(Alliance News) - Eco Atlantic Oil & Gas Ltd said on Monday it is progressing an acquisition to further its interests in Guyana.
The Toronto-based oil and gas exploration company signed a commercially-binding term sheet for a USD52 million cashless acquisition of 100% of JHI Associates Inc, a Guyana-focused deepwater exploration company.
The acquisition includes JHI's 18% working interest in the Canje Block, offshore Guyana, and its capital balance of a minimum of USD15 million.
JHI shareholders would receive 1.2 new Eco shares for each JHI share held for around 127 million new shares, around 34% of Eco's enlarged share capital.
The acquisition is expected to close in the second quarter of the year, subject to signing an arrangement agreement with JHI, due diligence checks and regulatory approvals.
The term sheet provides a 90-day period of exclusivity for Eco.
The Canje Block is directly adjacent to Stabroek Block, a site where ExxonMobil Corp has discovered over 10 billion barrels of oil since 2008, according to Eco.
Canje Block is operated by ExxonMobil subsidiary Esso Exploration & Production Guyana which owns 35%.
Eco already holds a 15% working interest in Orinduik Block, offshore Guyana, and said the new acquisition will add to its strategic acreage in the area. This will "pave the way" for future drilling at its blocks in the coming years.
Eco Atlantic's shares were up 1.1% to 28.80 pence each in London on Monday morning.
"Being a shareholder of JHI since last year has given us a deep understanding of the Canje Block and its prospectivity. It has also given us the opportunity to get to know the great management team at JHI and their technical and business achievements to date. Because of these facts, we believe that there is considerable strategic rationale in acquiring JHI," said Eco Co-Founder & Chief Executive Officer Gil Holzman.
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.
Eco (atlantic) (ECO)