Oil and gas company Eco Atlantic has agreed to acquire 100% of Toronto-based JHI Associates Inc. ("JHI"), including JHI's 17.5% stake in the Canje Block offshore Guyana.
The Canje Block, offshore Guyana, is directly adjacent to the prolific Stabroek Block where ExxonMobil has discovered more than 10 billion barrels of oil. ExxonMobil operates the Canje Block too, it has so far drilled three wells in the block, which have failed to replicate the successes of the adjacent Stabroek Block.
Eco said that the JHI acquisition, valued at around $52 million, would be a cashless one, with Eco planning to issue new common shares to JHI's shareholders based on an exchange ratio of 1.1994 new Eco common shares and convertible securities leading to JHI shareholders holding approximately 34% of Eco post-acquisition at current share count
"If and once completed the Acquisition provides the enlarged Eco Group with ownership of 17.5% PI in the Canje Block offshore Guyana," Eco, which last week also acquired Namibia and South Africa-focused Azinam, said.
The Canje Block is Operated by an ExxonMobil subsidiary Esso Exploration & Production Guyana Limited (35%), with the remaining partners including TotalEnergies E&P Guyana B.V. (35%), JHI Associates (BVI) Inc. (17.5%), and Mid-Atlantic Oil & Gas Inc. (12.5%).
The Canje Block is approximately 4,800km2, located approximately 180 to 300 kilometers offshore Guyana in water depths ranging between 1700 and 3000 meters.
"The Canje Block is a large and significant license which captures the lower slope and base of slope play fairways, channels and fans outboard of multiple ExxonMobil discoveries in the adjacent Stabroek Block which is immediately up-dip of Canje. Canje is covered with 6,100km2 of 3D seismic and holds over three dozen prospects in four proven plays in the Lower Tertiary and Upper Cretaceous confined channels, Lower Cretaceous Carbonate structures and, with recent drilling of Sapote-1 well and Stabroek discoveries, now offers the opportunity of yet deeper horizons," Eco said.
Access to Namibia and S. Africa
John Cullen, Founder and CEO of JHI commented: "This transaction provides JHI's shareholders access to Eco's exciting portfolio of exploration opportunities in the emerging oil basins of Namibia and South Africa, and in Guyana with their Orinduik block, while maintaining their exposure to the Canje Block, where we have been working steadily with our partners to identify the next prospect to drill.
"It also represents the culmination of a tremendous amount of work from JHI's technical team which, over the last six years, saw two supermajors join the Canje Block, and three wells drilled providing valuable information towards unlocking the potential of the deeper water portions of the Guyana-Suriname Basin.
"JHI's team has come to work well with Eco's team since they became shareholders last year, and we know that they will continue to be good stewards of the Canje Block as they add it into their impressive and expanding exploration portfolio."
Gil Holzman, Co-Founder and CEO of Eco Atlantic said: "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. Eco's ambition is to become the "go-to" small-cap exploration vehicle for investors seeking exposure to high-impact drilling programs in three of the world's most exciting hydrocarbon provinces in Guyana, Namibia and South Africa. This acquisition gets us another step closer to that goal and builds on the Azinam acquisition we announced earlier this year.
"This transaction adds to Eco's strategic acreage position in Guyana and ensures that there will be a number of drilling catalysts over the next couple of years on Eco's eight offshore blocks. In addition, the enlarged Group will benefit from JHI's current cash position, adding US$15million to Eco's balance sheet, further strengthening the company's liquidity position.
Eco said that given its strategic investor base and proven access to the public capital markets, the anticipated addition of JHI's interest in the Canje Block and its working capital, will further augment the enlarged Group cash position for its share of all near term exploration programs on its current blocks including: 2B in South Africa where drilling preparations for a late Q3 spud are underway and the Eco Orinduik Block offshore Guyana to follow, Block 3B/4B in Orange basin South Africa and elsewhere in the current and future portfolio of the enlarged entity.
"Ahead of our planned drilling campaign on Block 2B offshore South Africa in late Q3 2022, we are also looking to finalize drilling targets in Eco's Orinduik Block, offshore Guyana. Demonstrating that, as ever, the Eco team are head down and focused on delivering value for shareholders. We look forward to providing further corporate updates as appropriate."
To remind, Azinam (now part of Eco) earlier this month hired Island Drilling's Island Innovator semi-submersible drilling rig to drill the Gazania-1 well offshore S. Africa. The news came in the wake of the recent significant discoveries made by Shell and TotalEnergies in the Orange Basin in the nearby Namibia.