Results for three & six months ended 30 Sept 2023
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Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX‐V: EOG), the oil and gas exploration company focused on the offshore Atlantic Margins, is pleased to announce its results for the three and six month periods ended 30 September 2023.
Highlights:
Financials (as at 30 September 2023)
- The Company had cash and cash equivalents of US$3.85 million and no debt.
- The Company had total assets of US$51.0 million, total liabilities of US$1.71 million and total equity of US$49.30 million.
Operations:
Guyana
- On 10 August 2023, the Company signed a Sale Purchase Agreement for its wholly owned subsidiary, Eco Guyana Oil and Gas (Barbados) Limited to acquire a 60% Operated Interest in Orinduik Block, offshore Guyana, through the acquisition of Tullow Guyana B.V., a wholly owned subsidiary of Tullow Oil Plc. in exchange for a combination of upfront cash and contingent consideration (the "Transaction").
Post-period end:
- On 15 November 2023, Eco announced that the Company had received Government approval for the transfer of 60% Working Interest and Operatorship in the offshore Orinduik Block in Guyana from the Minister of Natural Resources, Cooperative Republic of Guyana.
- On 21 November 2023, the Company announced completion of the Transaction, upon which Eco became the designated Operator of the Orinduik Block and increase its aggregate Participating Interest to 75%, held via Eco Orinduik B.V. (60%) and Eco (Atlantic) Guyana Inc (15%). TOQAP Guyana B.V continues to hold a Participating Interest of 25%.
- A formal farm-out process for the Orinduik Block has commenced and the Company expects to provide further updates in due course.
South Africa
Block 3B/4B
- On 17 July 2023, the Company issued 1,200,000 shares to the Lunn Family Trust in place of the US$500,000 cash consideration due in respect of the acquisition of the 6.25% interest in Block3B/4B from the Lunn Family Trust as previously announced on 27 June 2022.
- On 11 July 2023, the Company signed a legally binding Letter of Intent with Africa Oil to farm out a 6.25% Participating Interest in Block 3B/4B, offshore South Africa for up to US$10.5 million in cash. On 14 August 2023, the parties signed the final Assignment and Transfer agreement. Additional US$2.5m cash consideration is expected to be received upon Government of SA approval of the transfer, with the initial consideration of US$2.5m already having been received.
- Government of SA approval and therefore the $2.5m cash payment from Africa Oil are expected to be received by year end 2023.
- The JV partners continue to progress a farm-out, in conjunction with preparations for a two well drilling campaign on the Block. Further updates will be made as appropriate.
Block 2B
- Eco has applied for a Production Right Application to the Petroleum Agency of South Africa, for Block 2B, and continues to assess opportunities available to deliver value from this licence for the benefit of stakeholders.
Namibia
- Following media reports that significant multi-well drilling campaigns are about to be undertaken offshore Namibia, Eco continues to receive third party interest in its strategic acreage position offshore Namibia.
- The Company continues to assess farm out opportunities with its four licences in the region as it considers options for progressing exploration and commercial activity on its acreage.
Board Changes:
- Post period end, on October 9, 2023, the Company announced the appointment of Miss Alice Carroll and Miss Selma Usiku as executive and non-executive directors respectively of the Company with immediate effect, with Helmut Angula retiring from the Board.
Gil Holzman, President and Chief Executive Officer of Eco Atlantic, commented:
"We have made progress on all fronts across our exploration portfolio in 2023. The most notable development was the acquisition of a 60% Working Interest in the Orinduik Block, offshore Guyana, from a subsidiary of Tullow Oil Plc. This transaction made Eco the Operator of the licence and brings our total stake in the Block to 75%. We have already commenced with a farm-out process and opened a data room, receiving early interest from a number of multi-national oil and gas companies.
"Also, offshore South Africa, we continue to progress plans for a two-well campaign on Block 3B/4B in parallel to continuing farm-out discussions with various large industry partners. In Namibia, we continue to receive incoming interest with regard to our highly strategic acreage position, which has increased following recent media reports of multi-well drilling campaigns being lined up.
"In closing, the last two quarters of 2023 have been a highly active period for us, and we look forward to sharing further updates on the ongoing farm out workstreams and drilling plans with our stakeholders as and when we are in a position to do so."
The Company's unaudited financial results and Management's Discussion and Analysis for the three and six months ended 30 September 2023 are available for download on the Company's website at www.ecooilandgas.com and on Sedar at www.sedar.com.
Balance Sheet
| September 30, | March 31, | |||
|---|---|---|---|---|
| 2023 | 2023 | |||
| Assets | ||||
| Current Assets | ||||
| Cash and cash equivalents | 3,850,448 | 4,110,734 | ||
| Short-term investments | 13,107 | 13,107 | ||
| Government receivable | 30,550 | 22,494 | ||
| Amounts owing by license partners, net | - | 477,578 | ||
| Accounts receivable and prepaid expenses | 164,142 | 1,529,451 | ||
| Total Current Assets | 4,058,247 | 6,153,364 | ||
| Non- Current Assets | ||||
| Investment in associate | 8,279,820 | 8,612,267 | ||
| Petroleum and natural gas licenses | 38,668,895 | 40,852,020 | ||
| Total Non-Current Assets | 46,948,715 | 49,464,287 | ||
| Total Assets | 51,006,962 | 55,617,651 | ||
| Liabilities | ||||
| Current Liabilities | ||||
| Accounts payable and accrued liabilities | 1,410,571 | 4,416,789 | ||
| Advances from and amounts owing to license partners, net | 298,775 | 286,553 | ||
| Warrant liability | - | 261,720 | ||
| Total Current Liabilities | 1,709,346 | 4,965,062 | ||
| Total Liabilities | 1,709,346 | 4,965,062 | ||
| Equity | ||||
| Share capital | 122,088,498 | 121,570,983 | ||
| Restricted Share Units reserve | 920,653 | 920,653 | ||
| Warrants | 14,778,272 | 14,778,272 | ||
| Stock options | 2,900,501 | 2,804,806 | ||
| Foreign currency translation reserve | (1,744,484) | (1,458,709) | ||
| Accumulated deficit | (89,645,824) | (87,963,416) | ||
| Total Equity | 49,297,616 | 50,652,589 | ||
| Total Liabilities and Equity | 51,006,962 | 55,617,651 | ||
| Income Statement | ||||
| Three months ended | Six months ended | |||
| September 30, | September 30, | |||
| 2023 | 2022 | 2023 | 2022 | |
| Revenue | ||||
| Interest income | 21 | 36,325 | 1,686 | 56,452 |
| 21 | 36,325 | 1,686 | 56,452 | |
| Operating expenses : | ||||
| Compensation costs | 236,556 | 210,605 | 420,998 | 479,914 |
| Professional fees | 202,557 | 240,894 | 298,560 | 460,579 |
| Operating costs, net | 411,201 | 11,097,960 | 761,381 | 13,041,411 |
| General and administrative costs | 160,569 | 350,864 | 273,042 | 608,154 |
| Share-based compensation | (15,817) | 750,667 | 95,695 | 1,751,886 |
| Foreign exchange loss | 139,795 | 690,794 | 99,745 | 975,221 |
| Total operating expenses | 1,134,861 | 13,341,784 | 1,949,421 | 17,317,165 |
| Operating loss | (1,134,840) | (13,305,459) | (1,947,735) | (17,260,713) |
| Gain on settlement of liability | (200,640) | - | (200,640) | - |
| Fair value change in warrant liability | - | 415,712 | 261,720 | 1,846,696 |
| Share of losses of company accounted for at equity | (166,223) | (92,302) | (332,447) | (184,605) |
| Net loss for the period from continuing operations, before taxes | (1,501,703) | (12,982,049) | (2,219,102) | (15,598,622) |
| Tax recovery | 536,694 | - | 536,694 | - |
| Net loss for the period from continuing operations. After taxes | (965,009) | (12,982,049) | (1,682,408) | (15,598,622) |
| Loss from discontinued operations, after-tax | - | (800,210) | - | (898,323) |
| Net loss for the period | (965,009) | (13,782,259) | (1,682,408) | (16,496,945) |
| Foreign currency translation adjustment | 9,901 | (441,472) | (285,775) | (553,102) |
| Comprehensive loss for the period | (955,108) | (14,223,731) | (1,968,183) | (17,050,047) |
| Basic and diluted net loss per share: | ||||
| from continuing operations | (0.004) | (0.038) | (0.006) | (0.049) |
| from discontinued operations | (0.000) | (0.002) | (0.000) | (0.003) |
| Weighted average number of ordinary shares used in computing basic and diluted net loss per share | 369,421,234 | 343,966,022 | 368,390,620 | 319,575,745 |
| Cash Flow Statement | ||||
| Six months ended | ||||
| September 30, | ||||
| 2023 | 2022 | |||
| Cash flow from operating activities - continued operations | ||||
| Net loss from continuing operations | (1,682,408) | (15,598,622) | ||
| Items not affecting cash: | ||||
| Share-based compensation | 95,695 | 1,751,886 | ||
| Revaluation of warrant liability | (261,720) | (1,846,696) | ||
| Share of losses of companies accounted for at equity | 332,447 | 184,605 | ||
| Changes in non‑cash working capital: | ||||
| Government receivable | (8,056) | (5,169) | ||
| Accounts payable and accrued liabilities | (2,805,578) | 1,601,059 | ||
| Accounts receivable and prepaid expenses | 1,365,309 | (948,297) | ||
| Reallocation to discontinued operations cashflows | - | 419,113 | ||
| Advance from and amounts owing to license partners | 489,800 | 1,486,236 | ||
| Cash flow from operating activities - continued operations | (2,474,511) | (12,955,885) | ||
| Cash flow from operating activities - discontinued operations | - | (1,069,617) | ||
| Cash flow from investing activities | ||||
| Proceeds from Block 3B/4B farmout | 2,500,000 | - | ||
| Cash flow from investing activities - continued operations | 2,500,000 | - | ||
| Cash flow from financing activities | ||||
| Proceeds from private placements, net | - | 35,662,446 | ||
| Exercise of stock options | - | 67,406 | ||
| Cash flow from financing activities | - | 35,729,852 | ||
| Increase in cash and cash equivalents | 25,489 | 21,704,350 | ||
| Foreign exchange differences | (285,775) | (553,102) | ||
| Cash and cash equivalents, beginning of period | 4,110,734 | 3,438,834 | ||
| Cash and cash equivalents, end of period | 3,850,448 | 24,590,082 | ||
Notes to the Financial Statements
Basis of Preparation
Summary of Significant Accounting Policies
Critical accounting estimates
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