Eco (atlantic) Regulatory News (ECO)

30 July 2018

ECO (ATLANTIC) OIL & GAS LTD.

("Eco Atlantic", "Company" or, together with its subsidiaries, the "Group")

Audited Results For The Year Ended 31 March 2018

Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX-V: EOG), the oil and gas exploration company with licences in highly prospective regions in South America and Africa, is pleased to announce its audited results for the financial year ended 31 March 2018 and provide a corporate and operational update.

Year End Corporate Highlights:

· Through the Company's subsidiary, Eco Atlantic (Guyana) Inc. ("Eco Guyana"), Eco Atlantic entered into an option agreement that provides Total E&P Activités Pétrolières SA, (a wholly owned subsidiary of Total SA) ("Total"), with an option to acquire a 25% Working Interest in the Orinduik Block (the "Total Option"). Total paid US$1 million for the option. Total has 120 days from the date of receipt of the final processing report of the 2,550 km2 3D seismic survey completed on the Block in September 2017 to exercise the option in return for a US$12.5 million cash payment to Eco Guyana.

· On 13 November 2017, the Company entered into an agreement with Africa Oil Corp. ("AOC") whereby AOC subscribed for 29,200,000 shares in the Company for gross proceeds of CAD$14 million (the "Subscription").

· The Company and AOC also entered into a Strategic Alliance Agreement to identify potential new projects to add to the Company's portfolio. The completion of the Subscription, associated share issuance and transfer of funds was completed on 16 November 2017. AOC CEO, Keith Hill, joined the Company's Board as a Non-Executive Director shortly after the completion of the transferred funds.

· On 22 February 2018, the Company was recognised as a 2018 TSX Venture 50™ company, an annual ranking of top-performing companies on the TSX Venture Exchange (the "TSX-V") over the last year. The TSX Venture 50™ comprises of the top 10 companies listed on the TSX-V in each of the five major industry sectors - mining, oil & gas, clean technology & life sciences, diversified industries and technology - based on a ranking formula with equal weighting given to return on investment, market capitalisation, growth, trading volume and analyst coverage. All data was as of December 31, 2017.

· On 20 February 2018, the Company entered into two share purchase agreements to acquire the minority interests in Eco Guyana, consisting of 6% of the outstanding shares for a cash payment of US$200,000 and the issuance of 1,700,384 common shares. Following completion of the transaction, Eco Guyana became a wholly owned subsidiary of the Company.

Year End Operational Highlights:

· Guyana

o Following the completion of the 2,550 km2 3D seismic survey on the Orinduik Block, offshore Guyana, the Company has progressed well with both processing and interpretation.

o On 18 January 2018, Eco and its partner Tullow Oil entered Phase Two of the Initial Period under the Petroleum Agreement and Prospecting License for the Orinduik Block, offshore Guyana.

o Upon each stage of the 3D seismic processing and interpretation, Eco has cooperated with Total and, significantly, all of this data to date has been transferred to Total's exploration team. The remaining data and final report will be provided to Total in the coming month, triggering the commencement of the 120-day review period under the terms of the Total option. Once the final report has been provided to Total, an update will be provided to shareholders.

o Eco and Tullow Oil have approved the initial budgeting for Environmental Permitting and Drilling Engineering and are actively interpreting the data to identify drilling targets.

o On 23 July 2018 and following the recent Longtail discovery, Exxon Mobil updated the recoverable oil estimates on the neighbouring Stabroek Block offshore Guyana, to be over 4 billion barrels

· Namibia

o The Company, as Operator of the Cooper Block, offshore Namibia, has published a public notice for Environmental Clearance Certificate (ECC) for drilling an exploration well on the Block, a key clearance step required ahead of potential drilling on the Block.

o On 25 June 2018, the Company, as Operator of the Tamar Block, was granted a one-year extension to the First Exploration period to March 2019 for PEL 50 (Tamar), located in the 22,500 km2 Walvis Oil Basin in North Central Namibia, by the Namibia Ministry of Mines and Energy.

o The Company will be paying close attention to the results of the two wells which are scheduled to be drilled during Q3 and Q4 2018 on PEL 37 and PEL 71 in the Walvis Basin. The results of these wells will add a significant amount of information to the overall understanding of the petroleum system in the Basin, including the blocks held by the Company.

· New Ventures

o In line with the Company's strategy, Eco is actively identifying, evaluating and negotiating additional project opportunities.

Year End Financial Highlights:

· Total assets of CAD$16.7 million as at 31 March 2018, up from CAD$8.8 million at 31 March 2017.

· Total Equity of CAD$16.0 million as at 31 March 2018, up from CAD$8.0 million as at 31 March 2017.

· Cash on hand of CAD$14.3 million as at 31 March 2018, up from CAD$6.1 million as at 31 March 2017.

· Income of CAD$1.3 million for the year ended 31 March 2018, primarily from the Total Option (see above).

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

"Our year ended 31 March 2018 has produced our best financial results yet. We have succeeded in significantly strengthening our balance sheet over the last two years, starting with our AIM IPO back in February 2017, followed by the receipt of US$1 million from Total as payment for an option to farm-in to our Orinduik Block, the completion of the CAD$14 million private placement with Africa Oil Corp. and the exercise of options and broker warrants, which injected a further CAD$840,000 into our cash reserves. In parallel, we have dedicated significant effort towards advancing our portfolio assets, including progressing various exploration programs.

"With numerous significant discoveries made by ExxonMobil in the neighbouring Stabroek Block totalling over 4 Billion barrels of oil, and having completed a significant 3D seismic programme on our Orinduik Block offshore Guyana, we find ourselves in a prime position. Eco are currently in the final stages of the interpretation process and have been actively cooperating with Total in respect of their farm-in option for the Orinduik Block. We are confident that Total will exercise this option, which would add a further US$12.5 million to our balance sheet and introduce a super major as our partner.

"Positive progress has also been made in Namibia as we look to push ahead with our drilling plans on the Opsrey Lead in the Cooper Block, while steadily developing our other three blocks; Guy, Tamar and Sharon. The recently granted extension for our licence on the Tamar Block shows the close cooperation that we have with the Namibian government and we are delighted by their continued support. Activity in the region, particularly in the Walvis Basin where we hold four prospective licences, has increased remarkably over the past year and we continue to keep a close eye on nearby developments.

"As we advance all of our existing licenses, we are also assessing new opportunities in frontier regions to potentially build on our already strong portfolio of assets and which fit Eco's strategy of developing underexplored prospective areas of interest.

"Having achieved our objectives that we set out at the beginning of the financial year, I would like to take this opportunity to thank our management team for all their hard work and for the loyal support from our shareholders for what has been a momentous year for the Company."

The Company's audited financial results for the year ended 31 March 2018, together with Management's Discussion and Analysis as at 31 March 2018, 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 audited Financial Statements. All amounts are in Canadian Dollars, unless otherwise stated.

Independent Auditors' Report

To the Shareholders of Eco (Atlantic) Oil & Gas Ltd.:

Report on the Consolidated Financial Statements

We have audited the accompanying consolidated financial statements of Eco (Atlantic) Oil & Gas Ltd., which comprise the consolidated statements of financial position as at March 31, 2018 and 2017, and the consolidated statements of operations and comprehensive loss, equity, and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management's Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards ("IFRS"), and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Eco (Atlantic) Oil & Gas Ltd. as at March 31, 2018 and 2017, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

Chartered Professional Accountants

Licensed Public Accountants

Mississauga, Ontario

July 25, 2018

Consolidated Statements of Financial Position

Consolidated Statements of Operations and Comprehensive Loss

Consolidated Statements of Equity

Consolidated Statements of Cash Flows

The Company's business is to identify, acquire, explore and develop petroleum, natural gas, and shale gas properties. The Company primarily operates in the Co-Operative Republic of Guyana ("Guyana") and the Republic of Namibia ("Namibia"). The head office of the Company is located at 181 Bay Street, Suite 320, Toronto, ON, Canada, M5J 2T3.

As used herein, the term "Company" means individually and collectively, as the context may require, Eco (Atlantic) Oil and Gas Ltd. and its subsidiaries.

These consolidated financial statements were approved by the Board of Directors of the Company on July 25, 2018.

The consolidated 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.

Statement of compliance

The Company applies International Financial Reporting Standards as issued by the International Accounting Standards Board ("IASB") and interpretations issued by the IFRS Interpretations Committee ("IFRIC").

The policies applied in these consolidated financial statements are based on IFRS issued and outstanding as of March 31, 2018.

The significant accounting policies followed by the Company are summarized as follows:

Basis of consolidation

These consolidated financial statements include the accounts of the Company and its directly and indirectly owned subsidiaries, as follows:

On October 21, 2016, the Company sold its wholly owned subsidiary, Eco Atlantic (Ghana) Ltd. (Note 19).

(*) See Subsequent Events note 21.

Foreign currencies

The functional and presentation currency of the Company and its subsidiaries is the Canadian dollar.

Transactions in currencies other than the functional currency are recorded at the rates of exchange prevailing at the dates of transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are translated at the rates prevailing at that time. Non‑monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange gains and losses are recognized in profit or loss.

Financial instruments

Financial instruments are required to be classified as one of the following: held-to-maturity; loans and receivables; fair value through profit or loss; available-for-sale or other financial liabilities.

The Company's financial instruments include cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued liabilities and advances from and amounts owing to license partners. The Company designated its cash and cash equivalents and short-term investments as fair value through profit or loss. The Company designated its accounts receivable as loans and receivables, accounts payable and accrued liabilities and advances from and amounts owing to license partners as other financial liabilities, all of which are measured at amortized cost.

Fair value through profit or loss financial assets are measured at fair value, with gains and losses recognized in operations. Financial assets held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost. Available-for-sale financial assets are measured at fair value with unrealized gains and losses recognized in other comprehensive loss.

The fair value of a financial instrument is the amount of consideration that would be agreed upon in an arm's length transaction between knowledgeable, willing parties who are under no compulsion to act. The fair value of a financial instrument on initial recognition is the transaction price, which is the fair value of the consideration given or received. Subsequent to initial recognition, the fair value of a financial instrument that is quoted in active markets is based on the bid price for a financial asset held and the offer price for a financial liability. When an independent price is not available, fair value is determined by using a valuation which refers to observable market data. Such a valuation technique includes comparisons with a similar financial instrument where an observable market price, discounted cash flow analysis, option pricing models and other valuation techniques commonly used by market participants exist.

Exploration and evaluation assets and expenditures

 i) Expenditures

For oil and gas prospects not commercially viable and financially feasible, the Company expenses exploration and evaluation expenditures as incurred. Exploration and evaluation expenditures include acquisition costs of oil and gas prospects, property option payments and evaluation activities. Exploration and evaluation expenditures are capitalized only when associated with a business combination or asset acquisition or the Company can demonstrate that these expenditures meet the criteria of an identifiable intangible asset.

Once a project has been established as commercially viable and technically feasible, related development expenditures are capitalized. This includes costs incurred in preparing the site for production operations. Capitalization ceases when the oil and natural gas reserves are capable of commercial production, with the exception of development costs that give rise to a future benefit.

ii) Depletion and depreciation

Capitalized costs related to each cost center from which there is production will be depleted using the unit‑of‑production method based on proven petroleum and natural gas reserves, as determined by independent consulting engineers. 

iii) Farm-out arrangements

The Company, as farmor, accounts for the farm-out arrangements as follows; the farmor does not record any expenditure made by the farmee on its behalf, and recognizes its expenditures under farm-out arrangements in respect of its own interest when the costs are incurred. Any cash consideration received as reimbursements of expenditures incurred in prior years and is recorded as income from farm-out agreements in profit or loss. Any cash consideration received as reimbursements of expenditures incurred in the current year is offset against related expenditures in operating costs and general and administrative costs in profit or loss. Any cash consideration received in advance of underlying expenditures is capitalized to advance from license partners until the applicable expenditures have been incurred, at which point the recovery is transferred to income from farm-out agreements in profit or loss. Any cash received without an underlying commitment to incur expenditures is recorded as income from farm-out agreements in profit or loss.

iv) Impairment

At the end of each reporting period, the Company reviews the carrying amounts of its non‑financial assets with finite lives, to determine whether there are facts and circumstances which suggest that the carrying amount exceeds the recoverable amount. Where such an indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. The recoverable amount is the higher of an asset's fair value, less cost to sell or its value in use. In addition, long‑lived assets that are not amortized are subject to an annual impairment assessment.

v) Asset retirement obligations

Asset retirement obligations are measured at the present value of the expenditure expected to be incurred using a risk‑free discount rate. The associated asset retirement cost is capitalized as part of the cost of the related long‑lived asset. Changes in the estimated obligation resulting from revisions to estimated timing, amount of cash flows, or changes in the discount rate are recognized as a change in the asset retirement obligation and the related asset retirement cost. Increases in asset retirement obligations resulting from the passage of time are recorded as accretion of asset retirement obligation in the consolidated statement of operations as a financial cost. Actual expenditures incurred are charged against the accumulated asset retirement obligation as incurred.

The Company currently does not have any asset retirement obligations.

Income taxes

Income tax expense consists of current and deferred tax expense. Current and deferred tax are recognized in profit or loss except to the extent that they related to items recognized in equity or other comprehensive income.

Current tax is recognized and measured at the amount expected to be recovered from or payable to the taxation authorities based on the income tax rates enacted or substantively enacted at the end of the reporting period and includes any adjustment to taxes payable in respect of previous years.

Deferred tax is recognized on any temporary differences between the carrying amounts of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable earnings. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized and liability is settled. The effect of a change in the enacted or substantively enacted tax rates is recognized in net earnings and comprehensive income or in equity depending on the item to which the adjustment relates.

Deferred tax assets are recognized to the extent future recovery is probable. At each reporting period end, deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxable earnings will be available to allow all or part of the asset to be recovered.

Revenue recognition

Revenue from the sale of petroleum and natural gas is recognized when the risks and rewards of ownership pass to the purchaser, including delivery of the product, the selling price is fixed or determinable and collection is reasonably assured. Oil and natural gas royalty revenue is recognized when received.

Loss per share

Basic loss per share is computed based on the weighted average number of common shares outstanding during the year. In calculating the diluted loss per share, the weighted average number of common shares outstanding assumes that the proceeds to be received on the exercise of dilutive share options and warrants are used to repurchase common shares at the average market price during the year. 

Segment reporting

The Company operates in one segment, the oil and gas business and conducts its operations in Namibia and Guyana with its head office in Canada. Substantially all the Company's oil and gas assets are located in Namibia and Guyana.

Significant accounting judgments and estimates

The preparation of the consolidated financial statements using accounting policies consistent with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities, the reported amounts of revenues and expenses and to exercise judgment in the process of applying the 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.

i) Impairment of assets

When there are indications that an asset may be impaired, the Company is required to estimate the asset's recoverable amount. The recoverable amount is the greater of value in use and fair value less costs to sell. Determining the value in use requires the Company to estimate expected future cash flows associated with the assets and a suitable discount rate in order to calculate present value.

The IASB issued new standards and amendments which are not yet effective.

IFRS 9, Financial Instruments ("IFRS 9") was initially issued by the IASB on November 12, 2009 and issued in its completed version in July 2014, and will replace IAS 39, "Financial Instruments: Recognition and Measurement" ("IAS 39"). IFRS 9 replaces the multiple rules in IAS 39 with a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for financial years beginning on or after January 1, 2018. The Company is currently assessing the effects of IFRS 9 and intends to adopt IFRS 9 on its effective date.

IFRS 15, Revenue from Contracts with Customers ("IFRS 15") was issued by the IASB in May 2014 and clarifies the principles for recognizing revenue from contracts with customers. IFRS 15 will result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively (i.e. service revenue and contract modifications) and improve guidance for multiple-element arrangements. IFRS 15 is effective for periods beginning on or after January 1, 2018 and is to be applied retrospectively. The Company's assessment of IFRS 15 has determined that there will not be a significant impact to the consolidated financial statements as a result of the adoption of this standard.

IFRS 16, Leases ("IFRS 16") was issued by the IASB in January 2016 and specifies how an IFRS reporter will recognize, measure, present and disclose leases. The standard provides a single lessee accounting model, requiring lessees to recognize assets and liabilities for all leases unless the lease term is 12 months or less or the underlying asset has a low value. Lessors continue to classify leases as operating or finance, with IFRS 16's approach to lessor accounting substantially unchanged from its predecessor, IAS 17. An entity applies IFRS 16 for annual periods beginning on or after January 1, 2019. Earlier application is permitted if IFRS 15 Revenue from Contracts with Customers has also been applied. A lessee shall either apply IFRS 16 with full retrospective effect or alternatively not restate comparative information but recognize the cumulative effect of initially applying IFRS 16 as an adjustment to opening equity at the date of initial application. The Company is currently assessing the effects of IFRS 16 and intends to adopt IFRS 16 on its effective date.

The Company's short-term investments comprise interest bearing deposits with its primary bank of $74,818 (March 31, 2017 - $49,818), which are held as collateral for credit-card lines of credit.

6. Accounts receivable and prepaid expenses

Included in accounts receivable and prepaid expenses is a receivable amounting to $767,428 (US$576,580) in respect of the sale of the Company's Ghana operations, which took place during the year ended March 31, 2017.

Balance Impairment, Sale Balance April 1, and March 31, 2017 Additions Abandonment 2018

Balance Impairment, Sale Balance April 1, and March 31, 2016 Additions Abandonment 2017

i. The Guyana License is located in the Orinduik block, offshore Guyana. The Orinduik block is situated in shallow water, 170 kilometers offshore Guyana in the Suriname Guyana basin and is located in close proximity to the recent Exxon "Lisa" and "Payara" discoveries.

ii. In accordance with the Guyana Petroleum Agreement, Eco Guyana holds a 40% working interest in the Guyana Licenses and Tullow Oil plc ("Tullow") holds the remaining 60% interest. Under the Guyana Petroleum Agreement, Tullow will act as operator.

iii. On June 8, 2017, in light of recent discoveries in the region by other petroleum explorers and the advancement of the interpretation of the Orinduik Block the results of which were encouraging to the Company, Tullow and the Company approved a circa 2,550 km2 seismic survey on the Company's Orinduik Block. Tullow carried US$1,250,000 of the Company's share of costs of the 3D survey.

iv. On June 18, 2017, the Company and Tullow elected to enter into Phase Two of the Initial Exploration Period, which runs for four years from January 2016, pursuant to the terms of the Guyana Petroleum Agreement. The work commitment under Phase Two requires the acquisition of at least a minimum of 1,000 square kilometers of 3D seismic on the Orinduik Block. This has already been completed and exceeded during Phase One when the Block partners completed a 2,550 square kilometers survey in September 2017. As such, there is no further 3D seismic in Phase Two of the Initial Period.

v. On September 26, 2017, the Company's subsidiary, Eco Guyana, entered into an option agreement that provides Total E&P Activités Pétrolières, (a wholly owned subsidiary of Total SA) ("Total") with an option to acquire a 25% Working Interest in the Orinduik Block from Eco Guyana (the "Option"). Pursuant to the Option Agreement, Total made an immediate payment of US$1 million for the Option (the "Option Fee") to Farm-in to the Orinduik Block for an additional payment in cash of US$12.5 million to earn the 25% Working Interest. The Option is exercisable within 120 days from delivery to Total of the processed 3D seismic and final report thereto. The survey acquisition was completed on September 5, 2017 and processing is expected to be fully completed in August 2018.

vi. On February 20, 2018, the Company entered into two share purchase agreements (collectively, the "Purchase Agreements") to purchase the minority interests in Eco Guyana, consisting of 6% of the outstanding shares of Eco Guyana (the "Minority Shares"). As consideration for the acquisition of the Minority Shares the Company agreed to pay a cash consideration in the amount of US$200,000 payable in two equal tranches (the first upon closing of the Purchase Agreements (the "Closing") and the second 60 days after Closing); and issue a total of 1,700,384 common shares (the "Consideration Shares"). The Consideration Shares are subject to a lock up arrangement, with 1/3 being released on Closing; 1/3 being released 91 days after Closing; and the remaining balance being released 181 days after Closing. Upon Closing, the Company will own 100% of Eco Guyana. As of March 31, 2018, the Company paid the first instalment of US$100,000. See also Subsequent Events note 21(i).

As at March 31, 2018, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Guyana License for is as follows:

Notes:

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

(2) Assuming Company's working interest remains at 40%.

(iii) Namibia

(iv) The Cooper License

i. The Cooper License covers approximately 5,000 square kilometers and is located in license area 2012A offshore in the economical waters of Namibia (the "Cooper Block"). The Company holds a 32.5% working interest in the Cooper License, NAMCOR holds a 10% working interest (carried by the Company and Tullow collectively), AziNam Ltd. ("AziNam"), holds a 32.5% working interest, and Tullow Namibia Limited, a wholly owned subsidiary of Tullow Oil plc ("Tullow"), holds a 25% working interest. AziNam and Tullow proportionally carry NAMCOR's working interest during the exploration period.

Pursuant to the Company's original farmout agreement with Tullow (the "Tullow Farmout Agreement"), if Tullow elects to participate in the drilling of an exploration well on the Cooper Block, Tullow will acquire an additional 15% working interest in the Cooper License from Eco and Azinam, will carry (capped at $18.17 million) the Company's share of costs to drill the exploration well and will reimburse the Company for 17.14% of its past costs (the "Second Transfer"); such terms were subsequently updated in January 2017 as set out below. There is no guarantee that the Second Transfer will be completed.

ii. On November 27, 2017, India's ONGC Videsh, announced that it is acquiring a 15% working interest in the Cooper license from Tullow. The transaction is subject to the approval of the Ministry.

 (iv) The Cooper License (continued)

iii. On April 15, 2016, the Ministry approved the entering of the next phase of the Cooper License which has been extended into the first Renewal Phase, which on October 16, 2017, was extended by the Ministry to March 2019. The Second Renewal phase is until March 2021. The Ministry also waived the relinquishment requirement (as stipulated in the Petroleum Agreement), and the partners will continue the exploration work on the entire block area.

iv. On November 2, 2017, the Company released its Public Notice for Environmental Clearance Certificate (ECC) for drilling of an exploration well within its Osprey Lead on the Block.

v. As of March 31, 2018, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Cooper License is as follows:

(v) The Sharon License

i. The Sharon License covers 5,000 square kilometers and is located in license area 2213A and 2213B offshore in the economical waters of Namibia (the "Sharon Blocks"). The Company holds a 60% working interest in the Sharon License, NAMCOR holds a 10% carried interest (by the Company), and AziNam holds a 30% interest. The Company and AziNam proportionally carry NAMCOR's working interest during the exploration period.

ii. On April 15, 2016, the Ministry approved the entering the next phase of the Sharon License, which has been extended into the first Renewal Phase, which on October 16, 2017, was extended by the Ministry to March 2019. The Second Renewal phase is until March 2020. The Ministry further approved the Company's request to terminate 50% of its licensing obligation corresponding with the relinquishment of 50% of the acreage in the license which was a requirement of the Petroleum Agreement. This relinquishment pertains to the eastern half of the Sharon Block. The Company considers this shallow section non-prospective.

iii. As of March 31, 2018, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Sharon License is as follows:

Notes:

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

(vi) The Guy License

i. The Guy License covers 5,000 square kilometers and is located in license area 2111B and 2211A offshore in the economical waters of Namibia (the "Guy Block"). The Company holds a 50% working interest in the Guy License, NAMCOR holds a 10% carried interest (by the Company) and AziNam holds a 40% interest. The Company and AziNam proportionally carries NAMCOR's working interest during the exploration period. As of July 1, 2015, AziNam assumed the role of operator with respect to the Guy License. The Company and AziNam proportionally carry NAMCOR's working interest during the exploration period.

ii. On May 12, 2016, the Ministry approved the entering the next phase of the Guy License, which has been extended into the first Renewal Phase, which on October 16, 2017, was extended by the Ministry to March 2019. The Second Renewal phase is until March 2020. The Ministry further approved the Company's request to terminate 50% of its licensing obligation corresponding with the relinquishment of 50% of the acreage in the license which was a requirement of the Petroleum Act. This relinquishment pertains to the western portion of the Guy block in the ultra-deep section that the Company and its operating partner, AziNam, consider non-prospective.

iii. As of March 31, 2018, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Guy License is as follows:

Notes:

 (1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

 (vii) The Tamar License

i. The Tamar License covers approximately 7,500 square kilometres and is located in license areas 2211B and 2311A offshore in the economical waters of the Republic of Namibia. PAO Namibia holds an 80% working interest in the Tamar License (the Company's net interest is 72% due to its 90% ownership of PAO Namibia), Spectrum Geo Ltd. holds a 10% working interest, and NAMCOR holds a 10% working interest.

ii. On June 25, 2018, the Company received a one-year extension to March 20, 2019 for the First Renewal Period from the Petroleum Commissioner of the Republic of Namibia. 

iii. As of March 31, 2018, the outstanding Exploration Activities and the aggregate expenditure as estimated by management based on current costs for the Tamar License is as follows:

Notes:

(1) Exploration Activities are not currently committed and cost estimates are based on management estimates for the costs if the relevant Exploration Activity was to be undertaken as at the date of this document.

The following are the expenses incurred with related parties for the years ended March 31, 2018 and 2017 and the balances owing as of March 31, 2018 and 2017:

(i) As of March 31, 2018:

(*) Included in Consulting fees are to Mr. Kinley is $231,066 of fees paid for technical services provided by a Company controlled by Mr. Kinley.

(**) Mr. Linfield resigned as a director on December 29, 2017.

(***) Mr. Hill was appointed as a director on December 29, 2017.

(ii) As of March 31, 2017:

(i) On February 20, 2015, the Company's Board of Directors authorized a share repurchase program (the "2015 Issuer Bid") of up to 10 percent of the Company's outstanding common shares through a normal course issuer bid (up to 6,171,724 common shares) ("ECO Share Repurchase Program"). Shares could be repurchased from time to time on the open market commencing March 2, 2015 through March 1, 2016, or such earlier time as the Issuer Bid is completed or terminated at the option of the Company, at prevailing market prices. The timing and amount of purchases under the program are dependent upon the availability and alternative uses of capital, market conditions, and applicable Canadian regulations and other factors. On March 10, 2016, the Company announced that is had received an additional Exchange approval for its intended normal course issuer bid (the "2016 Issuer Bid"). Under the terms of the 2016 Issuer Bid, the Company may acquire up to 6,491,870 Common Shares from time to time in accordance with Exchange procedures, representing approximately 10% of the total number of the Common Shares held by public shareholders as at the date of the Exchange approval.

As at March 31, 2017, the Company repurchased a total of 8,454,000, of which 8,191,500 have been cancelled. The Company held shares, as of March 31, 2017, valued at $52,805 (March 31, 2016 - $29,937) in treasury.

(ii) During the year ended March 31, 2017, the Company issued the following RSU's:

a. 708,700 of the 1,002,600 RSU's, granted on March 23, 2016 were issued, and the fair value of those RSU's ($136,079) were released from Shares to be Issued in the Statement of Equity to Contributed Surplus.

b. On August 5, 2016, 234,736 RSU's were granted to certain directors, officers and consultants of the Company. The RSU's vested immediately on the grant date. These RSU's had a fair value of $0.19 per unit based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date. The total fair value of the RSU's amounted to $44,600. As 18,000 underlying shares, have not yet been issued, $41,180 was recognized as share-based compensation expense for the year ended March 31, 2017 and $3,420 has been recorded as shares to be issued the Statement of Equity as at March 31, 2017.

c. On November 28, 2016, 833,600 RSU's were granted to certain officers and consultants of the Company. These RSU's had a fair value of $0.22 per unit based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date. The total fair value of the RSU's amounted to $183,392.

1. 433,600 RSU's vested immediately on the grant date, however, as of March 31, 2017, these shares have not been issued. As such, $95,392 was recognized as share-based compensation expense for the year ended March 31, 2017 with a corresponding credit to Shares to be issued in the Statement of Equity.

2. 400,000 RSU's will vest upon the achievement of certain milestones and expire on November 27, 2026. Management estimates that there is currently a 100% probability that the milestone will be achieved, and as such, the fair value of the RSU's was charged to share-based compensation over the vesting period of the RSU. $5,182 was recognized as share-based compensation expense for the year ended March 31, 2017 with a corresponding credit to Shares to be issued in the Statement of Equity.

(iii) On February 8, 2017, the Company completed an admission and listing on the AIM market of the London Stock Exchange ("AIM"). The Company raised $8,390,250 (£5,085,000) before expenses by placing 31,781,250 new Common Shares (the "UK Placing") with investors at a placing price of £0.16 per share ($0.265 per share (the "Placing Price") (the "Placing"). AIM listing expenses including, cash expenses, comprising primarily commissions and professional fees in the amount of $2,044,946 and the fair value of warrants issued to brokers' (see Note 11) in the amount of $237,267.

In addition to securities issued pursuant to the UK Placing, common shares and warrants were issued to the UK advisors in relation to the Company's Admission to AIM in the aggregate amount of 812,500 common shares and 3,702,935 warrants and one Canadian service provider subscribed for 306,748 common shares at CDN$0.26 per share for total cash consideration of $79,754. The exercise period for the warrants includes 12, 24, and 30 months and the related exercise prices are 17.6, 19.2 and 16 pence per share, respectively ($0.29, $0.32 and $0.27 per share, respectively) ("Broker Warrants").

The fair value of the warrants was $237,267 (Note 10).

Gross proceeds, less issuance costs paid in cash (including payments to the UK Advisors of £215,000 ($356,126) and cash commissions of £256,950 ($425,612)) and less the total fair value of the Broker Warrants were charged against share capital in the statement of equity.

All common shares being issued by the Company pursuant to this offering will be freely transferable outside of Canada, however these shares are subject to a four-month restricted hold period in Canada which will prevent such common shares from being resold in Canada, through a Canadian exchange or otherwise, during the restricted period without an exemption from the Canadian prospectus requirement.

(iv) In connection with the Amalgamation completed on January 28, 2015, the Company authorized for issuance 18,830,738 Common Shares. In order to obtain their Common Shares in the Company, former shareholders of Pan African Oil ("PAO") were required to surrender for cancellation the certificates representing their PAO shares (the "Certificates"). As at March 31, 2017, 17,972,764 shares were issued to former PAO shareholders. 

(v) During the year ended March 31, 2018, the following shares were issued as a result of vested Restricted Share Units:

a. On November 28, 2016, the Company issued 833,660 RSU's. 433,600 RSU's vested immediately, and 400,000 were to vest upon the achievement of certain milestones:

1. On May 4, 2017, shares in respect of 433,600 of the 833,600 RSU's, which had vested immediately, were issued, and the fair value of those RSU's ($95,932) were released from Restricted Share Unit Reserve in the Statement of Equity to Contributed Surplus.

2. On November 24, 2017, the milestones in respect of the 400,000 RSU's were achieved and shares in respect of these 400,000 RSU's were issued. The total fair value of these RSU's amounted to $88,000 which was charged to share-based compensation with a corresponding credit to Share Capital in the Statement of Equity.

(vi) On June 8, 2017, 3,500,000 RSU's were granted to certain directors, officers and consultants of the Company as compensation and success fees in relation with the AIM admission and Company's portfolio and operational developments. The RSU's vested immediately on the grant date. These RSU's had a fair value $1,046,500 ($0.299 per unit) based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date and was charged to Share based Compensation in the Statements of Operations and Comprehensive Loss. On November 24, 2017, 3,400,000 were issued and 100,000 remain outstanding. $1,016,600 was charged to Share Capital and $29,900 (representing the fair value of the remaining 100,000 shares) was charged to Restricted Share Units in the Statement of Equity.

a. On November 24, 2017, 3,050,000 RSU's were granted to certain directors, officers and consultants of the Company as compensation and success fees in relation with the Brokered Private Placement. The RSU's vested immediately on the grant date and 3,050,000 shares of the Company were issued immediately. These RSU's had a fair value $1,342,000 ($0.44 per unit) based on the volume weighted average market price of the Common Shares for the five preceding days before the grant date and was charged to Share based Compensation in the Statements of Operations and Comprehensive Loss with a credit to Share Capital in the Statement of Equity.

d. In addition, on November 24, 2017, the Company issued 198,000 shares in respect of RSU's that were granted on March 30, 2016. The total fair value of the RSU' amounted to $42,962.

(vii) On June 28, 2017, the Company granted 62,500 shares to a UK consultant for services provided. The fair value of the shares on the grant date was $17,500.

(viii) On August 4, 2017, the Company cancelled 262,500 shares that had been repurchased during the year ended March 31, 2107 under the terms of the its intended normal course issuer bid (the "2016 Issuer Bid"), in which the Company was allowed to acquire up to 6,491,870 Common Shares from time to time in accordance with Exchange procedures, representing approximately 10% of the total number of the Common Shares held by public shareholders as at the date of the Exchange approval. As of August 4, 2017, all the shares purchased under the 2016 Issuer Bid have now been cancelled.

(ix) On November 16, 2017 the Company completed a brokered private placement with Africa Oil Corp ("AOC") resulting in gross proceeds of $14 million (the "AOC Brokered Private Placement"). The AOC Brokered Private Placement involved the sale of 29,200,000 shares in the Company at a price of $0.48 per share. Net proceeds were $13,286,682 after deducting a cash commission in the amount of $588,096 to the brokers and other expenses of $52,801.

(x) In February 2018, 1,562,500 warrants were exercised at £0.176 ($0.31) per warrant into 1,562,500 shares of the Company for a gross consideration of $485,815 (£274,912).

(xi) On January 19, 2018, 1,200,000 options were exercise at $0.30 per option into 1,200,000 shares of the Company for gross consideration of $360,000.

(xii) As disclosed in note 7(ii), on February 20, 2018, the Company entered into Purchase Agreements to purchase the Minority Shares in Eco Guyana. As part of the consideration for the acquisition of the Minority Shares the Company agreed issue a total of 1,700,384 common shares. As the shares were not issued by March 31, 2018, the Company recorded a credit to Shares to be Issued in the Statement of Changes in Equity in the amount of $1,139,257 being that fair value of the shares at the date of the Purchase Agreements, and a corresponding charge to accumulated deficit.

A summary of warrants outstanding at March 31, 2018 was as follows:

(i) On February 8, 2017, the Company issued 3,702,935 warrants to three brokers as part of the Placing (Note 9 (iv)). The warrants were valued at $237,267 at the time of issuance. The Black-Scholes option pricing model was used to measure the warrant with the following assumptions:

(ii) On June 1, 2017, as a result of the increase to the proceeds of the UK placing associated with the Company's admission to AIM, and in accordance with the Company's contractual obligations to Strand Hanson Limited, an additional 17,813 warrants were issued to Strand Hanson Limited. These warrants are issued on the same terms as those set out in the Admission Document dated February 2, 2017. These warrants were valued at $969, on the same assumptions as (i) above.

(iii) As of March 31, 2018, outstanding warrants were as follows:

(*) The exercise price of these warrants is denominated in British Pounds and was translated to Canadian Dollars in the table above using the exchange rate as of March 31, 2018.

The Company maintains a stock option plan (the "Plan") for the directors, officers, consultants and employees of the Company and its subsidiary companies. The maximum number of options issuable under the Plan shall be equal to ten percent (10%) of the outstanding shares of the Company less the aggregate number of shares reserved for issuance or issuable under any other security based compensation arrangement of the Company.

A summary of the status of the Plan as at March 31, 2018 and changes during the year is as follows:

(i) On June 8, 2017, 250,000 options were issued to a director. These options are exercisable for a maximum period of five years from the date of the grant and vest as to one third on grant date and one third on each anniversary date of the grant for the following two years. The fair value of the options granted was estimated at $35,677 using the Black-Scholes option pricing model, using the following assumptions: Expected option life 5 years; Volatility 62.67%; Risk-free interest rate 1.28%; Dividend yield 0%.

(ii) Share-based compensation expense is recognized over the vesting period of options. During the year ended March 31, 2018, share-based compensation of $35,744 (March 31, 2017 - $168,673) was recognized based on options vesting during the year.

(iii) As at March 31, 2018, 6,753,333 options were exercisable (March 31, 2017 - 7,653,333).

The reconciliation of the combined Canadian federal and provincial statutory income tax rate of 26.5% (2017 - 26.5%) to the effective rate is as follows:

Unrecognized Deferred Tax Assets

Deferred taxes are provided as a result of temporary differences that arise due to the differences between the income tax values and the carrying amount of assets and liabilities. Deferred tax assets have not been recognized in respect of the following deductible temporary differences:

The Canadian non-capital loss carry forwards expire as noted in the table below. The remaining deductible temporary differences may be carried forward indefinitely. Deferred tax assets have not been recognized in respect of these items because it is not probable that future taxable profit will be available against which the group can utilize the benefit therefrom.

The Company's Canadian non-capital loss carry forwards expire as follows:

The Company is legally required to restore its properties to their original condition. Estimated future site restoration costs will be based upon engineering estimates of the anticipated method and the extent of site restoration required in accordance with current legislation and industry practices in the various locations in which the Company has properties.

As of March 31, 2018 and 2017, the Company did not operate any properties, accordingly, no ARO was required.

The Company considers its capital structure to consist of share capital, deficit and reserves. The Company manages its capital structure and makes adjustments to it, in order to have the funds available to support the acquisition, exploration and development of its licenses. The Board of Directors does not establish quantitative return on capital criteria for management, but rather relies on the expertise of the Company's management to sustain future development of the business.

The Company is a exploration stage entity; as such the Company is dependent on external equity financing to fund its activities. In order to carry out the planned exploration and pay for administrative costs, the Company will spend its existing working capital and raise additional amounts as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable.

There were no changes in the Company's approach to capital management during the year ended March 31, 2018. Neither the Company nor its subsidiaries are subject to externally imposed capital requirements.

The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern. The Company's ability to raise future capital is subject to uncertainty and the inability to raise such capital may have an adverse impact over the Company's ability to continue as a going concern (Note 2).

15. Risk Management

a) Credit risk

The Company's credit risk is primarily attributable to short-term investments and amounts receivable. The Company has no significant concentration of credit risk arising from operations. Short-term investments consist of deposits with Schedule 1 banks, from which management believes the risk of loss to be remote. Amounts receivable consist of advances to suppliers and harmonized sales tax due from the Federal Government of Canada. Government receivable consists of value added tax due from the Namibian government which has been collected subsequent to year end. Management believes that the credit risk concentration with respect to amounts receivable is remote. The Company does not hold any non-bank asset backed commercial paper.

b) Interest rate risk

The Company has cash balances, cash on deposit and no interest bearing debt. It does not have a material exposure to this risk.

c) Liquidity risk

The Company ensures, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or harm to the Company's reputation.

As at March 31, 2018, the Company had cash and cash equivalents and on deposit of $14,316,042. (March 31, 2017 - $6,088,567), short-term investments of $74,818 (March 31, 2017 - $49,818) and other receivables of $832,322 (March 31, 2017 - $1,100,491) to settle current liabilities of $731,024 (March 31, 2017 - $800,629).

The Company utilizes authorization for expenditures to further manage capital expenditures and attempts to match its payment cycle with available cash resources. Accounts payable and accrued liabilities at March 31, 2018 all have contractual maturities of less than 90 days and are subject to normal trade terms.

The Company is dependent on obtaining financing to complete development, and upon future profitable operations from the licenses or profitable proceeds from their disposition.

The Company has commitments related to its petroleum and natural gas licenses as described in Note 7.

d) Foreign currency risk

The Company is exposed to foreign currency fluctuations on its operations in Namibia, which are denominated in Namibian dollars. Sensitivity to a plus or minus 10% change in rates would not have a significant effect on the net income (loss) of the Company, given the Company's minimal assets and liabilities designated in Namibian dollars as at March 31, 2018.

16. Commitments

Licenses

The Company is committed to meeting all of the conditions of its licenses including annual lease renewal or extension fees as needed.

The Company submitted work plans for the development of the Namibian licenses, see Note 7 for details.

Operating costs consist of the following:

General and administrative costs consist of the following:

19. Discontinued Operations

a) On July 29, 2014, the Company, through its wholly-owned subsidiary, Eco Atlantic (Ghana) Ltd. ("Eco Ghana"), acquired a 50.51% interest in the Deepwater Cape Three Points West Block, located in the Tano Cape Three Points Basin, offshore Ghana (the "Ghana Block"). The parties to the GPA include the Company, the Ghana National Petroleum Company ("GNPC"), GNPC Exploration and Production Company Limited ("GNPCEPCL"), A-Z Petroleum Products Ghana Limited ("A-Z"), and PetroGulf Limited ("PetroGulf").

b) On November 21, 2016, the Company received the necessary approvals from GNPC and GNPC Exploration and Production Company to execute a Share Purchase and Sale Agreement (the "Ghana Agreement") to which the Company sold its total interest in Eco Ghana to PetroGulf for proceeds of $1 USD. Pursuant to the Ghana Agreement, the Company is entitled to receive US$576,580 as reimbursement for past operating expenditures owed to the company on the Ghana Block ("Ghana Reimbursement"). As a result of the Ghana Agreement, the Company will have no remaining obligations in Ghana, and in the Ghana Block, specifically, as PetroGulf has fully assumed all obligations of Eco Ghana. As of the date hereof, the Ghana Reimbursement has not been received.

c) The carrying value of Eco Ghana was ($853,362) at the date of sale. Proceeds on the sale were $1 USD ($1 CDN) resulting in a gain on disposition of $853,361.

d) The Company's operating results from discontinued operations in Eco Atlantic (Ghana) Ltd. are summarized as follows:

The Company's 6,920,000 (March 31, 2017 - 7,870,000) options and 2,158,248 (March 31, 2017 - 3,702,935) warrants have been excluded from the calculation of dilutive earnings per share as their inclusion would be antidilutive.

(i) On June 1, 2018, the Company issued the all of the tranches of the Consideration Shares in respect of the Purchase Agreements to acquire the Minority Shares of Eco Guyana. See Note 7(ii).

**ENDS**

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

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

Eco Atlantic is a TSX-V and AIM listed 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, ONGC, Total (optional) and AziNam.

In Guyana, Eco Guyana holds a 40%(1) working interest alongside 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 the deep-water Liza Field and Snoek, Payara, Pacora, Turbot and Longtail Discoveries, recently discovered by ExxonMobil and Hess, which is estimated to contain in excess of 3.7 billion barrels of oil equivalent, making it one of a handful of billion-barrel discoveries in the last half-decade.

In Namibia, the Company holds interests in four offshore petroleum licences totaling approximately 25,000km2 with over 2.3 billion barrels of prospective P50 resources in the Walvis and Lüderitz Basins. These four licences, Cooper, Guy, Sharon and Tamar are being developed alongside partners, which include Tullow Oil, AziNam and NAMCOR. Drilling activity in Namibia is set to gather pace in 2018 and 2019, with a few wells confirmed to be spud on Tullow PEL 037 and Chariot Central Blocks. The Company has applied for a drilling permit on its Cooper (Operator) Block.

(1) Total E&P Activités Pétrolières, (a wholly owned subsidiary of Total SA) ("Total") has purchased an option from Eco to acquire a 25% Working Interest in the Orinduik Block for and additional US$12.5 million.