Toronto – July 17, 2014 – Eco (Atlantic) Oil & Gas Ltd. (“Eco Atlantic” or the “Company”) (TSX-V:EOG, NSX:EOG) is pleased to announce 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% 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%, nets the Company a 100% carry of all costs on an expanded 1,000 km2 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% 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% of the Company’s past costs in an amount to Eco Atlantic of approximately US$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% 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% 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% 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% working interest in the Cooper Block, AziNam Limited holds a 20% working interest, and NAMCOR, the Namibian national oil company, holds a 10% working interest. Following the First Transfer, the Company will hold a 45% working interest in the Cooper Block, Tullow will hold a 25% 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.”
Tullow is a leading independent oil & gas, exploration and production group, quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW) and is a constituent of the FTSE 100 Index. The Group has interests in over 140 exploration and production licenses across 24 countries which are managed as three regional business units: West & North Africa, South & East Africa and Europe, South America and Asia.
About Eco Atlantic
Eco Atlantic is an oil and gas exploration company focused on the new and bourgeoning energy play in Namibia. Through a wholly owned Namibian subsidiary (“Eco Namibia”), it holds four petroleum licenses issued by the Government of the Republic of Namibia. Offshore in the Walvis Basin, Eco Atlantic holds three license blocks covering more than 25,000 square kilometers (6,177,000 acres). Eco Atlantic holds an additional license block covering 23,000 square kilometers (5,683,000 acres) which includes both onshore and offshore areas. Founded in 2008, Eco Namibia enjoys a strong local presence and has a longstanding relationship with the energy and oil and gas sector in Namibia and the region. The terms and conditions of these licenses are regulated by agreements signed by Eco Namibia with the Government of the Republic of Namibia in March 2011, as amended.
Forward Looking Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS: Certain information in this press release constitutes forward-looking statements under applicable securities law. Any statements that are contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements are often identified by terms such as “may”, “should”, “anticipate”, “expects” and similar expressions. Forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with oil and gas production and exploration, marketing and transportation; retention of and ability to attract Company personnel, regulatory approvals, loss of markets; volatility of commodity prices; currency and interest rate fluctuations; imprecision of reserve estimates; environmental risks; competition; inability to access sufficient capital from internal and external sources; changes in legislation, including but not limited to income tax, environmental laws and regulatory matters. Readers are cautioned that the foregoing list of factors is not exhaustive.
Although Eco Atlantic believes in light of the experience of its officers and directors, current conditions, expected future developments and other factors that have been considered appropriate that the expectations reflected in this forward-looking information are reasonable, undue reliance should not be placed on them because Eco Atlantic can give no assurance that they will prove to be correct. The forward-looking statements contained in this press release are made as of the date hereof and Eco Atlantic undertakes no obligation to update publicly or revise any forward- looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.
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