Results for the six months ended 30 September 2022

RNS Number : 8494H

Eco (Atlantic) Oil and Gas Ltd.

29 November 2022

 

29 November 2022

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 2022

Corporate and Operational Update

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 six months ended 30 September 2022 and to provide a corporate and operational update. 

Highlights:

Financials (as at 30 September 2022)

· The Company had cash and cash equivalents of US$24.6 million and no debt (after paying US$11.3 million, being Eco's cash share of the Block 2B well) as of September 30, 2022.

· The Company had total assets of US$67.3 million, total liabilities of US$5.7 million and total equity of US$61.6 million.

· As of November 27, 2022, the Company is expected to have approximately US$ 1 7.5 million cash and cash equivalents at the end of November 2022, following receipt of the initial proceeds from the sale of the Kozani project in the coming days referred to below.

Corporate:

· On November 28, 2022, the Company closed the sale of its 100% interest in the Kozani Photovoltaic Development Project for total cash proceeds of €2.3 million (US$2.4 million).  US$2 million is to be received by the Company by close of business on November 30, 2022, and the outstanding balance is expected to be received by year end 2022.

· After 12 years with the Company, Eco's Non-executive Chairman, Moshe 'Peter' Peterburg has informed the Board of his plans to retire, as such, he will not stand for re-election at the upcoming Annual General Meeting on December 29, 2022, and will step down from the Company with immediate effect. The Company has commenced the process to find a replacement and, in the interim, Peter Nicol, currently a Non-executive Director, will assume the role of interim Non-executive Chairman. Further announcements will be made as appropriate.

· With regard to the closing of the acquisition of Azinam Group Limited ("Azinam"), and in accordance with the previously announced Share Purchase Agreement, the Company will shortly issue the balance of 1,625,000 Common Shares ("Azinam Shares") to the previous shareholders of Azinam representing the full and final number of Common Shares to be issued in respect of this transaction.  These Common Shares are subject to a restrictive hold period of four months and one day (beginning on the date of issuance).  The issuance of Common Shares is subject to approval from the TSX Venture Exchange and a further announcement will be made once such approval has been received and the Common Shares issued.

Operations:

South Africa

Block 2B (post period end)

· In early October 2022, the Island Innovator Semi-Submersible Drilling Rig arrived on Block 2B, offshore South Africa, and operations on the Gazania-1 Exploration Well commenced.

· The well was spudded on October 10, 2022, and reached target depth of 2,360m. However, evidence of commercial hydrocarbons was not found, and the well has been plugged and abandoned.

· The JV Partners submitted a Production Right Application to the Petroleum Agency of South Africa ("PASA") on November 15, 2022, for Block 2B, based on the existing oil discovery of AJ-1 and potential future operations.  Well logging has been completed and the JV Partners now have time to conduct further analysis and integrate the well data to allow them to determine the next steps on the Block.  

Block 3B/4B

· The Company and its JV partners are progressing plans to conduct a two-well campaign on Block 3B/4B offshore South Africa.

· As previously announced by the Operator of Block 3B/4B, a   collaborative farm-out process (up to 55% gross WI), has been ongoing, and is now in a farm-out agreement negotiation stage. The JV partners will update the market as appropriate and should a farm-out agreement be concluded.

Namibia

· Following recent significant hydrocarbon discoveries offshore Namibia, Eco continues to assess options for progressing exploration and commercial activity on its acreage.

· Eco is witnessing considerable interest in its licences in Namibia and is currently assessing options, including a potential farm-out.

Guyana

· As previously announced, Eco and its JV partners on the Orinduik Block, offshore Guyana, are currently drawing up plans to drill at least one well into light oil Cretaceous targets in the next Petroleum Agreement exploration phase which begins in 2023. Further updates will be made on this matter in due course.

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

"Our main focus during the period, and through to recent weeks, was to execute a safe and environmentally friendly drilling campaign on the Gazania-1 exploration well, offshore South Africa. Although it was disappointing to not announce a commercial discovery, we can be proud of how we conducted our operations, which led to the well being drilled safely and on-time. We are now working with our JV partners on the licence to analyse the well data found and plan our next steps on the Block, which we believe contains significant untapped potential.

On Block 3B/4B, offshore South Africa, we are making steady progress towards conducting a two well drilling campaign on the licence. The drilling preparations and program are expected to commence in 2023 and, as previously announced, a potential farm-out process is also underway on the licence. We look forward to updating the market on both of these workstreams as appropriate.

In Guyana, we remain highly optimistic about the potential contained within the Orinduik Block, and we are working with our JV partners to drill another well as quickly as possible. Guyana remains one of the most exciting exploration hotspots, alongside Orange Basin SA and Namibia, where we also hold a highly strategic acreage position, and we are working hard to deliver value for all our stakeholders across our asset portfolio in the near to medium term.

Finally, on behalf of the Board I would like to thank Moshe Peterburg for his tireless efforts during his tenure as Eco's Chairman for the past 12 years and since inception of the Company. He played a pivotal role in the development and success of the Company to date and we wish him all the best for a happy retirement and are pleased he will remain an important shareholder of Eco."

The Company's unaudited financial results for the three months ended 30 September 2022, together with Management's Discussion and Analysis as at 30 September 2022, 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 US Dollars, unless otherwise stated.

Balance Sheet

	September 30,		March 31,
	2022		2022
	(Unaudited)		(Audited)
Assets
Current Assets
Cash and cash equivalents	24,590,082		3,438,834
Short-term investments	52,618		52,618
Government receivable	32,656		27,487
Amounts owing by license partners, net	13,764		-
Accounts receivable and prepaid expenses	2,206,208		257,911
Assets held for sale	2,052,326		2,061,734
Total Current Assets	28,947,654		5,838,584
Non- Current Assets
Investment in associate	9,092,557		9,277,162
Petroleum and natural gas licenses	29,253,034		30,753,034
Total Non-Current Assets	38,345,591		40,030,196
Total Assets	67,293,245		45,868,780
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	3,361,588		1,931,823
Advances from and amounts owing to license partners, net	67,406		-
Current liabilities related to assets held for sale	882,959		473,254
Warrant liability	1,395,066		3,241,762
Total Current Liabilities	5,707,019		5,646,839
Total Liabilities	5,707,019		5,646,839
Equity
Share capital	113,930,574		63,141,609
Shares to be issued	-		20,766,996
Restricted Share Units reserve	569,919		267,669
Warrants	14,778,272		7,806,000
Stock options	2,075,897		958,056
Foreign currency translation reserve	(1,862,829)		(1,309,727)
Accumulated deficit	(67,905,607)		(51,408,662)
Total Equity	61,586,226		40,221,941
Total Liabilities and Equity	67,293,245		45,868,780

Income Statement

	Three months ended				Six months ended
	September 30,				September 30,
	2022		2021		2022		2021
	Unaudited				Unaudited
Revenue
Interest income	36,325		3,911		56,452		8,435
	36,325		3,911		56,452		8,435
Operating expenses :
Compensation costs	210,605		206,327		479,914		410,087
Professional fees	240,894		142,540		460,579		181,499
Operating costs	11,097,960		34,953		13,041,411		417,818
General and administrative costs	350,864		200,960		608,154		309,357
Share-based compensation	750,667		5,888		1,751,886		11,710
Foreign exchange loss	690,794		99,153		975,221		53,222
Total operating expenses	13,341,784		689,821		17,317,165		1,383,693
Operating loss	(13,305,459)		(685,910)		(17,260,713)		(1,375,258)
Fair value change in warrant liability	415,712		637,189		1,846,696		637,189
Share of losses of company accounted for at equity	(92,302)		-		(184,605)		-
Net loss for the period from continuing operations	(12,982,049)		(48,721)		(15,598,622)		(738,069)
Loss from discontinued operations, after-tax	(800,210)		(351,915)		(898,323)		(488,191)
Net loss for the period	(13,782,259)		(400,636)		(16,496,945)		(1,226,260)
Foreign currency translation adjustment	(441,472)		(21,484)		(553,102)		(8,235)
Comprehensive loss for the period	(14,223,731)		(422,120)		(17,050,047)		(1,234,495)
Net loss for the period attributed to:
Equity holders of the parent	(12,982,049)		(421,643)		(16,496,945)		(1,226,260)
Non-controlling interests	-		21,007		-		-
	(12,982,049)		(400,636)		(16,496,945)		(1,226,260)
Basic and diluted net loss per share attributable to equity holders of the parent	(0.038)		(0.002)		(0.052)		(0.006)
Weighted average number of ordinary shares used in computing basic and diluted net loss per share	343,966,022		198,403,885		319,575,745		191,550,804

Cash Flow Statement

	Six months ended
	September 30,
	2022		2021
	(Unaudited)		(Unaudited)
Cash flow from operating activities
Net loss from continuing operations	(15,598,622)		(738,069)
Net loss from discontinued operations	(898,323)		(488,191)
Items not affecting cash:
Share-based compensation	1,751,886		11,710
Depreciation and amortization	-		38,124
Accrued interest	-		6,770
Revaluation of warrant liability	(1,846,696)		(637,189)
Share of losses of companies accounted for at equity	184,605		-
Changes in non‑cash working capital:
Government receivable	(5,169)		8,752
Accounts payable and accrued liabilities	1,601,059		102,372
Accounts receivable and prepaid expenses	(948,297)		(7,730)
Reallocation to discontinued operations cashflows	(171,294)		-
Net change in non-cash working capital items relating to discontinued operations	419,113		-
Advance from and amounts owing to license partners	1,486,236		(247,066)
	(14,025,502)		(1,950,517)
Cash flow from investing activities
Investment in associate	-		(10,000,000)
Short-term investments	-		1,500,022
	-		(8,499,978)
Cash flow from financing activities
Proceeds from private placements, net	35,662,446		-
Issuance of shares	-		4,793,789
Exercise of stock options	67,406		71,388
	35,729,852		4,865,177
Increase (decrease) in cash and cash equivalents	21,704,350		(5,585,318)
Foreign exchange differences	(553,102)		(671)
Cash and cash equivalents, beginning of period	3,438,834		11,807,309
Cash and cash equivalents, end of period	24,590,082		6,221,320

Notes to the Financial Statements

Basis of Preparation

The Condensed Interim 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.

**ENDS**

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

Eco Atlantic Oil and Gas	c/o Celicourt [phone]
Gil Holzman, CEO Colin Kinley, COO Alice Carroll, Head of Corporate Sustainability	[phone]
Strand Hanson (Financial & Nominated Adviser)	[phone]
James Harris James Bellman
Berenberg (Broker)	[phone]
Matthew Armitt Detlir Elezi
Echelon Capital (Financial Adviser N. America Markets)
Ryan Mooney  Simon Akit	[phone] [phone]
Celicourt (PR)	[phone]
Mark Antelme Jimmy Lea

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018 (as amended).

Notes to editors:

About Eco Atlantic:

Eco Atlantic is a TSX-V and AIM-quoted Atlantic Margin-focused oil & gas exploration company with offshore license interests in Guyana, Namibia, and South Africa. Eco aims to deliver material value for its stakeholders through its role in the energy transition to explore for low carbon intensity oil and gas in stable emerging markets close to infrastructure. 

Offshore Guyana in the proven Guyana-Suriname Basin, the Company holds a 15% Working Interest in the 1,800 km² Orinduik Block Operated by Tullow Oil. In Namibia, the Company holds Operatorship and an 85% Working Interest in four offshore Petroleum Licences: PELs: 97, 98, 99, and 100, representing a combined area of 28,593 km² in the Walvis Basin. 

Offshore South Africa, Eco is Operator and holds a 50% working interest in Block 2B and a 20% Working Interest (to be increased to a 26.25% Working Interest, subject to Completion of the Acquisition announced 27 June 2022) in Block 3B/4B operated by Africa Oil Corp., totalling some 20,643 km ² . 

 

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