised.

 

The Company also granted to the Company's IR and Marketing manager, options to subscribe for up to 200,000 Common Shares at a price of $1.20 per Share (the "Options"). The Options vest equally over three years with the first vesting period occurring on the date of issue and expire 5 years from the date of issue.

 

 

**ENDS**

 

 

For more information, please visit www.ecooilandgas.com or contact the following:

 

Eco Atlantic Oil and Gas

+1 (416) 250 1955

Gil Holzman, CEO

Colin Kinley, COO

Alice Carroll, Head of Marketing and IR

 

 

 +44(0)781 729 5070

 

Strand Hanson Limited (Financial & Nominated Adviser)

 

+44 (0) 20 7409 3494

James Harris

Rory Murphy

James Bellman

 

 

Stifel Nicolaus Europe Limited (Joint Broker)

Callum Stewart

Ashton Clanfield

+44 (0)20 7710 7600

 

 

Berenberg (Joint Broker)

 

+44 (0) 20 3207 7800

Matthew Armitt

Detlir Elezi

 

 

Celicourt (PR)

 

+44 (0) 20 8434 2754

Mark Antelme

Jimmy Lea

 

Hannam & Partners (Research Advisor)

Neil Passmore

Hamish Clegg

 

Canaccord Genuity (North American Advisor)

Simon Akit

 

 

 

 

+44 (0) 20 7905 8500

 

 

 

+1 416 869 3820

 

 

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 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 and Hess Corporation's Stabroek Block, on which sixteen discoveries have been announced and over 8 Billion BOE of oil equivalent recoverable resources are estimated. First oil production commenced in December 2019 from the deep-water Liza Field, less than 3 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 25,000km2 with over 2.3bboe of prospective P50 resources in the Walvis and Lüderitz Basins.  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).

 

 

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Market: TSX-V
Market Cap: £37.4 m
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