TIDMECO
RNS Number : 8853M
Eco (Atlantic) Oil and Gas Ltd.
26 January 2021
26 January 2021
ECO (ATLANTIC) OIL & GAS LTD.
("Eco," "Eco Atlantic," "Company," or together with its
subsidiaries, the "Group")
Launch of Eco Atlantic Renewables - a new company majority owned
by Eco Atlantic
and
Update on Guyana and Namibia Exploration
New venture seeking to develop exclusive pipeline of low cost,
high yield solar photovoltaic energy projects
Eco (Atlantic) Oil & Gas Ltd. (AIM: ECO, TSX-V: EOG), the
oil and gas exploration company with licences in proven oil
province in Guyana and the highly prospective basins in Namibia, is
pleased to announce that it has formed a new company ("Eco Atlantic
Renewables") with Nepcoe Capital Partners Ltd. ("Nepcoe"), a
renewable energy developer and investment company, to source,
acquire and develop an exclusive pipeline of potential high yield
solar projects. Eco (Atlantic) Oil & Gas Ltd. ("Eco Atlantic")
owns 70% of Eco Atlantic Renewables and the remaining 30% is owned
by Nepcoe.
Highlights
-- Eco Atlantic Renewables has been formed to source, acquire,
and develop exclusive renewable energy projects and to create value
through low cost, high yield, solar power development.
-- Investment into renewables, alongside its principal oil and
gas exploration business, will see Eco Atlantic becoming a
diversified, growth oriented energy company.
-- Eco Atlantic Renewables has been established to capture
opportunities in the shifting energy market and subsequent
attractive economics driving global solar photovoltaic ("PV")
energy demand growth.
-- Eco Atlantic is providing a shareholder loan of up to US$6m
(the "Loan") for its 70% stake in Eco Atlantic Renewables. It is
anticipated that the Loan will be repaid in full upon a
monetisation of the solar PV assets, from future third party
investment into Eco Atlantic Renewables or from future project cash
flows. Eco will maintain its majority interest following repayment
of the Loan.
-- Through the joint venture with Nepcoe, Eco Atlantic
Renewables has secured exclusivity to a potential pipeline of more
than 2 Gigawatts ("2 GW") of prospective PV projects, mainly in
Southern Europe 's high solar hours' sunbelt.
-- First acquisition of a fully licensed and permitted
ready-to-build project for an aggregate consideration of c.EUR1.1m
paid by Eco Atlantic Renewables using funds available from the loan
completed on 25 January 2021. The acquired 10.57 MW Kozani project
in Greece has a secured feed in tariff and management estimates an
internal rate of return ("IRR"), once built, of c.9% unlevered and
c.13% levered.
-- Subject, inter alia, to the availability of follow on project
finance, Eco Atlantic Renewables is targeting the development and
construction of c.100 MW of operating grid connected projects, in
addition to securing the rights for an additional c.800 MW
currently in development, in its first full year of operation
-- Eco Atlantic Renewables will have Executive Board oversight
by Eco Atlantic and is planned to be independent in terms of
operating management, governance, and future equity and customary
project debt finance funding needs.
-- As part of the wider financing strategy for Eco Atlantic
Renewables, Eco Atlantic will assess the potential for its
shareholders to participate directly in the growth of Eco Atlantic
Renewables.
-- Eco Atlantic will maintain its focus on oil and gas
exploration as it continues to see considerable upside in its
prospective hydrocarbon assets, offshore Guyana and Namibia, and is
committed to explore and deliver value from these exploration
assets as soon as possible, and once the Orinduik Block Offshore
Guyana partners (Tullow Oil and Total) finalise drilling targets
selection in Q2 2021.
Gil Holzman, Co-Founder and Chief Executive Officer of Eco
Atlantic, commented:
" We are not a management team that likes to sit and wait for
outcomes. Following several months of extensive strategic work and
identification of multiple projects by the management team and
Board of Directors, this exciting opportunity has crystalised. Our
decision to form this new majority held renewable energy company
was partly driven by a lack of oil and gas acquisition
opportunities that are as good and as prospective as the ones we
already hold.
While we remain focused and fully committed to achieving near
term exploration success in Guyana and Namibia, we are fully aware
of the global energy transition that is firmly underway. The
creation of Eco Atlantic Renewables is a clear demonstration that
Eco Atlantic is responding to the changing marketplace. We have
structured the new venture in such a way that our oil and gas
assets in Guyana and Namibia remain the core of our business, we
have retained adequate near term financing and both of our regions
continue to demonstrate significant potential for our
shareholders.
The creation of Eco Atlantic Renewables is very exciting, and
the recent shift in energy market dynamics presents compelling,
near term opportunities and the potential to grow yet another
ground-breaking independent energy company. Eco Atlantic's skill
set is diverse, and we are leveraging our capacities, knowledge and
experience of integrated project management, land and lease
management, offtake agreement negotiations, and contractual
negotiations and financial structuring within the public and
private financial sector.
Combined with our highly prospective exploration acreage and our
discoveries in Guyana, Eco Atlantic has added a highly relevant and
attractive asset to its portfolio."
Strategy
Eco Atlantic is seeking to create additional shareholder value
by applying its experience in integrated projects, direct
negotiating with governments, and being agile within the renewable
energy sector, while continuing to drive forward its core oil and
gas assets in Guyana and Namibia.
Pursuant to the Eco Atlantic Renewables joint venture
shareholders agreement, Eco will have the right to nominate a
majority of the Eco Atlantic Renewables board.
The opportunities already identified within Eco Atlantic
Renewables have significant potential, and Eco Atlantic Renewables
will be targeting a circa 12% - 18% IRR for each project. Each
project is expected to be held within a separate Special Purpose
Vehicle ("SPV") to facilitate SPV level funding arrangements and
potential asset level dealings as well as separate agreements with
state utilities.
Eco Atlantic Renewables is focused on identifying, securing, and
developing projects in the solar PV sector. Eco Atlantic
Renewables's immediate objective is to deliver value to investors
through a portfolio of international solar PV projects. A number of
the opportunities in its pipeline, including the recently acquired
Kozani project in Greece, are fully contracted, permitted, and
build ready, and in first stages towards financial closing whereas
others are in various development and permitting stages. The focus
will be on projects featuring a combination of one or all being
able to benefit from Europe's best solar irradiation and those
strategically located in markets with advantageous land prices in
prime locations and with premium offtake prices. Benefiting partly
from regulated revenues and long-term fixed power purchase
agreements, these asset classes constitute attractive investment
opportunities with additional sustainability features.
In line with Eco Atlantic Renewables' strategy to acquire
development and ready-to-build solar PV projects in Europe, and to
construct and develop such projects to produce a portfolio of up to
2GW of solar power, the ready-to-build and advanced development
stages projects that have already been identified in our pipeline
include the following:
-- Greece - 10.57MW (wholly owned having been acquired on 25 January 2021),
-- Spain - 31.25MW (in advanced stages of exclusive negotiations),
-- Canary Islands - 100MW (exclusive option),
-- Italy - 800 MW (exclusivity secured).
The ready to build projects have in place a secured grid
connection, environmental permits, building permits and lease or
purchase agreements on the land. Projects are subject to full
financing in the form of equity and customary project finance.
The Kozani project in Greece is estimated to cost c.US$10m
(including the aforementioned acquisition price) to construct and
to commence electricity production. As the project has a feed in
tariff by the Greek Grid Operator it is expected to be funded
largely from project debt financing with the balance expected to be
provided by Eco Atlantic Renewables through the project SPV.
Further funding required by Eco Atlantic Renewables is expected
to be sourced through Eco Atlantic Renewables, independently of Eco
Atlantic.
Structure of the new venture and Loan
Eco Atlantic has agreed to provide a secured loan of up to US$6m
to Eco Atlantic Renewables, as a result of which it now holds a 70%
shareholding in Eco Atlantic Renewables, , with Nepcoe holding the
remaining 30%. The Loan bears 2% annual interest, which will accrue
and is expected to be payable from the proceeds of either a public
or private financing, through operating cash flow, or a project
monetisation event. In time, it is intended that Eco Atlantic
Renewables will be a standalone business from Eco Atlantic. The
Board of Eco Atlantic will assess the ability for shareholders to
participate directly in the financing of Eco Atlantic Renewables
when it seeks to raise the necessary funds for capturing more
project opportunities and / or the construction of the projects
within its pipeline, for which a number of options are being
actively considered.
Management team of Eco Atlantic Renewables
The management team of Eco Atlantic Renewables will be comprised
of experienced renewable energy specialists and engineers within
Nepcoe and the experienced integrated project management members of
Eco Atlantic's executive team and board. In addition, as operations
commence, and the pipeline continues to build, specific project
managers will be appointed at project and /or country level.
European Solar Market
The European solar PV market is experiencing a period of high
growth, with an increasing speed of development. Numerous European
Governments are promoting the development of solar power, as it is
often cheaper to generate than other power sources, and they are
increasingly taking it into consideration when developing their
climate strategies.
Eco Atlantic Renewables has a pipeline of low cost, high yield
solar PV projects in Europe, with the potential to generate returns
for investors. Management estimate that the first development
identified in Greece will deliver an IRR of approximately 9%
(unlevered) and 13% (levered). Eco Atlantic Renewables believes
there is considerable room to expand, given it has access to an
exclusive pipeline of more than 2 Gigawatts in southern Europe.
About Nepcoe
Nepcoe Capital Partners Ltd. is a UK based renewables investment
business focused on creating a platform for access to renewable
energy opportunities able to provide and generate predictable cash
flows in combination with positive environmental and social impact.
The management team of Nepcoe is closely engaged with project
developers in order to efficiently build a network of strategic
projects and suppliers, to minimise project capital requirement and
maximise performance and profitability.
Oil and gas assets in Guyana and Namibia
Eco Atlantic continues to see considerable upside in its
hydrocarbon assets in the Orinduik Block in the proven Guyana Basin
and its newly reissued licenses in Namibia and is looking to
develop and deliver value from these projects as soon as
possible.
Eco remains fully funded for its share of its planned two
exploration wells on the Orinduik Block and, with its partners
Tullow Oil and Total, it is assessing all opportunities available
to drill such exploration wells into the light oil cretaceous
targets as soon as practical. The Company is fully aligned with its
block partners on careful target selection based on the 3D
currently being reprocessed for the next drilling campaign and Eco
expects to be able to update the market on its next drilling plans
in due course and most probably towards the end of Q2 2021 when the
drilling targets selection process is anticipated to be
finalised.
In Namibia, Eco continues to benefit from a strategically
significant acreage position in-country and is progressing its
various work programmes on its newly awarded four blocks offshore
Namibia. The Company has witnessed considerable interest from
multiple IOCs. The Company continues to monitor upcoming drilling
activity in the region, which should potentially see up to five
exploration wells drilled on behalf of ExxonMobil, Total, Maurel
& Prom, Shell and ReconAfrica (currently drilling) in the next
12 months.
For more information, please visit www.ecooilandgas.com or
contact the following :
Eco Atlantic Oil and Gas c/o Celicourt +44 (0) 20
8434 2754
Gil Holzman, CEO
Colin Kinley, COO
Alice Carroll, Head of Marketing and +44(0)781 729 5070 | +1 (416)
IR 318 8272
Strand Hanson Limited (Financial & Nominated
Adviser) +44 (0) 20 7409 3494
James Harris
Rory Murphy
James Bellman
Berenberg (Broker) +44 (0) 20 3207 7800
Matthew Armitt
Emily Morris
Detlir Elezi
Celicourt (PR) +44 (0) 20 8434 2754
Mark Antelme
Jimmy Lea
Hannam & Partners (Research Advisor)
Neil Passmore +44 (0) 20 7905 8500
Notes to editors:
About Eco Atlantic:
Eco Atlantic is a TSX-V and AIM quoted Oil & Gas exploration
and production Company with interests in Guyana and Namibia, where
significant oil discoveries have been made.
The Group aims to deliver material value for its stakeholders
through oil exploration, appraisal and development activities in
stable emerging markets, in partnership with major oil companies,
including Tullow, Total and Azinam.
In Guyana, Eco Guyana holds a 15% Working Interest alongside
Total (25%) and Operator Tullow Oil (60%) in the 1,800 km(2)
Orinduik Block in the shallow water of the prospective
Suriname-Guyana basin. The Orinduik Block is adjacent and updip to
ExxonMobil Operated Stabroek Block, on which eighteen discoveries
have been announced and over 9 Billion BOE of oil equivalent
recoverable resources are estimated. First oil production commenced
in December 2019 from the deep-water Liza Field, less than three
years from FID.
Jethro-1 was the first major oil discovery on Orinduik Block.
The Jethro-1 encountered 180.5 feet (55 meters) of net high-quality
oil pay in excellent Lower Tertiary sandstone reservoirs which
further proves recoverable oil resources. Joe-1 is the second
discovery on the Orinduik Block and comprises high quality
oil-bearing sandstone reservoir with a high porosity of Upper
Tertiary age. The Joe-1 well encountered 52 feet (16 meters) of
continuous thick sandstone which further proves the presence of
recoverable oil resources.
In Namibia, the Company holds interests in four offshore
petroleum licenses totalling approximately 28,593km(2) with over
2.362bboe of prospective P50 resources in the Walvis Basin. These
four licenses, Cooper, Guy, Sharon and Tamar are being developed
alongside partners Azinam and NAMCOR. Eco has been granted a
drilling permit on its Cooper Block (Operator).
Eco Atlantic is a 70% shareholder in Eco Atlantic Renewables,
alongside Nepcoe Capital Partners Ltd., a renewable energy
developer and investment company, that own the remaining 30%. The
aim of Eco Atlantic Renewables is to deliver material returns for
investors by sourcing, acquiring and developing an exclusive
pipeline of potential high yield solar photovoltaic projects in
Southern Europe's high solar hours' sunbelt.
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