Last checked at 20 Nov 2019 07:00
20 November 2019
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its subsidiaries, the "Group")
Unaudited Results for the six months ended 30 September 2019 and Business Update
Preparations underway for 2020 drilling campaign
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX‐V: EOG), the oil and gas exploration company with licences in Guyana and Namibia, is pleased to announce its results for the three and six months ended 30 September 2019, alongside a corporate and operational update.
Results Highlights:
Financials
·; As at 30 September 2019, the Company had cash and cash equivalents of CAD $30.7 million. The Company remains well funded and currently has CAD $27.9 million of cash and cash equivalents on the balance sheet.
·; During the first quarter of the financial year, Eco completed its previously announced private placement raising gross proceeds of CAD $22.6 million.
·; As at 30 September 2019, Eco had total assets of CAD $32.3 million, total liabilities of CAD $2.5 million and total equity of CAD $29.8 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 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 high quality oil-bearing sandstone 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. The complete fluid analysis and report for both wells have not yet been received. However, initial results suggest 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 it is 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 Joint Venture partners on the block have engaged a third party consultant with heavy oil development expertise to help conduct preliminary evaluations related to production and commercialisation. Evaluation work is ongoing and the partners are considering alternatives for further drilling and testing and a number of development drilling and production alternatives are now to be considered. The Company remains optimistic in considering the development scenarios and as the project progresses will define further information on plans and timing.
·; The CPR published on 18 March 2019 suggested the block potentially contains in excess of 3.9 billion Gross Prospective Oil Equivalent Resources (P50 Best) on approximately 15 identified prospects. Approximately 900 million barrels of oil in Tertiary Reservoirs and approximately 3 billion barrels of oil in Cretaceous prospects, remain to be explored. The Company is currently preparing an updated CPR, which is expected to be published after the Kanuku block Carapa well results, potentially in January 2020.
Outlook
·; Guyana
o Multiple prospects currently being reviewed with high graded candidates under consideration for a 2020 drilling programme.
o Operator is preparing a budget for long lead items including wellheads and casing.
o Once the final well fluid reports and related testing data for the two discoveries as well as results from other regional exploration activities, including drilling of the neighbouring Carapa well have been analysed and evaluated, an updated CPR will be published
o A further update will be made on the JV Partner's drilling plans for next year in January 2020.
·; Namibia
o Eco continues to progress its various work programmes offshore Namibia.
o 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:
"We ended the first half of our financial year with a very strong balance sheet. After drilling our first two wells in Guyana we now have CAD $27.9 of cash and cash equivalents. These funds will be used to continue the evaluation of our two Guyana oil discoveries and to drill additional exploration and potentially appraisal wells on the block in 2020.
We recognise the market reaction to our last announcement on the oil quality discovered at Jethro and Joe and we are grateful for the continued support of our shareholders. This continues to be an exciting time for the Company, as the Orinduik block offers many promising prospects and we continue to work with our partners and third party experts to evaluate our first two discoveries and determine the 2020 drilling targets and budget. We expect to announce our drilling plans by the end of January 2020 and we look forward to updating our shareholders on this as appropriate."
The Company's unaudited financial results for three and six months ended 30 September 2019, together with Management's Discussion and Analysis as at 30 September 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
In accordance with the Company's accounting policies, under IFRS, all our exploratory costs to date have been charged to the Company's statement of operations. Following the two discoveries on our Guyana Licenses, the Company will begin to capitalize all development related costs incurred until potential production phase.
| September 30, |
| March 31, |
2019 | 2019 | ||
Assets | Unaudited |
| Audited |
Current assets |
|
|
|
Cash and cash equivalents | 30,654,374 |
| 25,007,479 |
Short-term investments | 74,818 |
| 74,818 |
Government receivable | 42,613 |
| 33,104 |
Accounts receivable and prepaid expenses | 50,338 |
| 80,926 |
| 30,822,143 |
| 25,196,327 |
|
|
|
|
Petroleum and natural gas licenses | 1,489,971 |
| 1,489,971 |
|
|
|
|
Total Assets | 32,312,114 |
| 26,686,298 |
|
|
|
|
Liabilities |
|
|
|
Current liabilities | |||
Accounts payable and accrued liabilities | 147,986 |
| 423,513 |
Advances from and amounts owing to license partners, net | 2,328,675 |
| 1,127,675 |
Total Liabilities | 2,476,661 |
| 1,551,188 |
|
|
|
|
Equity |
|
|
|
Share capital | 78,759,680 |
| 50,025,998 |
Restricted Share Units reserve | 356,493 |
| 111,493 |
Warrants | 70,280 |
| 52,775 |
Stock options | 3,278,086 |
| 3,184,658 |
Accumulated deficit | (52,629,086) |
| (28,239,814) |
|
|
|
|
Total Equity | 29,835,453 |
| 25,135,110 |
|
|
|
|
Total Liabilities and Equity | 32,312,114 |
| 26,686,298 |
Income Statement
| Three months ended |
| Six months ended | ||||
September 30, | September 30, | ||||||
| 2019 |
| 2018 |
| 2019 |
| 2018 |
| Unaudited |
| Unaudited | ||||
Revenue |
|
|
|
|
|
|
|
Interest income | 134,415 |
| 88,132 |
| 304,210 |
| 96,975 |
| 134,415 |
| 88,132 |
| 304,210 |
| 96,975 |
Operating expenses: |
|
|
|
|
|
|
|
Compensation costs | 342,627 |
| 291,575 |
| 558,922 |
| 524,941 |
Professional fees | 289,636 |
| 77,069 |
| 313,826 |
| 102,362 |
Operating costs | 6,851,804 |
| 1,293,895 |
| 15,109,935 |
| 1,762,395 |
General and administrative costs | 473,423 |
| 340,349 |
| 1,000,588 |
| 632,068 |
Share-based compensation | 7,409,504 |
| 1,486 |
| 7,468,361 |
| 2,973 |
Foreign exchange gain | 291,195 |
| 233,848 |
| 241,850 |
| 91,152 |
|
|
|
|
|
|
|
|
Total expenses | 15,658,189 |
| 2,238,222 |
| 24,693,482 |
| 3,115,891 |
|
|
|
|
|
|
|
|
Net loss and comprehensive loss | (15,523,774) |
| (2,150,090) |
| (24,389,272) |
| (3,018,916) |
|
|
|
|
|
|
|
|
Basic and diluted net loss per share attributable to equity holders of the parent | (0.09) |
| (0.01) |
| (0.13) |
| (0.02) |
Weighted average number of ordinary shares used in computing basic and diluted net loss per share | 182,038,204 |
| 159,195,217 |
| 181,112,949 |
| 158,619,131 |
Cash Flow Statement
| Six months ended | ||
| September 30, | ||
2019 |
| 2018 | |
| Unaudited | ||
Cash flow from operating activities |
|
|
|
Net loss from operations | (24,389,272) |
| (3,018,916) |
Items not affecting cash: |
|
|
|
Share-based compensation | 7,468,361 |
| 2,973 |
Warrants issued for services | 70,280 |
| - |
Changes in non‑cash working capital: |
|
|
|
Government receivable | (9,509) |
| (4,505) |
Accounts payable and accrued liabilities | (275,527) |
| (291,294) |
Accounts receivable and prepaid expenses | 30,588 |
| 40,413 |
Advance from and amounts owing to license partners | 1,201,000 |
| 284,515 |
| (15,904,079) |
| (2,986,814) |
|
|
|
|
Cash flow from financing activities |
|
|
|
Net proceeds from Private Placement | 21,338,853 |
| - |
Proceeds from the exercise of stock options | 50,345 |
| - |
Proceeds from the exercise of warrants | 161,776 |
| - |
| 21,550,974 |
| - |
|
|
|
|
Increase (decrease) in cash and cash equivalents | 5,646,895 |
| (2,986,814) |
Cash and cash equivalents, beginning of year | 25,007,479 |
| 14,316,042 |
|
|
|
|
Cash and cash equivalents, end of period | 30,654,374 |
| 11,329,228 |
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 October 24, 2019, the Company issued 178,750 common shares, in respect of 178,750 options that were exercised at $0.30 per option. Gross consideration received amounted to $53,625.
**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 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 thirteen discoveries have been announced and over 6 Billion BOE of oil equivalent recoverable resources are estimated. First oil production is expected from the deep-water Liza Field in 2020.
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 licences totalling approximately 25,000km2 with over 2.3bboe of prospective P50 resources in the Walvis and Lüderitz Basins. These four licences, 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).