London, 11 July, 2023, (Oilandgaspress) Eco (Atlantic) Oil & Gas Ltd. announced that it has signed a legally binding Letter of Intent (the “Agreement“) pursuant to which its wholly owned subsidiary, Azinam Limited (“Azinam“), will farm out 6.25% Participating Interest in Block 3B/4B, offshore South to Africa Oil SA Corp, a wholly owned subsidiary of Africa Oil Corp. (“Africa Oil“) (the “Acquisition“). Pursuant to the terms of the LOI, the completion of the Acquisition is subject to the satisfaction of customary conditions precedent including, but not limited to, the receipt of requisite regulatory approvals from the government of South Africa and the TSX Venture Exchange (the “TSXV“).
The consideration for the Acquisition is up to US$10.5m in cash, payable conditional on certain milestones as set out below:
· US$2.5m within 30 days of signing of the LOI;
· US$2.5m upon government approval for the transfer of the 6.25% interest in Block 3B/4B to Africa Oil;
· US$4m upon the completion of targeted farm out to a third party; and
· US$1.5m upon spud of the first exploration well in Block 3B/4B
On closing of the Acquisition, which is subject, amongst other things, to Section 11 approval for the transfer from the government of South Africa, TSXV approval and customary pre-emption provisions, the Block 3B/4B interests of the JV partners in Block 3B/4B will be as follows:
· Africa Oil SA Corp, a wholly owned subsidiary of Africa Oil Corp. and the Operator of the Block, holding a 26.25% Participating Interest;
· Azinam Limited, a wholly owned subsidiary of Eco Atlantic, holding a Participating Interest of 20%; and
· Ricocure (Proprietary) Limited, holding the remaining 53.75% Participating Interest.
The JV partners continue to progress the collaborative farm-out process, as previously announced, for up to a 55% gross working interest in the Block, with various potential parties.
As announced on 21 March 2023, the application process for a permit to drill one well and one contingent well (and potentially up to five wells) within an area of interest in the north of Block 3B/4B remains underway.
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