Eco (Atlantic) Oil & Gas Ltd. has executed a Farm-out agreement with Tullow Kudu Limited, a wholly owned subsidiary of Tullow Oil plc., pursuant to which Tullow has agreed to acquire up to a 40% working interest in Block 2012A (Cooper Block) in the Walvis Basin, offshore Namibia.
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 is expected to start 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. 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. 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.
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.”